How do you calculate Amazon FBA profit?
Subtract everything one unit costs from its selling price: the product, shipping it to Amazon, Amazon's referral and fulfillment fees, storage and the small costs around it. What is left is your profit before ads.
Example: a product sells for $29.99. It costs $7 to make and $0.80 to ship to Amazon. Amazon keeps a $4.50 referral fee (15%), a $5.50 FBA fee and $0.15 of storage, and $0.50 goes to prep and packaging. Profit = 29.99 − 7 − 0.80 − 4.50 − 5.50 − 0.15 − 0.50 = $11.54 per unit.
Profit = price − product cost − shipping to Amazon − referral fee − FBA fee − storage − other costs
What fees does Amazon charge FBA sellers?
Three fees per unit, plus the selling plan:
- The referral fee, on every sale: a percentage of the total price or a minimum amount, whichever is greater. It depends on the category: 15% in most of them, with a $0.30 minimum in most.
- The FBA fulfillment fee, for picking, packing and shipping the order. It depends on the product's size and weight; Amazon's Revenue Calculator gives the exact figure for your product.
- The monthly storage fee, for the space your inventory takes in Amazon's warehouses. Spread it over the units you sell to get a cost per unit.
- The selling plan: $0.99 per item sold on the Individual plan, or $39.99 a month on the Professional plan. A monthly fee is a fixed cost, so it is paid from the profit, not counted per unit.
Margin and ROI: what is the difference?
The margin compares the profit with the price: $11.54 on a $29.99 sale is a 38.48% margin. It tells you how much of each sale you keep.
The ROI (return on investment) compares the profit with what the unit cost you before Amazon sold it: $11.54 on $7.80 of product and shipping is a 148% ROI. It tells you how hard your money works, and matters most when cash is tight.
Where advertising fits: break-even ACOS and TACoS
Your margin before ads is also your break-even ACOS: at a 38.48% margin, an ad sale stops making money once its ACOS goes above 38.48%.
Across the whole business, ads take your TACoS (ad spend ÷ all sales) out of every sale. With a TACoS of 10%, the $29.99 unit leaves $8.54 instead of $11.54: a net margin of 28.48%.
Costs sellers often forget
The ones that turn a profitable product into a break-even one:
- Freight and duties to your own warehouse, which belong in the product cost.
- Shipping to Amazon and any prep or labelling service.
- Returns, and the units that come back unsellable.
- Storage in slow months, when the same fee is spread over fewer sales.
- Advertising, which is usually the largest cost after the product itself.