Demand forecasting and planning to skyrocket your online business

seasonally adjusted forecast

By the end of this article, you’ll know how to implement demand forecasting that works for your business. Make more sales and profit without going out of stock or sitting on too much inventory.

Demand forecasting isn’t hard. It’s a lot of common sense and understanding your business.

In this in-depth demand forecasting guide, you learn:

  • How demand forecasting works
  • How to interpret results from a demand forecasting analysis
  • Real-life scenarios that apply to your Amazon or e-commerce business
  • The best demand forecasting models for an e-commerce business
  • Suitable metrics to use in a demand forecasting analysis

If you want the formulas and methods right away, jump to the start of the practical section with this link.

Why does demand forecasting matter?

If you are reading this, it’s safe to assume that you’ve run a business (or worked in one) long enough to understand the issue of going out of stock or sitting on too much inventory.

Demand forecasting and planning to skyrocket your online business 1

These are the two issues that every business wants to avoid.

  1. Going out of stock (especially best sellers or seasonal best sellers)
  2. Sitting on too much inventory

Ordering inventory and estimating demand based on an “empty shelf” isn’t going to improve your sales or cash flow. Using old data and then projecting it will sell the same as before without thinking about the seasonality and current trends, which could mean you over purchase and tie up your cash on slow-moving inventory.

Demand forecasting is:

The trend and demand for online shopping is only growing. 69% of Americans have shopped online. COVID19 is pushing this number higher as online shopping becomes more vital for people to get what they need.

In 2020 alone, millions of buyers flocked to Amazon to get their goods during the pandemic. The surge in sales left many FBA sellers out of stock and missing out on huge sales and profits. Competitors took over the sales while you missed out.

If your business generates sales in the 5 or 6 figures and you are serious about getting into the 7-8 figure range, there is no excuse not to use demand forecasting and better demand planning.

If big sellers and companies rely on these planning strategies and calculations so much, why aren’t you?

Real demand forecasting scenarios

I’m going to revisit the 2 points frequently on this topic.

  1. Going out of stock
  2. Sitting on too much inventory

Going out of stock is one of the worst things to happen. It kills your momentum. If for this one reason alone, forecasting your sales and inventory is pivotal.

Because it is so easy to open an online business, competition is cut-throat. If you’ve spent time and energy to build your sales and then find yourself out of stock, it drains all the momentum you’ve built.

Getting more product in stock can take 30-90 days depending on where you manufacturer and by that time, potential customers could have moved on and bought from your competitor.

Went out of stock on Amazon

Here’s a real example that happens all the time.

Demand forecasting and planning to skyrocket your online business 2

We went out of stock for one of our best selling items on Amazon. We had more inventory on the way, but we didn’t factor into our forecast any potential spikes from summer sales.

Leading up to our boost in sales, we invested a lot of time and money into:

  • PPC
  • advertising on other channels
  • creating sales funnels
  • launches

This isn’t a few hundred dollars I’m talking about.

By the time we got the product back in stock, we had been out of stock for a month.

Rather than picking up where we left off, once inventory hit Amazon again, we had to:

  • increase PPC bids
  • restart ad campaigns with new ideas
  • paid for launches again

After 2-3 months, we finally got traction to where it was before the product went out of stock.

During that 1 month of stock out and the 2-3 months of building sales up again, we lost a considerable amount of sales and profit to competitors who scooped up all the work we had done.

If you have best sellers on Amazon, do whatever it takes to keep it in stock. Better yet, improve your demand planning so that it doesn’t happen.

But it’s not just inventory when it comes to forecasting. Other factors include:

  1. pricing – cheaper sells quicker
  2. consumer trends – fads won’t sell
  3. inventory lead times
  4. seasonality and historical sales

Sitting on too much inventory

Here’s the reverse of the going out of stock.

Too much inventory.

Demand forecasting and planning to skyrocket your online business 3

  • Drains cash flow
  • Eats up fees
  • Takes up space
  • Wastes mental space as you figure out what to do with it

For Amazon Sellers (FBA and FBM) or other e-commerce sellers, planning and knowing your demand will put you ahead of the competition.

