Using the Amazon Fee Calculator to maximize profits

written by GORILLA ROI

Looking to get started with Amazon?

The Amazon fee calculator is an essential tool for sellers to figure out the profit earned per unit sold.

By the end of this guide, you’ll know how to:

  • Calculate the variable and fixed costs using the FBA fee calculator
  • Determine the real profits using different elements
  • Cut down the overhead costs
  • Identify factors that have an effect on the cost of goods sold(COGS)

This way, you can figure out whether using FBA is profitable for your product and business.

Why should you listen to us?

I have lost so much money with bad quality, shady manufacturers and wasted just as much money on bad agencies and advertising. We’ve taken the school of hard knocks.

Today, we sell over 7 figures with a gross profit of 30-40% blended average. After taxes, our net profit is 10-15% profit.

We are in the trenches running a successful Amazon business. You can read our income reports where we provide a lot of transparency on the wins and fails of our business.

Unlike gurus and promotional youtubers, we do this as our bread and butter and share what it is truly like.

No Ferraries. No Lamborghini’s.

Just regular folks working hard at creating products, navigating the ever changing landscape of FBA and making profit.

The Amazon FBA profit calculator: Quick overview

Here’s some cold hard truth.

Newbie FBA sellers lose money because they don’t use the right numbers to calculate a product’s profit potential.

Every niche is potentially profitable if you know your numbers.

That’s why it’s important to factor in a breakdown of all your costs that include, product COGS, freight, shipping, fulfillment costs and Amazon seller fees.

I get into how the FBA  program compares to Fulfillment By Merchant in terms of the overall fees needed to fuel your e-commerce business.

Understanding the Amazon fee calculator

Using the Amazon price calculator, it’s easy to get the associated expenses of existing products selling on Amazon.

The goal of the calculator that Amazon provides is to help you decide whether FBA or FBM is cheaper. It’s not to calculate the deep, detailed profit analysis that you may be looking for.

Their focus is to make you see that it’s likely just as cheap to use FBA rather than fulfill products on your own.

I have a calculator for that which is offered in our PRO Amazon Business Spreadsheet package.

There are other risks associated with letting Amazon handle the shipments such as lost inventory, high customer returns, more margin required to offset the fees, increase in PPC costs. But that is a different topic.

PRO TIP: Amazon's goal is to get you selling on their platform.

Amazon FBA revenue and cost calculator for each marketplace

Each marketplace has a different fee due to logistics and currency. $1 USD does not equal 1 EURO.

Each marketplace has their own adjusted calculator. Europe is mostly all going to be the same. New market additions include United Arab Emirates, Netherlands, Singapore and Australia.

  1. US FBA Calculator
  2. Canada FBA Calculator
  3. Mexico FBA Calculator
  4. UK FBA Calculator
  5. France FBA Calculator
  6. India FBA Calculator
  7. Italy FBA Calculator
  8. Germany FBA Calculator
  9. Spain FBA Calculator
  10. Netherlands FBA calculator
  11. UAE FBA calculator
  12. Australia FBA calculator

If you sell on multiple marketplaces, use the correct calculator to adjust your pricing accordingly.

PRO TIP: Selling in another country's marketplace is always more expensive than your home country cost. Adjust pricing to match the increase in cost.

How does the Amazon Fee Calculator work?

There are lots of Amazon fulfillment fees that get confusing – especially for new sellers.

Using the FBA fee calculator, you can identify the following expenses for any products when you load the ASIN into Amazon’s calculator.

  1. Removal order fees
  2. Returns processing fees
  3. Inventory storage fees
  4. Long-term storage fees
  5. Pick and pack fees (now all included as Fulfillment Fees)
  6. Inbound shipping (using Amazon’s partner carrier to send inventory to warehouses)
  7. Referral fees (AKA closing fees)

Open up the correct marketplace calculator for where you are selling and enter the product title, UPC, EAN, ISBN or ASIN.

