Selling on Amazon 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 calculate your net profit after all Amazon-specific deductions.
Key Components of the FBA Calculation
Referral Fee: This is essentially Amazon's commission for selling on their platform. For most categories, this is 15% of the total selling price.
FBA Fulfillment Fee: This covers the cost of picking, packing, shipping, and providing customer service for your products. It is based on the weight and dimensions of the product.
Landed Cost: This includes the manufacturing cost of the item plus the cost to ship it from your supplier to an Amazon fulfillment center.
PPC/Marketing Cost: Most Amazon sellers use Sponsored Products to drive traffic. It is vital to attribute these costs on a per-unit basis to see your true margin.
FBA Profit Example
Let's say you sell a yoga mat for $40.00. Your costs are as follows:
Product Cost: $10.00
Shipping to Amazon: $2.00
Amazon Referral Fee (15%): $6.00
FBA Fee: $7.50
Ad Spend per unit: $4.50
Total Expenses: $30.00 | Net Profit: $10.00 | Profit Margin: 25% | ROI: 83.3% (calculated on $12.00 initial investment).
Tips for Improving Your Margins
If your margins are below 20%, consider negotiating with suppliers for bulk discounts, optimizing your product packaging to reduce the FBA size tier, or refining your PPC campaigns to lower your ACOS (Advertising Cost of Sale).
function calculateFBAProfit() {
var price = parseFloat(document.getElementById('sellingPrice').value);
var cost = parseFloat(document.getElementById('productCost').value);
var shipping = parseFloat(document.getElementById('shippingToAmazon').value);
var fbaFee = parseFloat(document.getElementById('fbaFee').value);
var referralRate = parseFloat(document.getElementById('referralFeeRate').value);
var ppc = parseFloat(document.getElementById('ppcCost').value);
if (isNaN(price) || isNaN(cost) || isNaN(shipping) || isNaN(fbaFee) || isNaN(referralRate) || isNaN(ppc)) {
alert("Please enter valid numbers in all fields.");
return;
}
// Calculations
var referralFeeAmount = price * (referralRate / 100);
var totalAmazonFees = referralFeeAmount + fbaFee;
var landedCost = cost + shipping;
var totalExpenses = totalAmazonFees + landedCost + ppc;
var netProfit = price – totalExpenses;
var margin = (netProfit / price) * 100;
var roi = (netProfit / landedCost) * 100;
// Display Results
document.getElementById('results-area').style.display = 'block';
document.getElementById('netProfitResult').innerText = '$' + netProfit.toFixed(2);
document.getElementById('marginResult').innerText = margin.toFixed(1) + '%';
document.getElementById('roiResult').innerText = roi.toFixed(1) + '%';
document.getElementById('totalFeesLabel').innerText = '$' + totalAmazonFees.toFixed(2);
document.getElementById('landedCostLabel').innerText = '$' + landedCost.toFixed(2);
// Color coding for profit/loss
if (netProfit < 0) {
document.getElementById('netProfitResult').style.color = '#d32f2f';
} else {
document.getElementById('netProfitResult').style.color = '#2e7d32';
}
}