If you sell summer swimwear, it is seasonal and you don’t want too much supply after the summer period.

One of our products was in the grilling niche and the problem was that we received our product near the end of summer.

Ouch.

Not only did we mistime inventory, we completely missed out on all sales and ended up with too much inventory. This product sat in our warehouse for months without doing anything until we got creative and re-marketed it for a different industry.

But what if we didn’t have a warehouse to pivot quickly? What if we sent a whole container of this product straight to Amazon fulfillment centers?

Double, triple, ouch.

Imagine, no sales, inventory fees adding up, long term storage fees approaching.

What a nightmare.

If you operate in multiple countries and platforms, it’s so important to track and forecast demand accurately because you lose a lot of control.

We ended up disposing of thousands of inventory in the UK because we weren’t able to sell enough and the fees were costing more than the product itself.

Tore the band-aid off and got out of UK and EU.

Inventory forecasting spreadsheet

You can use Google Sheets or basic Excel to create your own inventory management system. There is a free inventory spreadsheet template in the link.

inventory stock spreadsheet tracking

You can see from the screenshot how many days of inventory is left at Amazon, and how many units you should ship based on the average number of units sold over the last 30 days.

inventory ship to amazon fba
inventory ship to Amazon FBA

By using a formula like the following

QTY TO SHIP = AV30DAYUNITSSOLD X 1.5 - TOTALAVAILABLE

you can keep your inventory in check and you won’t go out of stock because you know how many units need to be sent in to maintain the inventory level threshold to meet your demand.

By understanding the sales demands and sending in the right amount to Amazon, you improve your cash flow by not overbuying and storing.

Get your free inventory template to use as an inventory replenishment tool to help you project the demand.

Economic Order Quantity method

Another basic formula to help with knowing how much inventory to plan and order is called the Economic Order Quantity formula. This works best if your costs are stable.

The EOQ is a company’s optimal order quantity that minimizes its total costs related to ordering, receiving, and holding inventory.

The EOQ formula is best applied in situations where demand, ordering, and holding costs remain constant over time.

Let’s assume the following:

  • A cosmetics store sells 200,000 units of lipstick per year.
  • Each unit costs $1
  • Holding (storage) cost per unit is $1.80 per year ($0.15 per month)

The formula is:

EOQ = √(2DS/H)

where:

D=Demand in units (annual basis)

S=Unit cost (per purchase order)

H=Holding costs (per unit, per year)

EOQ = √[(2 x 200000 x 1) / 1.8] = 471.4

The ideal order size for this business is 471 units of lipstick to minimize costs but meet customer demand.

But only 471 units when this business sells 200,000 units a year? That’s the downside with simplistic formulas such as this.

Seasonality adjusted demand forecasting calculator

This is a demand planning and forecasting calculator that our PRO business spreadsheets offer to FBA sellers.

If sales were always a straight line, you’d never need to run any demand forecasting calculations.

But in reality, sales more likely represents the purple line.

The orange line is a straight line forecasting method that will either leave you out of stock or with too much inventory.

The blue line is the data you need when running a forecasting analysis.

seasonally adjusted forecast
Purple = sales. Blue = seasonally adjusted. Orange = straight line.

The exact calculations are far too complex for this article, but here’s the big idea of how it works.

  • Get at least 12 months (24 months is better) of past sales data with the number of units sold per month
  • Get this number for each SKU. Sold per month over the past 12 to 24 months.
  • The moving average is then calculated.
  • A seasonal index is calculated for each month.
  • A seasonal average is calculated.
  • This number is then deseasonalized and a trend is projected.

If that’s too complex, then trust me when I say it’s easier to get the spreadsheet calculator for yourself and not have to worry about the details. It will cost you far more time and money to create your own calculator and won’t work anywhere near as accurately or better than our ready made solution.

