Amazon FBA Profit Calculator
Calculate your net profit, margins, and ROI for Amazon FBA products.
Understanding Your Amazon FBA Profit Margins
Selling on Amazon via Fulfillment by Amazon (FBA) is a powerful way to scale an e-commerce business, but the fee structure can be complex. To ensure your business remains sustainable, you must look beyond the "Selling Price" and account for every hidden cost.
Key Components of the FBA Profit Calculation
- Cost of Goods Sold (COGS): This is what you pay your manufacturer per unit. It should include any packaging or inspection fees incurred before the item leaves the factory.
- Referral Fees: This is Amazon's commission for the sale. For most categories, this is 15% of the total selling price.
- Fulfillment Fees: These are the costs for Amazon to pick, pack, and ship your item to the customer. This depends heavily on the weight and dimensions of your product.
- Shipping to Amazon: Often overlooked, this is the cost of freight or small parcel delivery to get your inventory into the Amazon warehouse network.
- Advertising (PPC): In a competitive marketplace, you likely spend money on Amazon Sponsored Products. Dividing your total monthly ad spend by the number of units sold gives you your per-unit PPC cost.
Example Profit Breakdown
Imagine you sell a yoga mat for $35.00. Your manufacturing cost is $8.00, and shipping to Amazon is $1.50 per unit. Amazon takes a 15% referral fee ($5.25) and charges a $6.00 fulfillment fee. If you spend $3.00 per unit on ads, your calculation looks like this:
$35.00 (Price) – $8.00 (COGS) – $1.50 (Shipping) – $5.25 (Referral) – $6.00 (Fulfillment) – $3.00 (PPC) = $11.25 Net Profit.
In this scenario, your profit margin is 32.1% and your ROI is 118.4%.
How to Improve Your FBA Margins
To increase profitability, successful sellers focus on three areas: optimizing dimensions to lower FBA fees, negotiating lower unit costs with suppliers, and improving PPC conversion rates to lower the advertising cost per unit. A healthy target for most private label sellers is a profit margin above 25% after all expenses.