Apply the Contribution Margin Gate

Outcome: Separate revenue from real profit after fees, COGS, ads, returns, storage, prep, and inbound costs before scaling or reordering.

What to do in this lesson

Watch: start with the lesson video.
Learn: use the summary and key points to capture the operating principle.
Do: complete the action steps against one real product, SKU, campaign, supplier, or workflow.
Submit: write one action card with owner, evidence, next step, risk, status, and review date.

Watch

Hosted on Google Drive.

Lesson summary

This lesson teaches how to set up the ‘My Products’ page in Scaler-OS tools to accurately track your product’s contribution margin and gross profit. The key steps are: 1) Set the landed cost (COGS) for each product, either using a constant value or a fluctuating period-based cost. 2) This ensures the contribution margin and gross profit calculations in the dashboard are accurate and reflect your true costs.

Key points

Set the landed cost (COGS) for each product in Scaler-OS tools
Can use a constant landed cost or a period-based fluctuating cost
Ensures accurate contribution margin and gross profit calculations in the dashboard
Can upload COGS data in bulk using a spreadsheet template
Explains the difference between constant vs period-based COGS

Lesson notes

Profit Dashboard & Contribution Margin Growth Planning Resources:

Brand Growth Menu
New Product Targets Spreadsheet
Monthly Profit Analysis Training

Action checklist

Set the landed cost (COGS) for each of your products in Scaler-OS tools
Decide whether to use a constant or period-based COGS setup
Use the bulk upload template if you have many products

Full transcript

Open transcript

Hello Titans, Justin Dyson here. In this video, we’re going to be talking about setting up the My Products page in Scaler-OS tools. Now, why are we doing this? Well, you just set your contribution margin target in that spreadsheet, right? Well, you need to compare that to your actual contribution margin. The only way to do that is to make sure that you have that data uploaded into the Scaler-OS tools week. So how are we going to do this? How to ensure that the Scaler-OS tools can show you each of your products’ actual contribution margin. We need to know what you’re actually getting comparative to your target, all right? And we’re going to be learning how to set up Lannond cost by period and then how to set up Lannond cost by constant, right? I’m going to walk you through how to do both of these. I’ve got a whole demo for you. Speaking of demos, let’s just dive in. So the first thing you’re going to want to do is come over here into Scaler-OS tools. So log in, this is the dashboard’s first thing you see, right? And you’re going to come over here to the menu, click on My Products. I mean, you click on My Products, it will take you to this page here. Now in this page, you’ve got a bunch of stuff going on at the top. But ultimately, what we’re trying to do is set the Lannond cost. Okay, and I’m going to show you how to do that here in a second. But as you can see, it already calculates your fulfillment fee. And we can get our gross profit, basically, because we have these here, but this gross profit is going to be wrong if you don’t put in your Lannond cost, okay? So just for clarity on what that looks like on the dashboard. So if we’re looking on the dashboard, you see this contribution margin and you see this one says 11% and these are all like 38, 39, whatever. Well, if you don’t have your Lannond cost in here, actually, that’s not a good example. This one’s 72%. That’s because there’s no cost of goods added into these products, it’s all zero, right? So it’s calculating your contribution margin based on a false number. That’s wrong. We don’t want that. That’s bad. Okay. So we’re going to be setting up our Lannond cost in here so that we can look at the product dashboard. Oops, that’s not that page. The product dashboard right here and actually know that this number is accurate and what we’re actually seeing on Amazon. So how do we do this? So first thing to note is all we’re trying to do in this demo is set up Lannond cost, all right? You have in your product, product targets and margins that sheet that you filled out. You have Lannond costs already in here, right? Boom. There it is. All right. So you’re not going to be recalculating this. You could if you wanted, but you’ve already documented it. Hopefully if you’ve been following along in the training, so we’re just going to pull this number into the tools. So what we’re going to do is find a product that needs to be done. So as you can see for some of these have already done this. So I’m going to try to find a product where I have not done it yet, and I’m on the wrong page here. All right. So if we’re back into our my products page, right, and we’re going to scroll down. Let’s find a product where we haven’t done this yet. So the way I have this set up or what the way I have all the products on this page set up is their parent child listings. So when you see dashes like this, it’s because it’s a parent. Okay. If you’re seeing constant or period with blanks or the word configured by it, then that means you can actually set it up here. So in our example, we’re going to be setting the landed cost for this parent product. And in order to do that, we have to do it to each of the children here. Now I’m going to show you how to do this using the constant versus the period. Now what’s the difference? Constant just means your price or your landed cost is always 757. Okay. So to change it, you literally make it 757, right? Very simple. Let’s just make it 750 just to show that we’ve changed it. And you click accept or let it load here for a second. So you click accept and it will add that into it. So we’ve set this to constant at 750. Now why would you use constant over period? And really it’s up to you. If you have a deal with your manufacturer and your particular unit price or shipping price is fluctuating a lot with every single order, then period might be the best setup for you. Okay. And what does that look like? When we click configure, what this allows us to do is to basically set a cost element for unit price, right? So manufacturing, which is your unit cost and then shipping, which would be your freight and duty costs, right? So the way this is set up is, let’s say you get an invoice from your manufacturer and it’s $2,000, okay, for the unit cost. And let’s say you bought 1,000 units, okay, about 1,000 units, that means your unit cost was $2, okay? Now when you get your invoice for shipping for that same 2,000 units, let’s say it was another $2,000, right? And let’s say it was a big item, right? It’s $5,000, all right? And this is 4,000 units, okay? And once you’ve added this in, you’ll see that the amount per unit automatically calculates and it’s saying you spent $2 per unit for manufacturing and the $5 per unit for shipping. So you’re confirming that it’s $7, again, if you were to look at your product targets at margin sheet and say, okay, yeah, that’s pretty close to what it normally is, cool. I like that. I can deal with that and you click save. Now it’s going to set that for that particular time period. Now when you do this for the first time, since there’s no other time period to compare to, it just, it says at the top here, beginning and end of time. Now let’s say you had another one, right? And let’s do it from, I don’t know, just click, I guess we shouldn’t have done it from the current date, it’s not going to work. But let’s say three months from now, you go in and you need to update this, you would add another period and you would do the same thing and it would recalculate your product margins and your contribution margin and gross profit on the tool. So that’s how that works and that’s why this exists. Now the other thing I want to show you, if you have a lot of products and you don’t want to do this one by one, because I definitely don’t, you can click on upload cogs and then you can click this template on what this is going to do. It’s going to download all of your products. And as you can see, you have the ASIN, SKU and all that stuff and you can select the cost type. Super important. At the present moment, the cost type only allows for constant. In the future, it will allow you to change the period. But for now, it only works with a constant and you’re just going to put in the amount and the number of units to get that particular cost. So you can use this spreadsheet if you want or you can do it individually throughout here, but it’s pretty straightforward. Get it to constant. If you just want to get this done quickly, set it to period. If you’re super particular about your margins and they change a lot, for my products that didn’t change very often, so I’ve always just used constant. But that’s just what I prefer to do. So now that you understand how to set this up, we can actually get into the monthly profit analysis. And in the next video, I’m going to show you how to do that.

Resources

Source lesson: Profit Dashboard & Contribution Margin Growth Planning
Resources: none attached yet.

Track: 01 — Seller Operating Baseline
Module: Data Truth Before Action