Seasonal sales and inventory forecast calculator
Seasonal sales and inventory forecast calculator

​Data required to create a practical demand forecasting analysis

If you are really keen on making your own, a good demand forecasting calculator needs to monitor business KPIs (Key Performance Indicators) as well as subjective factors.

Business KPIs

  • sales per SKU
  • sales per month
  • inventory on hand
  • inventory days remaining
  • pricing strategy
  • lead times

Subjective factors

  • seasonality planning
  • new product launch management
  • production planning
  • consumer trends

All these points add to demand forecasting in one way or another, but I’ve always found the best results by focusing on fewer pieces of hard data such as sales per SKU, units sold per month, inventory numbers, pricing and lead times.

The subjective factors can always be completely off and that will throw your numbers out the window. It is better to focus on the data that you have.

Let’s say that you have a new T-Shirt coming out in a couple of months and expect huge results and responses from the product launch.

The launch comes and goes and it was a flop. Now you are sitting on 100,000 units that are not moving.

Or what if you came up with the idea of having wheels at the bottom of shoes for kids to roll around.

You create it and launch it and no one buys it – because the Heely’s fad is dead.

Where to get data from seller central?

To get your sales data, go into seller central, and REPORTS > BUSINESS REPORTS.

Demand forecasting and planning to skyrocket your online business 4

Keep adjusting the time periods by month and then download the data.

This will be very time intensive unless you have a sales software that you’ve been using, or use Gorilla ROI to load this type of seller central data immediately into Google Sheets like below.

monthly amazon sales stats gorilla salescount

For inventory data, do the same thing by exporting the data from your seller central account.

  • Go to REPORTS > FULFILLMENT REPORTS
  • Download the Amazon Fulfilled Inventory Reports.
  • Adjust the dates as needed to get monthly data.

With this data, you can use it to create projections and forecast or plug it into free forecast spreadsheet templates from the internet.

Here’s ours you can use.

Basic demand sales forecasting template

This is a free Google Sheets version of a sales demand forecasting spreadsheet.

You need your sales data by month to enter into the spreadsheet.

demand forecasting
demand forecasting spreadsheet

Step 1: Enter the product name so you know what you are analyzing.

Step 2: Enter the units sold per month

Step 3: Enter the unit price as it can change month to month

The spreadsheet will show you which month makes the biggest volume of sales for you to plan your inventory.

demand forecasting month sales

Repeat for all the SKUs you need to analyze. Remember this type of forecasting is done per SKU. Not by total sales.

When you are ready, upgrade to our automatic forecasting calculator which will make all this work effortless and more accurate.

Reorder point formula

I touched on this with the earlier example of the lipstick example. It’s good to know how many units to order, but when should you reorder?

Basic Reorder Point = Average Daily Sales x Lead Time + Safety Stock

This requires a good understanding of your supply chain as lead times will play a major role.

First, you must have safety stock which is a buffer of extra inventory to prevent stock-outs. If you only order exactly what you think you need, without any safety stock, you will run out of stock if any sales spike occurs.

A very basic safety stock calculation is to get an extra X number of days of inventory.

If Loreal sold 100 units of lipstick a day and wanted to keep 14 days of extra safety stock, that would be 100 x 14 = 1400 units extra when reordering.

Reorder point example

Let’s say I’m selling high end Office Chairs.

  • daily sales over 3 months = 26
  • manufacturer lead-time = 120 days
  • safety stock = 14 days = 14×26 = 364

Reorder Point = 26 x 120 + (14 x 26) = 3,484 units

When my inventory reaches 3484 units, I must reorder so as not to go out of stock.

This basic version works whether you sell on Amazon on in brick and mortar sales.

Thoughts on other forecast demand methods

There are plenty of other methods.

Before you came to this page, you’ve probably gone through sites mentioning the following:

These qualitative methods can be used, but if you’re an Amazon seller or small to medium business, it is useless.

Sorry if that ruffles a few academic feathers, but I’ll say it again. These are useless in the real world for small to medium businesses.

Unless you have gobs of time and thousands of dollars to waste, gather this type of data for forecasting is pointless.

