Amazon FBA Profit Calculator
Estimate your net margins and ROI after all Amazon fees.
Understanding Your Amazon FBA Profit Margins
Selling on Amazon through the Fulfillment by Amazon (FBA) program offers incredible scale, but it comes with a complex web of fees. To run a sustainable business, you must calculate your "true" net profit after accounting for every cent spent on procurement, logistics, and Amazon's service fees.
How to Calculate Amazon FBA Profit
The basic formula for FBA profit is: Revenue – (COGS + Amazon Fees + Marketing + Logistics) = Net Profit. Here is a breakdown of the variables included in our calculator:
- Sale Price: The final price the customer pays for your product.
- COGS (Cost of Goods Sold): The price you paid the manufacturer to produce the unit.
- Referral Fee: Amazon's commission for selling on their platform (typically 15% for most categories).
- FBA Fulfillment Fee: The cost for Amazon to pick, pack, and ship your item to the customer. This depends on weight and dimensions.
- Monthly Storage: The cost to keep your inventory in Amazon's warehouses. This fluctuates based on the season (higher in Q4).
- Ad Spend (PPC): Your total advertising budget divided by the number of units sold.
FBA Calculation 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. The referral fee (15%) is $6.00. The FBA fulfillment fee is $7.50 and storage is $0.50. You spend $4.00 in PPC ads per sale.
Your total costs are $10 + $2 + $6 + $7.50 + $0.50 + $4 = $30.00. Your Net Profit is $40 – $30 = $10.00. This results in a 25% profit margin and a 100% ROI on your initial product cost.
Why Profit Margin and ROI Both Matter
Profit Margin tells you how much of every dollar of sales you keep. A healthy FBA margin is usually between 20% and 30%. ROI (Return on Investment) tells you how efficiently your capital is working. If you spend $1,000 on inventory and make $1,000 in profit, your ROI is 100%, which is considered excellent for physical products.
Tips for Increasing FBA Profits
To increase your bottom line, consider optimizing your packaging to reduce dimensions, which can drop your FBA fulfillment tier and lower fees. Additionally, focus on improving your organic ranking to reduce your dependency on expensive PPC advertising.