Selling on Amazon via Fulfillment by Amazon (FBA) offers incredible scale, but the fee structure can be complex. To run a sustainable business, you must account for every cent that leaves your pocket before the product reaches the customer.
Key Factors in the FBA Calculation
Referral Fees: This is Amazon's commission for selling on their platform. For most categories, this is 15% of the total sales price.
Fulfillment Fees: These are the costs for picking, packing, and shipping your product. These vary based on the size and weight of your item.
Landed Cost: This includes the manufacturing cost per unit plus the shipping costs to get the inventory from your supplier to Amazon's fulfillment centers.
Monthly Storage: Amazon charges for the space your inventory occupies in their warehouses. This price usually increases during the Q4 holiday season.
How to Use This Calculator
To get an accurate profit estimate, follow these steps:
Enter your target Selling Price. Research competitors to ensure this is realistic.
Input your Product Cost (COGS). This is what you pay your manufacturer per unit.
Estimate Shipping to Amazon. Divide your total freight shipment cost by the number of units in that shipment.
Check the FBA Fulfillment Fee in your Seller Central account for your specific product size tier.
Example Calculation
Imagine you sell a yoga mat for $40.00. Your cost per unit is $10.00 and it costs $1.00 to ship it to Amazon. If the referral fee is 15% ($6.00) and the fulfillment fee is $7.00, your total expenses are $24.00. Your Net Profit is $16.00, resulting in a 40% profit margin and a 160% ROI.
Why Net Profit Margin Matters
A healthy FBA business typically aims for a net margin of 20% or higher. This provides a buffer for PPC (Pay-Per-Click) advertising costs, returns, and unexpected storage fees. If your margin is below 10%, you may need to renegotiate with suppliers or raise your prices to remain profitable.