Selling on Amazon via Fulfillment by Amazon (FBA) is an excellent way to scale an e-commerce business, but the fee structure can be complex. To ensure your business remains sustainable, you must accurately calculate your net profit after all Amazon "takes" are deducted.
Key Metrics in FBA Calculations
Cost of Goods Sold (COGS): This is the total cost to manufacture or purchase your product from a supplier.
Amazon Referral Fee: This is the commission Amazon takes for every sale. For most categories, this is 15% of the total sale price.
FBA Fulfillment Fee: This covers the cost of picking, packing, and shipping your product to the customer. It is determined by the weight and dimensions of your product.
Monthly Storage Fee: Amazon charges you to keep your inventory in their warehouses. This fee increases significantly during the Q4 holiday season.
Advertising (PPC): Don't forget to factor in your Amazon Advertising costs. If you spend $200 to sell 100 units, your per-unit marketing cost is $2.00.
Example Calculation
Imagine you are selling a yoga mat for $40.00. Your costs are as follows:
Product Cost: $10.00
Shipping to Amazon: $1.00
Referral Fee (15%): $6.00
FBA Fulfillment Fee: $7.50
Storage & Misc: $0.50
In this scenario, your total expenses are $25.00. Your Net Profit is $15.00, resulting in a 37.5% profit margin and a 150% ROI.
How to Increase Your FBA Margins
To improve your bottom line, consider optimizing your packaging to reduce the product size and drop into a lower FBA fee tier. Additionally, negotiating better rates with suppliers or increasing your Average Order Value (AOV) through bundles can significantly impact your ROI.
function calculateFBAProfit() {
var salePrice = parseFloat(document.getElementById('fba_salePrice').value) || 0;
var productCost = parseFloat(document.getElementById('fba_productCost').value) || 0;
var shipToAmazon = parseFloat(document.getElementById('fba_shippingToAmazon').value) || 0;
var referralRate = parseFloat(document.getElementById('fba_referralFee').value) || 0;
var fulfillmentFee = parseFloat(document.getElementById('fba_fulfillmentFee').value) || 0;
var storageFee = parseFloat(document.getElementById('fba_storageFee').value) || 0;
var marketing = parseFloat(document.getElementById('fba_marketing').value) || 0;
if (salePrice 0) {
roi = (netProfit / (productCost + shipToAmazon)) * 100;
}
// Display Results
document.getElementById('res_totalFees').innerText = "$" + amazonFeesOnly.toFixed(2);
document.getElementById('res_totalExpenses').innerText = "$" + totalExpenses.toFixed(2);
document.getElementById('res_netProfit').innerText = "$" + netProfit.toFixed(2);
document.getElementById('res_margin').innerText = margin.toFixed(2) + "%";
document.getElementById('res_roi').innerText = roi.toFixed(2) + "%";
// Show the results div
document.getElementById('fbaResults').style.display = 'block';
// Color code profit
var profitEl = document.getElementById('res_netProfit');
if (netProfit < 0) {
profitEl.style.color = "#d32f2f";
} else {
profitEl.style.color = "#2e7d32";
}
}