Amazon FBA Profit Calculator
Calculate your net profit, margins, and ROI for Amazon FBA sales.
Understanding Amazon FBA Profit Margins
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 accurately calculate your net profit after all Amazon-specific costs.
Key Factors in FBA Calculations
- 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: A per-unit fee that covers picking, packing, shipping, and customer service. This depends on the weight and dimensions of your product.
- Cost of Goods Sold (COGS): The total cost to manufacture or purchase one unit of your product.
- Storage Fees: Monthly fees based on the volume (cubic feet) your inventory occupies in Amazon's warehouses. These fees increase significantly during Q4 (October–December).
A Realistic Example
Let's say you sell a yoga mat for $40.00. Your manufacturing cost is $10.00, and shipping it to the Amazon warehouse costs $1.00 per unit. Amazon takes a 15% referral fee ($6.00) and charges an FBA fulfillment fee of $7.00. If you spend $3.00 per unit on PPC advertising, your total expenses are $27.00. Your net profit would be $13.00, resulting in a 32.5% profit margin and a 130% ROI on your initial product cost.
Tips for Increasing FBA Profitability
To maximize your margins, consider optimizing your packaging to fit into a smaller size tier, which reduces fulfillment fees. Additionally, monitor your "Inventory Performance Index" (IPI) to avoid costly long-term storage fees. High-volume sellers often find that even a $0.50 reduction in shipping costs can result in thousands of dollars in extra profit per year.