Amazon FBA Profit Calculator
How to Calculate Amazon FBA Profitability
Selling on Amazon through the Fulfillment by Amazon (FBA) program is a powerful way to scale an e-commerce business, but understanding your bottom line is critical. Many new sellers focus solely on revenue, only to realize later that hidden fees have eroded their margins.
Key Components of FBA Profit Calculation
- Selling Price: The final price the customer pays for your product.
- Cost of Goods Sold (COGS): The total cost to manufacture or purchase one unit of your product.
- Referral Fee: Amazon's "commission" for selling on their platform. For most categories, this is 15%.
- Fulfillment Fee: A per-unit fee for picking, packing, shipping, and providing customer service. This depends on the weight and dimensions of your product.
- Inbound Shipping: The cost to send your inventory from your warehouse or supplier to Amazon's fulfillment centers.
- Storage Fees: Monthly fees based on the volume (cubic feet) your inventory occupies in the warehouse.
Realistic Example of FBA Profit
Imagine you are selling a yoga mat for $35.00. Your costs might look like this:
| Product Cost | $10.00 |
| Shipping to Amazon | $1.50 |
| Referral Fee (15%) | $5.25 |
| FBA Fulfillment Fee | $6.50 |
| Net Profit | $11.75 |
In this scenario, your Profit Margin would be 33.5% and your ROI (Return on Investment) would be 117.5%.
Tips for Improving FBA Margins
To maximize your profits, consider optimizing your packaging to reduce the FBA fulfillment tier. Smaller, lighter boxes can save dollars per unit. Additionally, keep an eye on your "IPI" (Inventory Performance Index) to avoid expensive long-term storage fees which can quickly turn a profitable product into a loss-maker.