If you are currently not selling, use a competitor product to get the fees and details.

amazon fee calculator search bar upc asin sku

In this example, I entered “bluetooth earphones” and some recommendations show up.

fba revenue calculator results product title

Select a product to use in the calculator and product details show up.

Using the Amazon Fee Calculator to maximize profits 1

You can see the ASIN, package dimensions and the weight.

Amazon FBA fees is based on dimensions and weight. That’s how they calculate their fees.

The main calculator is now activated and looks like this.

fulfillment fees- Amazon Calculator

 

This is where you enter your costs for when you ship via your own online store and another one for when you ship using FBA.

Clicking on “cost of seller fulfillment” will open up another small box where you can enter numbers of more detail like how much you currently pay for:

  • monthly storage
  • labor
  • packaging material
  • shipping to customer
  • customer service

The dashboard uses simple form fields to give you a complete report of all the costs which include the selling fees, FBA fees, and estimated net profit.

Let’s see how it compares with the following inputs.

amazon profit margin fbm vs fba
Amazon profit margin FBM vs FBA

Remember Amazon’s goal. It is for you to sell using FBA.

But if your product pricing is good, FBM or selling on your own site is always more profitable if you have good traffic.

FBA is very powerful because of the traffic with very little effort.

fba revenue calculator showing sales flow through net profit
FEE calculator showing sales flow through net profit
PRO TIP: "Net profit" on the calculator is not the actual profit margin. It does not consider other operational expenses such as advertising, returns, insurance, etc.

Unlike typical calculators, this FBA-optimized tool will help you see your numbers on a cost per unit basis. This is the best way to calculate profit rather than using absolute sums.

It’s why our Break-even calculator works much better because it’s focused on a per unit basis.

You don’t need real numbers. You can use estimates and get worthwhile results that give a rough blueprint of the total fulfillment cost per unit sold.

What are FBA selling fees?

The main FBA fees you’ll be dealing with.

  1. Removal order fees
  2. Returns processing fees
  3. Inventory storage fees
  4. Long-term storage fees
  5. Pick and pack fees (now all included as Fulfillment Fees)
  6. Inbound shipping (using Amazon’s partner carrier to send inventory to warehouses)
  7. Referral fees (AKA closing fees)

We already have a monster guide on all the Amazon seller fees and what they are. There’s also a free spreadsheet in that article.

But let’s tie it in with the Amazon fee calculator.

FBA fees are the associated expenses that the seller incurs when the buyer makes a purchase on Amazon.

These fees apply to all sellers, regardless of whether you use FBA or FBM to deliver orders to the customer.

The FBA fees vary depending on the kind of service subscription a seller prefers to work with. Amazon merchants can choose the Professional or Individual plan.

For sellers who fulfill 40 units or less, the Individual account works just fine. While it doesn’t come with any monthly commitments, you’ll pay about $0.99 for any item you fulfill using the FBA program.

If you upgrade to the Professional plan, the monthly subscription fee is $40.

PRO TIP: Don't waste your energy nickel and diming. $40 is not a lot to get started. Think of it as a cost of doing business and to unlock all the features. You will never do 7 figures in sales by trying to save a few cents here and there.

In contrast to the Individual plan, your sales volume isn’t limited, and even better, you don’t pay any fees for each item a customer adds to cart.

If you don’t believe you can sell 40 units a month, it is not even worth doing Amazon FBA as you will pay all sorts of other fees and it is more expensive overall. Better to test your product and idea on eBay.

Both Professional and Individual sellers also need to factor in the referral fees, which range from 6% to 15% and fluctuate based on the item category.

Unlike other expenses, referral fees are like commission paid to Amazon only after the sale of a product is made. Amazon gets a cut for you to use their platform.

To figure out the actual profit, remember to check any “hidden costs”. We’ll look at all these fees in a moment. This is easier to figure out if you use the Amazon fee calculator.

The FBA cost you must understand

Other than the Seller account fees, the FBA profit calculator lets you take into account all the associated fulfillment expenses.