Stick to quantitative forecasting where you can use data to:

  • understand what products customers are buying from you
  • see which products are gaining momentum
  • create trends and projections based on past sales data
  • identify slow-moving products
  • understand current demand vs previous months or periods

You can’t get any of this insight from asking strangers who have never bought from you or answers from random surveys and polls.

Other factors that play a role in demand planning

Up till now, I’ve made the assumption that everything remains the same such as your costs, pricing, economy, politics etc.

But life’s never like that right?

Consider the following that will impact your demand.

Pricing

Your pricing formula affects the buyer’s decision to make a purchase.

You’ll obviously sell more if the product is a highly desired item and the price is cheap.

If you plan to run heavy promotions and sales, then your demand will be higher. You can account for this by adding a bigger buffer to your reordering quantity calculations.

If the calculation tells you to order 5000 units with everything stable, then go for 6000 units if you want to run a strong ad campaign.

Just make sure to use the Amazon fee calculator to nail down the best pricing. What’s the point of doing business if you don’t know what your break-even point is.

Knowing details upfront like – how much is the expected profit you are going to make from the lower price vs the higher price, how quickly you expect to sell through, and how quickly you can reorder is important.

Most successful sellers on Amazon also use the price elasticity of demand to set their pricing policies.

The price elasticity of demand calculates how receptive the target market gets towards demanding your products when you adjust the price.

A lot of times on Amazon, or in huge demand markets, the market is willing to pay a higher price.

Take disposable masks for example.

The regular price used to be about 10-20c per mask. With the surge in demand, the price per mask is now easily 50c to $1 and there are still availability issues.

If you are the brand owner and the only one selling an in-demand product, pricing will be less of a factor because shoppers cannot price shop your product.

Competition/ substitute availability

Every e-commerce merchant needs to get along with the fact that competition is infinite and grows each day.

Buyers review other options before deciding to purchase your product.

And if you’re already selling on Amazon, chances are, there are possibly hundreds of substitute or knock off products in your niche.

If your product and brand are already established, then it’s easy to judge the demand because it will likely be stable.

But if you are trying to enter a fierce and competitive industry, the demand for your new product will be considerably lower than an established seller or product.

Using the Amazon Fee Calculator to maximize profits

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 5

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 6

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.

Break-Even calculator and formula for Amazon online sellers

break even analysis

By the end of this article, you will

  • understand how to use the break-even calculator
  • know the formulas to make this break even analysis
  • learn how to extend it to your own analysis
  • know how to interpret the numbers and break even point
  • make the right decision to break even on your products

This is a spreadsheet template that you can create on your own and can be applied to any sales channel. Not just limited to Amazon

This break even calculator spreadsheet is available as part of the PRO Amazon Business Spreadsheet Package.

What is the break-even point?

The simplest definition of breaking even, is to make enough profit to cover all expenses.

But this definition isn’t helpful for Amazon or online sellers who are trying to figure out whether a product is worth adding to their portfolio.

It’s like telling a first time driver to put one foot on the accelerator and press down to drive.

Completely useless in real life.

That’s the problem with many break-even calculators and analysis because it doesn’t clearly define or break down the details for you and it is too generic.

I’ll share all the details with you and more. If you make it through the entire article, you’ll be able to nail it when analyzing your product and calculating the break even point.

Why a break-even analysis is vital

I’m going to use Amazon as the example sales channel. The concept and calculations are the same for ebay, Walmart, Etsy, Craigslist etc.

You’ve done all the work and know what product you are going to sell.

  • Finding a niche
  • Finding a supplier
  • Negotiating with the supplier
  • Received samples
  • Tested the samples
  • Made some custom changes to the product
  • Designed the packaging

Now you are ready to order, but before you go any further, it’s imperative that you’ve performed your break-even analysis.

If you think it will cost $1000 to get the product to your warehouse/home/business, it doesn’t mean you only have to sell $1000 to break even.

This is how newbies lose money. I wasted $70k because I didn’t know how to do a break even calculation properly. I underestimated everything.

