Amazon FBA Profit Calculator
How to Calculate Amazon FBA Profits
Selling on Amazon via Fulfillment by Amazon (FBA) is a powerful way to scale an e-commerce business, but the fee structure can be complex. To accurately determine your "take-home" pay, you must look beyond the selling price and account for multiple layers of operational costs.
Key Metrics Explained
- 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: This covers the cost of picking, packing, and shipping your product to the customer. It varies based on the item's weight and dimensions.
- COGS (Cost of Goods Sold): The total amount you paid the manufacturer to produce the item.
- ROI (Return on Investment): This shows how much money you make relative to what you spent on inventory. An ROI of 100% means you doubled your money.
Realistic Example
Imagine you sell a Yoga Mat for $40.00. Your manufacturing cost is $10.00 and shipping it to an Amazon warehouse costs $2.00. Amazon takes a 15% referral fee ($6.00) and charges a fulfillment fee of $7.50 for a large standard item. If you spend $4.00 per unit on Amazon PPC advertising, your total costs are $29.50. Your net profit is $10.50 per unit, resulting in a 26.25% margin and a 105% ROI on your initial inventory spend.
Strategies to Increase FBA Margins
If your margins are too slim (generally below 15%), consider optimizing your packaging to move into a smaller size tier for fulfillment fees, or negotiate lower manufacturing costs with your supplier. Many successful sellers aim for the "Rule of Three": 1/3 for COGS, 1/3 for Amazon fees, and 1/3 for profit/marketing.