Fulfillment fees depend on whether you want to use Fulfillment by Amazon or handle the logistics yourself.

If you have any stale inventory sitting at Amazon’s warehouse,  you will need to pay the inventory removal fee to get rid of the unsold stock. This costs anything between 50 to 60 cents per unit. You can dispose of it, but what Amazon does is sell it off in bulk at 1-10c per unit.

Here’s an example of someone who purchased supposedly “disposed” items at discount.

Such an expense may seem trivial but starts to eat up margin if you have to recall massive amounts of inventory.

FBA covers things like warehousing, shelving, packing, shipping, customer support. It makes it very easy to run and scale because all the components are offered by Amazon.

You can have the product shipped from China directly to Amazon so that you don’t even have to touch the product.

For returns processing, the FBA price calculator allows you to get the exact cost per unit, which starts at $2.50 to over $100, depending on the size and weight of the shipment.

It all comes down to reducing your FBA fees because the lower it is, the higher your margin.

This could be packing your product so that it is as thin as possible to get in the cheapest rate of $2.50.

Or if you sell a long item, see how you can reduce the length down. By being creative with how the product is packed, you can bring down your fees and fatten your margins tremendously.

Don’t forget about indirect and variable costs that affect profitability

There are indirect costs that pile up and flatten your profit margin curve. Things like insurance, cost to ship product samples, bookkeeping, warehouse rent, and so forth.

Let’s say your gross profit is 40%, but if your costs are so high that the cost of doing business equates to 30%, you end up with 10% net profit. Not so great.

This is why you need a finer breakdown expenses to track your profitability.

Some categories of expenses you should consider:

  • COGS: product cost, freight, shipping to amazon, software
  • Operating expenses: PPC advertising, rent, labor, auto, insurance
  • Misc: taxes, travel

To get more granular, this is where our Gorilla ROI break-even calculator comes in.

A better Amazon FBA profit calculator. Our break-even calculator.

break even analysis

This Amazon calculator is a spreadsheet template included in our Business PRO spreadsheet package.

Full instructional guide on how to use this break-even analysis is here.

A break-even point is simply the point at which your sales equals the total expenses of the product after including all fixed and variable costs.

All the expenses mentioned above can be broken down to a per unit basis.

  • COGS: product cost, freight, shipping to amazon, software
  • Operating expenses: PPC advertising, rent, labor, auto, insurance
  • Misc: taxes, travel

For an Amazon fee calculator to truly show you profitability, it must account for all these factors.

If you can sell more than your business expenses, it is profitable.

If not, you lose money for every unit sold.

Using this calculator, you can accurately divide the number of fixed costs( seller fees), with the revenue per unit minus the variable operating expenses(think shipping costs).

The major problem with free break-even calculators on the internet is that it does not go beyond the bare basics. It assumes the production costs are always constant.

This calculator is not only limited to Amazon sellers. It uses a flexible formula that fits merchants selling digital products and e-commerce retailers on other marketplaces such as Etsy, Walmart, or eBay. Just update the names of the expenses.

Gorilla ROI Accurate Product Pricing Calculator

Before trying to figure out what price you should sell a product, the best method is to understand what margin you want.

Costco and Walmart work with 1-2% net margin (after taxes and interest).

Other businesses have net margins as high as 15-20%.

For more volume, lower your margins. For more profitability, increase your margins.

PRO TIP: Use a benchmark margin for your business. Don't randomly assign margin requirements.

If your selling price does not cover the fixed and variable costs, don’t expect to rake in any profits.

Every Amazon seller needs to learn how to price products for profit and exponential growth.

With the product pricing calculator, you can crush your competitors by knowing what is the min and max price you should sell a product.

For example, our company runs on a target gross margin of 40% and 15% operating margins. We enter all of our fixed and variable costs and desired selling price.

