Selling on Amazon through the Fulfilled by Amazon (FBA) program offers massive reach, but the fee structure can be complex. To ensure your business is sustainable, you must accurately calculate your net margins after all Amazon-related expenses.
Understanding FBA Fee Components
Referral Fees: This is Amazon's commission for selling on their platform. For most categories, this is 15% of the total selling price.
Fulfillment Fees: These are flat fees per unit based on the dimensions and weight of your product. They cover picking, packing, and shipping to the customer.
Storage Fees: Amazon charges for the space your inventory occupies in their warehouses. This varies by month (higher in Q4).
COGS (Cost of Goods Sold): The total cost to manufacture or purchase the product from your supplier.
FBA Profit Calculation Example
Let's say you sell a yoga mat for $40.00. Your manufacturing cost is $10.00, and shipping to Amazon costs $2.00 per unit. Amazon takes a 15% referral fee ($6.00) and charges a fulfillment fee of $7.50. After adding $0.50 for storage:
Total Fees: $6.00 (Referral) + $7.50 (FBA) + $0.50 (Storage) = $14.00
Total Costs: $10.00 (COGS) + $2.00 (Shipping) + $14.00 (Fees) = $26.00 Net Profit: $14.00 Profit Margin: 35%
Tips to Increase Your FBA Margins
1. Optimize Packaging: Dropping just one size tier in Amazon's fulfillment categories can save you dollars per unit.
2. Bundle Products: Since the fulfillment fee is charged per shipment/unit, bundling items allows you to pay one fulfillment fee for multiple products.
3. Monitor Storage: Keep an eye on "Aged Inventory" to avoid long-term storage fees which can quickly erode your profits.
function calculateFBAProfit() {
var sellingPrice = parseFloat(document.getElementById("sellingPrice").value);
var productCost = parseFloat(document.getElementById("productCost").value);
var shippingToAmazon = parseFloat(document.getElementById("shippingToAmazon").value);
var referralFeeRate = parseFloat(document.getElementById("referralFeeRate").value);
var fulfillmentFee = parseFloat(document.getElementById("fulfillmentFee").value);
var miscFees = parseFloat(document.getElementById("miscFees").value);
// Validation
if (isNaN(sellingPrice) || isNaN(productCost)) {
alert("Please enter at least the Selling Price and Product Cost.");
return;
}
// Default values for optional inputs
if (isNaN(shippingToAmazon)) shippingToAmazon = 0;
if (isNaN(referralFeeRate)) referralFeeRate = 15;
if (isNaN(fulfillmentFee)) fulfillmentFee = 0;
if (isNaN(miscFees)) miscFees = 0;
// Logic
var referralFeeAmount = (referralFeeRate / 100) * sellingPrice;
var totalAmazonFees = referralFeeAmount + fulfillmentFee + miscFees;
var totalExpenses = productCost + shippingToAmazon + totalAmazonFees;
var netProfit = sellingPrice – totalExpenses;
var margin = (netProfit / sellingPrice) * 100;
var roi = (netProfit / (productCost + shippingToAmazon)) * 100;
// Display Results
document.getElementById("resTotalFees").innerHTML = "$" + totalAmazonFees.toFixed(2);
document.getElementById("resNetProfit").innerHTML = "$" + netProfit.toFixed(2);
document.getElementById("resMargin").innerHTML = margin.toFixed(2) + "%";
document.getElementById("resROI").innerHTML = roi.toFixed(2) + "%";
// Change color if negative
if (netProfit < 0) {
document.getElementById("resNetProfit").style.color = "#cc0000";
} else {
document.getElementById("resNetProfit").style.color = "#007600";
}
document.getElementById("results-area").style.display = "block";
}