Every detail that adds to the landed cost of the product must be identified. Your original estimate of $1000 could mean you need $10,000 in sales to break even.

Don’t allow yourself to be surprised. Follow the formulas and examples below.

How to calculate the break-even point of a product

The standard method of calculation is to use a fixed cost, variable cost per unit, sales price per unit and quantity sold.

I don’t like this because it is mainly for service based businesses.

Standard break-even formula method

E.g. you run a dentistry. The fixed cost per month is $10,000. Dentists are paid $50 and hour, clients are charged $100. What’s the break even revenue?

Break-even Sales = Fixed Cost / [1 - (cost ÷ sales price)]

10000 / [1 – (50/100)] = $20,000

The dentistry needs to make $20,000 in sales each month to break even.

But how does this apply if you are trying to figure out whether a PRODUCT is going to break even or not?

That’s where our version of the Break-even calculator comes into play for Amazon and online sellers.

Breakeven formula for Amazon and online sellers

I keep it simple and to the point.

The minimum break-even point is:

Sales = COGS + Fixed & Variable Costs

You get back what you spend. You don’t lose any money, you don’t lose any money.

Let’s say you are importing Tennis balls from China.

The basic theory and formula to break even is this:

SELLING PRICE - TOTAL COGS = GROSS PROFIT

Break-Even Point is when: GROSS PROFIT = TOTAL COGS

Profit is when: GROSS PROFIT > TOTAL COGS

HUGE Losses occur when: GROSS PROFIT < TOTAL COGS

If you can’t break even on your gross profits, you will bleed money on your operating and net profit.

  • Tennis balls = $1.00
  • Total COGS per unit = $8.72 (after all taxes, tariffs, fees, commissions, shipping)
  • Selling price = $18.00
  • Gross profit = $9.28

Since the gross profit is greater than the total cost per unit, you will profit. Break-even is when the gross profit is equal to the total COGS.

We’ll get into deeper examples and in-depth calculations, but the theory to understand first is that, if your gross profit is less than the total cost per unit, you will never break even with your order quantity.

Using the same example, let’s change the selling price to $15 because you “think” you have plenty of margin since the tennis balls “only” cost $1.

  • Tennis balls = $1.00
  • Total COGS per unit = $8.72 (after all taxes, tariffs, fees, commissions, shipping)
  • Your selling price = $15.00
  •  Your gross profit = $6.80
  • Quantity ordered = 1000

The total COGS is $8.72 x 1000 = $8720

Gross profit if you sell 1000 units = $6800

In this scenario, gross profit is less than the total COGS. You lost money.

If the quantity is 5000, see what happens.

  • Total COGS is $8.72 x 5000 = $43,600
  • Gross profit if you sell 5000 units = $34,000

You just spent $43,600 to make $34,000.

The more you sell, the more you lose. Hence the reason why it’s vital that you know your numbers.

How to enter fixed and variables costs to the formula

Think of fixed costs as the expense required to run your business.

Regardless of whether you sell anything, you have to pay for the things like:

  • lease
  • electricity
  • waste disposal
  • insurance
  • maintenance
  • equipment
  • payroll
  • bookkeeping
  • and so on

These are your fixed costs. It mostly stays the same.

But entering the total sum like $1500 or $7000 is not the best practice.

Why?

If you already have 9 products and you are looking at your 10th product, the 10th product is not supposed to cover all your business expenses. The costs should be spread out and shared across your entire portfolio of 10 products.

You do this by entering your operating costs as a percentage.

OPERATING COSTS = Total Operating Expenses ÷ Total Revenue 

If you use cash basis accounting, it could be 20-30%.

If you use accrual basis accounting, it could be 15-25%.

This percentage is then applied to the selling price and used as the fixed+variable cost.

Example of how to calculate variable fixed costs break even product
Example of how to calculate variable fixed costs break even point of product

E.g. If Tennis balls selling price is set to $10 with operating costs at 15%, then $1.50 will be used up for fixed and variable costs.