The product pricing tool auto-generates a consolidated profit & loss statement which indicates if the target price is really profitable. The cool part is our sensitivity matrix which shows the change in profitability as the selling price decreases or increases.

product pricing revenue calculator

Based on my costs and inputs, it’s telling me that I need to sell between $23.94 and $26.60 to achieve my margin requirements.

If the price is too high, every seller and their mother will want a piece of the action. If I need to liquidate it, I can go down to $20 and still be profitable.

Strategies for FBA sellers to maximize profit margins

Know your costs

Identify all hidden costs. It’s as easy as going through your transaction reports and jotting down all the stuff Amazon takes from you. Then include it as a per unit cost. This way, you’ll be able maximize your ROI.

We take it as granular as the poly bags that is used for shipping. It’s $0.01-$0.025 only, but when shipping out 100k units, it starts to add on.

Where most people have trouble is calculating their operational expenses.

Instead of summing up the total lease, electricity, water, trash, internet etc etc. The best and easiest way is to open up last year’s P&L and look up the number for “total operating expenses”.

Then divide the number from total sales.

Total Sales ÷ Total Operating expenses = Operating Expense %

If you end up with something like 20%, it means that 20% of your sales goes towards operating expenses.

Easy.

Reduce returns

We track returns as a percentage and think of it like discounts. It’s the cost of doing business, but the more you can reduce it, the better.

On Amazon, we average 2.3% in returns, which you can see from your business reports.

tracking refund rates returns profit analysis

On our Amazon pricing calculator, the refund rate is taken off the total sales, much like a discount.

If our refund rate is 5% and the selling price is $100, we assume net sales of $95. Not $100.

Using the Amazon Fee Calculator to maximize profits 2

However, if you can’t anticipate and control returns, you will leak profit. This should be accounted for when you calculate your costs and added back into pricing.

Here are some simple ways to reduce return rates and maximize returns.

  1.  Use detailed and correct product descriptions. The item which you ship to the buyer must have specifications that match the description on the product page. You can also include more context on how to resolve a claim where the product is faulty.
  2. If you’re sourcing products from a supplier, negotiate a discount or partial refund anytime they ship a damaged product to your potential buyer.
  3. Make adjustments to your order handling if there is an increase in return requests, damaged goods or chargeback claims.
  4. Use high-resolution images to give the buyer the perfect idea of what features your product is made of. Clearly describe the current condition(new, used).
  5. Use short videos. Phones can create great product videos. Keep it simple.

Negotiate with your suppliers

This is a no brainer, but had to include it.

The better your pricing is, the better your margins.

But be careful. Many suppliers will agree to your lowered pricing without objection, because they lower the quality accordingly to make their own profit.

PRO TIP: always focus on win-win pricing. Don't bully suppliers as you will shoot yourself in the foot once you receive the product.

There are many areas where you can negotiate better rates or use creative negotiations. Ask for discounts at different quantities, meeting performance, after a certain time etc.

This applies to freight forwarders. Find a win-win relationship and your fees go down, profits go up.

While making negotiations, it’s more practical to show interest that you’re looking for a long-term business relationship. From this perspective, it would be much easier to secure a better deal from your supplier.

Final thoughts: is the Amazon FBA calculator worth using?

It’s free. So yes.

The best use of the Amazon fee calculator is to find the fees that a competitor is paying.

You then feed this info into our breakeven calculator or Accurate Product Pricing calculator to get the best details and analysis.

There’s a lot missing on Amazon’s calculator, but it’s a good start. The only problem is that you could end up with a false picture. Thinking it is more profitable than it really is.

Make the best use of the FBA profit calculator, together with the above-listed spreadsheet templates to streamline your margin projections and cut unnecessary costs that downsize the potential ROI.

What is Gorilla ROI?

Gorilla ROI automatically pulls Amazon data into Google sheets for you to make sense of the data without the inconvenience of manually downloading, sorting and updating spreadsheets.

Learn how you can centralize your data and use it to increase your ROI.

Leave a Reply

Your email address will not be published. Required fields are marked *

fourteen − four =