Selling on Amazon through the Fulfillment by Amazon (FBA) program involves various fees that can quickly eat into your margins. To stay profitable, you must account for more than just the cost of your product.
Key Components of the FBA Calculation:
Referral Fees: This is Amazon's commission for selling on their platform, typically 15% for most categories.
Fulfillment Fees: This covers picking, packing, and shipping your product to the customer. It depends on the size and weight of your item.
COGS (Cost of Goods Sold): The total cost to manufacture or purchase one unit of your product.
Advertising (PPC): Most sellers spend money on Amazon Advertising to drive sales. This is calculated as an average cost per unit sold.
Example FBA Calculation
If you sell a yoga mat for $40.00:
Product Cost: $10.00
Referral Fee (15%): $6.00
Fulfillment Fee: $7.50
Shipping to Warehouse: $1.50
PPC Expense: $4.00
————————- Total Expenses: $29.00 Net Profit: $11.00 Profit Margin: 27.5%
function calculateFBAMetrics() {
var salePrice = parseFloat(document.getElementById('fba_sale_price').value) || 0;
var productCost = parseFloat(document.getElementById('fba_product_cost').value) || 0;
var shippingInbound = parseFloat(document.getElementById('fba_shipping_inbound').value) || 0;
var referralPct = parseFloat(document.getElementById('fba_referral_pct').value) || 0;
var fulfillmentFee = parseFloat(document.getElementById('fba_fulfillment_fee').value) || 0;
var ppcCost = parseFloat(document.getElementById('fba_ppc_cost').value) || 0;
var storageFee = parseFloat(document.getElementById('fba_storage_fee').value) || 0;
var miscCost = parseFloat(document.getElementById('fba_misc_cost').value) || 0;
// Logic for Amazon Fees
var referralAmount = (referralPct / 100) * salePrice;
var totalAmazonFees = referralAmount + fulfillmentFee + storageFee;
// Total Costs
var totalExpenses = productCost + shippingInbound + totalAmazonFees + ppcCost + miscCost;
// Net Profit
var netProfit = salePrice – totalExpenses;
// Profit Margin
var margin = salePrice > 0 ? (netProfit / salePrice) * 100 : 0;
// ROI (Return on Investment – Profit / (Cost of product + shipping to Amazon))
var investment = productCost + shippingInbound;
var roi = investment > 0 ? (netProfit / investment) * 100 : 0;
// Update UI
document.getElementById('res_net_profit').innerHTML = '$' + netProfit.toFixed(2);
document.getElementById('res_margin').innerHTML = margin.toFixed(2) + '%';
document.getElementById('res_amazon_fees').innerHTML = '$' + totalAmazonFees.toFixed(2);
document.getElementById('res_roi').innerHTML = roi.toFixed(2) + '%';
// Color coordination for negative profits
if (netProfit < 0) {
document.getElementById('res_net_profit').style.color = '#cc0000';
document.getElementById('res_margin').style.color = '#cc0000';
} else {
document.getElementById('res_net_profit').style.color = '#007600';
document.getElementById('res_margin').style.color = '#007600';
}
document.getElementById('fba-results-box').style.display = 'block';
}