By using a percentage, you can keep it consistent across all your products, and also easily adjust it based on how your business is doing.

If your business is booming and margins are increasing, you can decrease the percentage a little. Or if expenses are going up, increase the percentage.

Much better than going over your statements and summing up expenses all the time.

When you factor in fixed and variables costs like referral fees, return rates, operating costs, you are calculating your operating income. For most businesses, the operating income is very close to the net income.

(Operating income is NOT net income. You must pay taxes on operating income. Net income is the profit after taxes. Don’t confuse the two and end up with a nasty surprise.)

PRICE - COGS - Fixed & Variable Costs = OPERATING PROFIT

Best Break-Even Point is when: OP PROFIT = TOTAL COGS

Best Profit is when: OP PROFIT > TOTAL COGS

Losses occur when: OP PROFIT < TOTAL COGS

All break-even point formulas of a product

Break-even sales = COGS + Fixed & Variable Costs

Break-even units = Break-even Sales ÷ Selling price

Break-even months = Break-even units ÷ Est units sold per month

Gross Profit per unit = Selling price - COGS per unit

Gross Profit Margin = Gross Profit per unit ÷ Selling Price x 100

Operating Profit per unit = Selling price - COGS per unit - fixed & variable costs per unit

Operating Profit Margin = Operating profit per unit ÷ Selling price x 100

Break-even spreadsheet calculator

break-even calculator spreadsheet with formulas template amazon ebay ecommerce

Click the image to see the published full size and preview of the break-even calculator.

This calculator is split up into 3 sections.

  1. Your COGS
  2. Your Variable & Fixed Costs as a %
  3. Break-even analysis and chart
break even cogs detailed breakdown
break even cogs detailed breakdown

Under the COGS section, add all break downs associated with your COGS. The more detailed the better. It’s a spreadsheet so you can edit the labels.

The sum of the COGS is shown at the bottom.

variable fixed costs break even
variable fixed costs break even

The variable and fixed costs section is the same as explained above. Enter it as a percentage of your total sales.

It will then calculate the dollar amount based on your selling price. Variable costs are always changing based on your selling price as it is based on a percentage.

break even analysis chart
break even analysis and chart for a product

Based on your COGS and costs, the break even analysis shows the margins based on the selling price, and the right chart shows how many units you’ll need to sell to break even, the total sales you need to break even and how many months it will take to break even.

Here’s a video explanation of the break-even spreadsheet.

Break even calculation definitions

Break-Even UnitsNumber of units you must sell to make back your total investment from the profits.
Break-Even SalesTotal amount in sales you must sell to make back your total investment from the profits.
Break-Even MonthsTotal number of months it will take to make back the investment from the profits.
Cost of Goods SoldCost to make the product
Inspection costCost associated with any factory or product inspections
Duties&TariffsAny additional import duties and tariffs that must be accounted for in the cost
Freight costCost of shipment
Extra labor costIf extra labor is required from your warehouse or from a packing service
FBA FeesPer unit FBA fees for pick and pack
Extra shipping to AmazonExtra costs to ship the item to Amazon
Amazon Referral FeeThe % fee for your Amazon product category
Return rateThe return rate for your account. Find it in your business sales report in seller central.
Operating costsinclude if you want to calculate break even after accounting for returns.

Delete if you want to calculate break even based on gross profit only.

includes business and overhead expenses like:- Advertising, payroll, utilities, rent, legal, fees and interest, marketing, taxes, travel, rent/lease, maintenance, licenses, supplies, software, hardware

Total Cost Per UnitThe total sum of the landed cost and extra variable costs
Profit Margin Per UnitProfit in dollars
Profit Margin RatioProfit as a percentage. If operating costs are excluded, it’s closer to a gross profit margin. If operating costs are included, it is Operating Profit.

Other break-even calculators

Standard break-even calculators

  • https://www.nase.org/business-help/calculators/business/breakeven-analysis-calculator
  • https://www.nase.org/business-help/calculators/business/breakeven-analysis-calculator

Break even calculators for online sellers and Amazon sellers

April COVID19 update at $598K

April COVID19 update at $598K 7

Here’s the current Gorilla ROI Amazon sales progress. To see the interactive version, go to our income reports page.

