On April 17, 2026, Amazon began applying a 3.5% fuel and logistics surcharge to US and Canadian Fulfillment by Amazon fees. The change points to a problem consumer brands can overlook: the selling price can stay exactly where it was while the cost of getting the product to the customer moves underneath it.
For a growing brand, that difference matters.
A sale only tells part of the story. What matters is what remains after production, fulfilment, advertising, platform fees, returns and overhead have taken their share.
That calculation becomes harder when capital is limited. A large order can require money for inventory, freight and promotion weeks or months before the customer pays. A sudden spike in demand can create the same problem on a smaller scale. A founder sees the orders coming in, buys more stock, then discovers that the demand was temporary.
The answer is not to slow growth for its own sake. It is to know which parts of growth are actually leaving money in the business.
1. Reprice Before Costs Force the Decision
The cost of making a product is only the beginning.
Packaging, shipping, payment processing, marketplace commissions, discounts, returns and the portion of overhead required to sell the product all have to fit somewhere inside the price.
That is easy to miss when a founder is looking primarily at the factory or production bill. A product can appear profitable at the point of manufacture and become far less attractive once the rest of the selling costs are included.
The U.S. Small Business Administration advises small businesses to account for shipping, processing and packaging when evaluating pricing. It also recommends monitoring cash flow and inventory turnover.
Consider a $32 direct-to-consumer order. If production costs $8, packaging and fulfilment cost $6, payment and platform charges take $2, discounts and expected returns account for $3, and advertising costs another $8 to secure the first purchase, only $5 remains before monthly overhead and tax.
The example is not a recommended margin. It is a reminder that the number customers see on a product page is not the number the company keeps.
Pricing deserves another look whenever a supplier raises prices, a carrier changes its terms, a marketplace adds a fee or a retailer asks for new promotional support. A quarterly review can catch some of those changes before they become a cash problem.
Sometimes the answer will be a higher price. Sometimes it will be a smaller package, a different bundle or a change to promotions. The important part is knowing what each option does to the economics before making the change.
A discount that protects order volume while destroying contribution is still an expensive decision.
2. Lower the Cost of Acquiring Each Customer
Getting a customer and making money from that customer are two different events.
Paid advertising can introduce a brand to someone who has never heard of it. But if the first order barely covers the cost of acquiring the buyer, the business needs another reason for that relationship to become valuable.
Customer acquisition cost, or CAC, is the sales and marketing expense divided by the number of new customers acquired during the same period. Shopify’s guidance recommends looking beyond advertising spend and including marketing staff, software and other conversion costs.
For brands selling products customers regularly replace, the second order can change the calculation.
A customer who returns through an email reminder, text message or direct visit may cost less to reach than someone acquired through a new advertising campaign. That does not make the repeat order free. Fulfilment, customer service and retention activity still cost money. But the business can compare the economics instead of treating every customer as if the cost of reaching them were identical.
That makes the customer list an operating asset.
Build permission-based email and SMS lists at checkout. Tell customers what they will receive. Give them a reason to remain subscribed, whether that is replenishment information, useful product guidance or early access to a launch.
Then watch what happens after the first purchase.
Repeat-purchase rate matters. So does gross profit per customer. A growing customer count can hide a weaker business if every new buyer requires a larger advertising budget and few customers return.
Lisa Price, founder of Carol’s Daughter, made a similar point in a 2026 interview with The Cut. Even when a brand expands through major retailers, she argued for maintaining a direct-to-consumer presence. The reason is straightforward: retail can expand reach, but the retailer controls part of the customer relationship.
A brand does not have to abandon paid advertising or retail to build an owned audience. It simply should not assume those outside channels will always be available on the same terms.
3. Know Which Sales Channels Are Actually Profitable
More sales do not necessarily mean better economics.
A direct-to-consumer order, an Amazon order, a specialty-marketplace sale and a wholesale order can all produce revenue while leaving very different amounts behind.
DTC gives a brand more control over pricing and customer communication. It also puts delivery, returns and customer acquisition costs on the brand. Wholesale can bring larger orders and new customers, but retailer discounts, freight, brokers, promotions and slower payment can change the calculation.
Amazon’s published 2026 updates said FBA fees would rise by an average of $0.08 per unit sold. That figure is an average, not a universal charge. The actual economics vary by product and by the fees that apply to a particular seller.
That is why a channel should be judged on its own numbers.
For each channel, calculate what remains after product costs, marketplace or retailer fees, fulfilment, shipping subsidies, discounts, returns and advertising. Then look at how quickly the business receives the cash.
A wholesale order with a lower contribution may still make sense if it introduces the brand to customers who later buy directly. A DTC order with a higher headline margin may be less attractive if the company has to spend heavily on advertising to generate it.
The useful question is not simply, “Which channel sells the most?”
It is, “What does this channel leave behind, and what does it give the business in return?”
