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 ensure your business remains sustainable, you must calculate your "Net Profit" after all Amazon-related costs and COGS (Cost of Goods Sold).
Key Metrics Explained
Referral Fee: This is essentially a commission Amazon takes for every item sold on their platform. For most categories, this is 15%.
FBA Fulfillment Fee: This covers the cost of picking, packing, and shipping your product to the customer. It is determined by the size and weight of your product.
ROI (Return on Investment): This tells you how much money you made relative to the cost of the inventory. An ROI of 100% means you doubled your money.
Profit Margin: This is the percentage of the selling price that is actual profit. It's a key indicator of how efficiently you are running your business.
Example Calculation
Imagine you are selling a yoga mat for $40.00. Your manufacturing cost is $10.00 and shipping it to an Amazon warehouse costs $1.00 per unit. Amazon takes a 15% referral fee ($6.00) and charges a $7.50 fulfillment fee. If you spend $3.00 per unit on PPC ads, your total costs are $27.50. Your net profit would be $12.50 per unit, resulting in a 31.25% profit margin and a 125% ROI on inventory spend.
How to Improve Your FBA Margins
To increase your bottom line, focus on three levers: Negotiating lower manufacturing costs with suppliers, optimizing your packaging to move into a smaller FBA size tier (lowering fulfillment fees), and improving your PPC efficiency to lower your ACOS (Advertising Cost of Sales).
function calculateFBAProfit() {
var price = parseFloat(document.getElementById('fba_selling_price').value) || 0;
var cost = parseFloat(document.getElementById('fba_product_cost').value) || 0;
var shipping = parseFloat(document.getElementById('fba_shipping_to_amazon').value) || 0;
var referralPercent = parseFloat(document.getElementById('fba_referral_fee').value) || 0;
var fulfillment = parseFloat(document.getElementById('fba_fulfillment_fee').value) || 0;
var ppc = parseFloat(document.getElementById('fba_ppc_spend').value) || 0;
if (price 0) ? (netProfit / cost) * 100 : 0;
// Display Results
document.getElementById('fba_results_area').style.display = 'block';
document.getElementById('res_total_fees').innerText = '$' + totalAmazonFees.toFixed(2);
var profitEl = document.getElementById('res_net_profit');
profitEl.innerText = '$' + netProfit.toFixed(2);
profitEl.className = 'fba-result-value ' + (netProfit >= 0 ? 'profit-positive' : 'profit-negative');
document.getElementById('res_margin').innerText = margin.toFixed(2) + '%';
document.getElementById('res_roi').innerText = roi.toFixed(2) + '%';
// Smooth scroll to results on mobile
if(window.innerWidth < 600) {
document.getElementById('fba_results_area').scrollIntoView({ behavior: 'smooth' });
}
}