Is Your Import Business Making Money? Here's How to Actually Know
Revenue is up, the P&L shows profit, and the bank account keeps shrinking — the most common state of an import business. The truth lives at the per-SKU level: three margin layers, break-even math, and five silent leaks that blended numbers can't show.
One SKU, Three Verdicts — the Worked Example
| Selling price | $49.00 |
| Landed cost per unit (incl. duty stack) | −$30.74 |
| Level 1 — Gross margin | $18.26 (37%) |
| Marketplace fee (15%) | −$7.35 |
| Outbound shipping | −$4.00 |
| Ad spend per order | −$5.00 |
| Level 2 — Contribution margin | $1.91 (3.9%) |
| Monthly fixed costs ÷ contribution | $5,000 ÷ $1.91 |
| Level 3 — Break-even | 2,618 units/month |
A "37% margin product" that actually contributes $1.91 per order. Selling 1,500/month feels like success and loses ~$2,100/month. This math takes ten minutes per SKU and most catalogs have never done it.
The Five Silent Profit Leaks
Each invisible in a blended P&L; each findable per SKU.
1. Tariff drift
Duty stack changed after you priced (§301 revision, the forced-labor tariff). New shipments cost more; store price frozen; margin silently gone.
Recalculate landed cost per shipment; alert on lane changes
2. FX drift
PO priced at one exchange rate, paid at another. On TRY/CNY/INR lanes this swings 3–8% per quarter.
Cost at the payment-date rate; hedge or reprice quarterly
3. Returns
A 10% return rate on a 35% margin product removes ~a third of profit once return shipping and unsellable units count.
Track per-SKU return rate; kill or fix the worst SKUs
4. Storage & aging
Slow SKUs pay monthly storage (FBA long-term fees especially) while their cash sits frozen in inventory.
Per-SKU sell-through rate; liquidate below the line
5. Ad creep
CAC rises while contribution margin is checked once a year. Growth in revenue, decline in profit.
Contribution margin per order, reviewed monthly
The tariff stress test every SKU should pass
Before reordering any SKU, ask: if the duty stack rose 10 points and freight rose 20%, is contribution still positive? In 2026 both happened to real lanes within a quarter (Section 122, then the forced-labor tariff; Red Sea rerouting). SKUs that only work at today's exact rates aren't products — they're open positions on trade policy.
Start at Level 1: Your True Landed Cost
Every layer of this analysis stands on the landed cost per unit. Calculate it with the current duty stack for your lane — then the margin math above takes minutes.
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Frequently Asked Questions
Compute profit at three levels, per SKU — not blended: (1) Gross margin = price − landed cost per unit (product economics); (2) Contribution margin = gross margin − platform fees − payment fees − shipping-out − ad cost per order (order economics); (3) Net = total contribution − fixed costs (business economics). A business can be profitable at level 1, break-even at level 2, and losing money at level 3 — and blended averages hide which SKUs cause it. If you can't state the contribution margin of your top 5 SKUs, you don't yet know whether you're profitable.
Contribution margin is what each ORDER contributes after all variable costs: price − landed cost − marketplace/payment fees − outbound shipping − per-order ad spend. It matters because it's the number that has to cover fixed costs and profit. Example: $49 price, $30.74 landed, $7.35 Amazon fees, $4 outbound, $5 ads → $1.91 contribution (3.9%). This 'profitable-looking' product needs 2,600 orders/month just to cover a $5,000 fixed base.
Usually inventory timing. Accrual P&L recognizes cost only when units SELL — cash leaves when you pay the supplier and the duty invoice, months earlier. A growing import business ties ever more cash into inventory-in-transit and stock, so the P&L smiles while the account drains. Watch the cash conversion cycle (days from paying supplier to collecting from customer); import businesses commonly run 90–150 days, and growth multiplies the gap.
Break-even units = fixed costs ÷ contribution margin per unit. Using the example above ($1.91 contribution): $5,000 of monthly fixed costs needs 2,618 units per month. Then run the tariff stress test: if the duty stack rises 10 points, contribution drops to about −$1.16 — break-even becomes infinite; the product is dead at any volume. Products should survive a 10-point tariff move and a 20% freight move, or they're bets, not businesses.
Rank every SKU by contribution margin × monthly velocity (total monthly contribution), then check three red flags: negative contribution after ads (you pay customers to take it), return rate above ~2× catalog average, and sell-through slower than ~90 days of stock. The usual finding in a first per-SKU analysis: the top 20% of SKUs fund everything, the middle is noise, and 10–20% actively destroy profit — often the best-selling revenue lines with the worst economics.
Every shipment — not annually. Landed cost moves with each PO: tariff rates change (§301 revisions, the forced-labor tariff), freight quotes swing, FX moves, suppliers reprice. Each receipt should update the SKU's landed cost (most systems use weighted average), and a meaningful change should trigger a pricing review. Annual costing on quarterly-moving inputs is how businesses discover a losing year in February.