Amazon FBA Profit Calculator
Understanding Your Amazon FBA Profit Margins
Selling on Amazon through the Fulfillment by Amazon (FBA) program is a powerful way to scale an e-commerce business, but the fee structure can be complex. To ensure your business is sustainable, you must calculate your "true" net profit after all overheads.
Key Metrics Explained
Referral Fee: This is Amazon's commission for selling on their platform. For most categories, this is 15%, though it can range from 8% to 45% depending on the niche.
Fulfillment Fee: This covers the picking, packing, and shipping of your orders. It is determined by the weight and dimensions of your product.
COGS (Cost of Goods Sold): This is the manufacturing cost of your product. To maintain a healthy business, aim for a COGS that is no more than 25-30% of your sale price.
Example Calculation
Imagine you sell a Yoga Mat for $40.00:
- Product Cost: $10.00
- Shipping to Amazon: $2.00
- Referral Fee (15%): $6.00
- FBA Fee: $7.50
- PPC Spend: $4.00
In this scenario, your total costs are $29.50, leaving you with a Net Profit of $10.50 per unit, a 26.25% margin, and an ROI of 87.5%.
Tips to Improve FBA Profitability
1. Optimize Packaging: Reducing the size or weight of your product packaging can move you into a lower FBA tier, saving dollars on every sale.
2. Monitor ACOS: Keep a close eye on your Advertising Cost of Sales. If your PPC spend per unit is higher than your profit margin, you are losing money on every "sold" click.
3. Bulk Shipping: Negotiate better freight rates by shipping larger quantities to Amazon's warehouses to reduce the per-unit shipping cost.