Selling on Amazon via Fulfillment by Amazon (FBA) offers incredible scale, but the fee structure can be complex. To maintain a healthy business, you must calculate your "True Net Profit" after all Amazon overheads.
Key Metrics in FBA Calculations
Referral Fee: This is Amazon's commission for selling on their platform. For most categories, this is 15% of the total selling price.
Fulfillment Fee: A flat fee per unit based on the weight and dimensions of your product. This covers picking, packing, and shipping to the customer.
Cost of Goods Sold (COGS): This is what you pay your manufacturer per unit.
ROI (Return on Investment): Calculated as (Net Profit / Initial Investment). In FBA, your initial investment is usually your Product Cost plus Shipping to Amazon.
Real-World 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's warehouse. Amazon takes a 15% referral fee ($6.00) and charges an FBA fee of $7.50. Your total expenses are $25.50. Your Net Profit is $14.50 per unit, with a 36.25% profit margin and a 120.8% ROI.
Why Margin Matters
A "good" Amazon margin typically falls between 20% and 30%. High margins provide a buffer for PPC (Pay-Per-Click) advertising costs, returns, and unexpected storage fee increases during Q4 (October – December).
function calculateFBA() {
// Get Inputs
var price = parseFloat(document.getElementById('fba_price').value) || 0;
var cogs = parseFloat(document.getElementById('fba_cogs').value) || 0;
var shippingIn = parseFloat(document.getElementById('fba_shipping_in').value) || 0;
var referralPct = parseFloat(document.getElementById('fba_referral_pct').value) || 0;
var fulfillment = parseFloat(document.getElementById('fba_fulfillment').value) || 0;
var misc = parseFloat(document.getElementById('fba_misc').value) || 0;
// Logic
var referralFee = price * (referralPct / 100);
var totalAmazonFees = referralFee + fulfillment + misc;
var totalLandingCost = cogs + shippingIn;
var totalExpenses = totalAmazonFees + totalLandingCost;
var netProfit = price – totalExpenses;
var margin = 0;
if (price > 0) {
margin = (netProfit / price) * 100;
}
var roi = 0;
if (totalLandingCost > 0) {
roi = (netProfit / totalLandingCost) * 100;
}
// Display Results
document.getElementById('res_total_fees').innerHTML = '$' + totalAmazonFees.toFixed(2);
document.getElementById('res_total_cost').innerHTML = '$' + totalExpenses.toFixed(2);
document.getElementById('res_net_profit').innerHTML = '$' + netProfit.toFixed(2);
document.getElementById('res_margin').innerHTML = margin.toFixed(2) + '%';
document.getElementById('res_roi').innerHTML = roi.toFixed(2) + '%';
// Color code the profit
if (netProfit < 0) {
document.getElementById('res_net_profit').style.color = '#d32f2f';
} else {
document.getElementById('res_net_profit').style.color = '#2e7d32';
}
}
// Initial calculation on load
window.onload = calculateFBA;