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 succeed, you must understand your numbers beyond just the selling price and the cost of the goods.
Key Components of FBA Fees
Referral Fees: This is essentially Amazon's commission for selling on their platform. For most categories, this is 15% of the total selling price.
FBA Fulfillment Fees: These are the "pick and pack" fees. They cover the cost of shipping your product to the customer, packaging materials, and customer service. This fee depends heavily on the weight and dimensions of your product.
COGS (Cost of Goods Sold): The total cost to manufacture or purchase one unit of your product.
Shipping to Amazon: Don't forget the cost of freight or small parcel delivery to get your inventory from your warehouse or supplier to an Amazon Fulfillment Center.
FBA Profit Calculation Example
Imagine you sell a Yoga Mat for $40.00. Your manufacturing cost is $10.00 and it costs $2.00 to ship it to Amazon. If the referral fee is 15% ($6.00) and the FBA fulfillment fee is $7.00, your total expenses before advertising would be $25.00. This leaves you with a $15.00 profit per unit, which is a 37.5% profit margin.
Why Tracking ROI and Margin Matters
Your Profit Margin tells you how much of every dollar you keep. A healthy margin (typically 25%+) allows you to absorb price fluctuations or increased advertising costs. Your ROI (Return on Investment) tells you how effectively your capital is working. If you spend $10 to make $10 profit, your ROI is 100%, which is generally considered excellent in the FBA world.
function calculateFBAProfit() {
var price = parseFloat(document.getElementById("fba_selling_price").value) || 0;
var cogs = parseFloat(document.getElementById("fba_product_cost").value) || 0;
var shipping = parseFloat(document.getElementById("fba_shipping_to_amazon").value) || 0;
var referralPct = parseFloat(document.getElementById("fba_referral_fee_pct").value) || 0;
var fulfillment = parseFloat(document.getElementById("fba_fulfillment_fee").value) || 0;
var ppc = parseFloat(document.getElementById("fba_ppc_cost").value) || 0;
// Calculation Logic
var referralFee = price * (referralPct / 100);
var totalFees = referralFee + fulfillment;
var totalExpenses = cogs + shipping + totalFees + ppc;
var netProfit = price – totalExpenses;
var profitMargin = 0;
if (price > 0) {
profitMargin = (netProfit / price) * 100;
}
var roi = 0;
var capitalInvested = cogs + shipping;
if (capitalInvested > 0) {
roi = (netProfit / capitalInvested) * 100;
}
// Display Results
document.getElementById("fba_results_area").style.display = "block";
document.getElementById("res_net_profit").innerText = "$" + netProfit.toFixed(2);
document.getElementById("res_profit_margin").innerText = profitMargin.toFixed(2) + "%";
document.getElementById("res_roi").innerText = roi.toFixed(2) + "%";
document.getElementById("res_total_fees").innerText = "$" + totalFees.toFixed(2);
// Color coding for profit
if (netProfit < 0) {
document.getElementById("res_net_profit").style.color = "#c62828";
} else {
document.getElementById("res_net_profit").style.color = "#2e7d32";
}
}