A closer look at who captures value when Black consumers buy adds another dimension to that calculation. Selling more is not the same as keeping more ownership or profit. A founder can use retail for reach while strengthening DTC, retaining customer data where possible and negotiating terms that make future orders sustainable.
4. Turn Inventory Into an Asset, Not Trapped Cash
Inventory can make a growing business look healthier than it is. The shelves are full. Orders are coming in. The warehouse is busy. But the money spent on that inventory has already left the business.
Until those products sell, the cash is tied up. And if demand slows, a seasonal product expires, packaging changes or a new version replaces the old one, some of that inventory may be worth less than the founder paid for it. The SBA recommends monitoring how long products remain in inventory so owners can identify slow-moving stock and adjust purchasing decisions.
Denis Asamoah, co-founder of Forvr Mood, described the problem from experience. He told The Cut that about 70% of the brand’s initial $250,000 to $300,000 in startup capital went into inventory. The founders ordered 20,000 candles, expecting the supply to last three to six months. Looking back, Asamoah said he would advise other founders to start smaller.
That is one company’s experience, not a universal inventory formula. But it demonstrates the cost of getting the timing wrong.
Seventy percent of that went into inventory, easily. — Denis Asamoah
Sales history, supplier lead times and the cost of running out of stock can help determine when to reorder. New products can sometimes be tested with smaller production runs. Existing inventory should be reviewed by age and sell-through, not simply by how many units remain.
A temporary sales spike also deserves some skepticism.
One unusually strong week may justify investigating demand. It does not automatically justify a large purchase order.
When slow stock does build up, a markdown is one option. A bundle, targeted offer or product pairing may recover cash without treating the original price as meaningless. The right choice depends on the product and the reason it stopped moving.
Inventory discipline matters even more when outside financing is difficult to obtain. The Federal Reserve’s 2024 Small Business Credit Survey found that firms owned by people of color continued to report differences in financing outcomes, including in how often they received all the financing they sought.
For a business with limited borrowing capacity, too much inventory is not simply a storage problem. It can reduce the cash available for payroll, marketing, new products and the next order.
5. Manage Contribution Margin Before Chasing Revenue
Revenue is easy to celebrate because it is visible.
Contribution is harder to see.
Contribution margin looks at what remains after the variable costs directly associated with making and selling an order. It does not replace net profit. Fixed costs such as rent, salaries and insurance still have to be paid. But contribution gives a founder a clearer way to compare products, promotions and channels.
Take a promotion that produces 500 additional orders.
That sounds like growth.
If the discount, fulfilment, advertising, returns and other variable costs leave less contribution per order than the business needs to cover its fixed expenses, those additional orders may create more work without solving the underlying financial problem.
That is why contribution should be tracked by product and channel.
Start with the net sales amount. Subtract the variable costs attached to the order, including discounts, returns, shipping, marketplace charges and customer acquisition where appropriate. Then compare the result with what the business needs from that sale.
Melissa Butler, founder of The Lip Bar, put the issue plainly in The Cut‘s 2026 interview:
Know your numbers, and make sure your margins are there to support all the things you want: your marketing activities, the salary you want to pay yourself — all of it. — Melissa Butler
That calculation belongs before the product launch, not after it. The same goes for a major promotion or retailer pitch.
If the numbers do not work, there are several places to look: price, packaging, supplier terms, shipping thresholds, advertising or the channel itself.
Not every product needs to carry the same margin. A lower-margin product may have a legitimate role if it introduces customers to a more profitable range. What matters is knowing that role instead of assuming volume will eventually solve the problem.
For Black-owned consumer brands, the margin question is ultimately a control question.
Healthy contribution gives a company more room to fund its next inventory purchase, meet payroll and keep operating when a platform changes its fees or a retailer changes its terms.
Growth still matters.
The point is to know what the growth is leaving behind.
FAQs
What is a good profit margin for a consumer brand?
There is no single number that works across every category. A brand should know what remains after the costs that actually come with selling its products, then compare that contribution with its fixed expenses.
How often should pricing be reviewed?
At least quarterly is a useful starting point, but a review should happen sooner when supplier, freight, platform or retailer costs change. Packaging, discounts and product-size changes can also alter the economics.
Is DTC always more profitable than wholesale?
No. DTC can give a brand greater control over pricing and customer relationships, but customer acquisition, shipping, service and returns can be expensive. Wholesale can produce larger orders while introducing different costs and less control. The answer depends on the product and the economics of each channel.
What is contribution margin?
It is the amount left from a sale after variable costs are deducted. Tracking it by product and channel helps show whether additional sales are actually helping the business cover its fixed expenses.
How can a small brand avoid overbuying inventory?
Use sales history, supplier lead times and sell-through rates to guide purchasing. When demand is uncertain, a smaller initial production run can limit the amount of cash tied up in stock. A sudden sales spike should be investigated before it becomes the basis for a large reorder.
