Amazon FBA Profit Calculator
Understanding Your Amazon FBA Profit Margins
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 account for every cent spent from production to the final customer delivery.
Key Components of the FBA Calculation
- Product Cost (COGS): The amount you pay your manufacturer per unit, including packaging.
- Referral Fee: Amazon's commission for selling on their platform. For most categories, this is 15% of the total selling price.
- Fulfillment Fee: This covers the picking, packing, and shipping of your product to the customer. It is based on the weight and dimensions of your product.
- Inbound Shipping: The cost to ship your inventory from your warehouse or manufacturer to Amazon's fulfillment centers.
- Storage and Advertising: Monthly inventory storage fees and your PPC (Pay-Per-Click) marketing spend distributed across your unit sales.
Real-World Example Calculation
Let's say you are selling a "Premium Kitchen Gadget" with the following numbers:
- Selling Price: $35.00
- COGS: $8.50
- Shipping to Amazon: $1.20
- Referral Fee (15%): $5.25
- Fulfillment Fee: $4.75
- PPC & Storage: $3.00
In this scenario, your Total Costs equal $22.70 ($8.50 + $1.20 + $5.25 + $4.75 + $3.00). Your Net Profit would be $12.30 per unit, resulting in a 35.1% Profit Margin and a 144.7% ROI.
Why Monitoring ROI and Margin Matters
Your Profit Margin tells you how much of every dollar in sales you keep as profit. A healthy FBA margin is typically between 20% and 30%. Your ROI (Return on Investment) measures how efficiently you are using your capital. If you spend $10 on a product and make $10 in profit, your ROI is 100%. High ROI allows you to reinvest in inventory faster and grow your brand.