Margin checkpoint
Net Revenue
The first checkpoint of the waterfall and the denominator for every margin percentage: net product revenue plus shipping and gift-wrap revenue, minus shipping refunds.
Formula
Net revenue is what a customer paid you and did not get back. Every margin in the waterfall is expressed as a percentage of this number, not of gross sales. Product margin, channel margin, growth margin and net operating margin all use it as the base.
Using gross sales as the denominator instead makes every margin look several points better than it is. Always state the denominator when quoting a margin.
VAT is not part of net revenue. It is collected on behalf of a tax authority and held in a memo outside the calculation.
Where it sits in the waterfall
- 1Gross Ordered Revenue
- 2Gross Shipped Revenue
- 3Net Product Revenue
- 4Net Revenuecheckpoint
- 5Product Margincheckpoint
- 6Channel Margincheckpoint
- 7Growth Margincheckpoint
- 8Net Operating Profitcheckpoint
Related terms
See the whole waterfall worked through.
Our guide walks all eight steps with real numbers: How to calculate Amazon net margin.
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