Note: These monthly updates are for educational purposes.


If March was crazy, April was just insane. We hit record highs.

Many times we were definitely overwhelmed. Even had a week where everyone had to work in the warehouse to fulfill orders and ship inventory.

All hands on deck.

April COVID19 update at $598K 8

But we got through it.

Some points I’ll be talking about.

  • Inventory issues… in a different form
  • FBM processes
  • Basic shipping supplies
  • Finding help

April highlights

  • Ended the month with $598k in sales
  • 221% growth from the same month last year
  • 84% growth from last month
  • Conversion rate across the account jumped to 29.9%. Normally between 20-21% before COVID.
  • Bestseller took off and got the best seller badge in the category for a 4 days
  • FBM sales continued to increase (which is also bad because products are switching to FBA)
  • ACoS dropped to 12.4%. Normally 25-30% before COVID.

Lowlights for April

  • One of our main suppliers refusing to give us enough product
  • Majority of products still showing delayed FBA delivery dates
  • Dealing with FBM refunds and customer service issues
  • 7 out of our top 10 best sellers still classified as non-essential
  • Increase in expenses to keep up and trying to stay ahead of the sales
  • Not enough manpower
  • Had to turn off PPC for best seller to reduce velocity

Inventory/supply chain capacity

A couple of months back, I mentioned that we purchased a year’s worth of inventory in order to get ahead of the virus and to make sure we didn’t go out of stock while the country was in lock down mode.

The thinking behind this was believing the global supply chain would be broken. It didn’t break as much as I thought, but boy, am I glad we ordered a year’s worth of product – because we are nearly out after only 3 months. Another order is on the way.

However, one supplier we rely heavily on in the US, is operating at max capacity and cannot meet customer orders.

This has resulted in the manufacturer allocating inventory to their biggest accounts, leaving smaller accounts (us included) fighting for rations.

We are now at the mercy of our supplier who is reducing our quantities, delaying shipments and limiting how many pallets they will ship us per order.

If there’s ever a way to p*ss off customers, this is at the top. We are moving forward with replacing them.

April COVID19 update at $598K 9

We could easily be doing 40-60% higher sales. But we are forced to shut down all PPC related to this product line and let SKUs “glide” out of stock. Better to slow it down and try to keep things steady as opposed to going out of stock quickly and giving up a high ranking spot to a competitor.

For the first time, this isn’t the typical out of stock inventory issue or inventory projections that we could blame ourselves. Our numbers and projection models have been working brilliantly the past couple of months.

We know what to order, when to order, how much to order, even with the days where products are spiking. All thanks to the flexibility of our custom spreadsheets and calculations. Being able to update numbers on the fly and calculate new scenarios is keeping our operations ahead.

amazon warehouse dashboard
Our Amazon warehouse dashboard

Now that we’ve had a taste of the velocity needed to run at $600k/mo ($7.2M annual run rate), I’m confident our current operations can keep up if sales continue at this rate.

Sales will slow down for sure. May looks to be slowing down as summer rolls in and people get out more.

FBM is a pain in the ***

FBA has problems for sure. But dealing with FBM is a massive pain in the butt.

We’ve got our FBM to where we can support 200 orders per day, but I’d be more than happy to offload it back to Amazon.

  • Picking and packing orders
  • higher shipping costs
  • more supplies
  • extra tables
  • extra space needed
  • more shelves
  • and pretty much double all the basic stuff

Trying to be quick and accurate is not easy. Goes to show how easy FBA makes life on sellers even with all the mistakes they make.

The increase in customer service and extended return period is piling up. We have a new shelf to hold all the returned items we need to check and request reimbursement for and the mountain keeps growing.

April COVID19 update at $598K 10

I’ve seen some companies take down their phone numbers from their website citing “high demand”. It’s tempting to do the same and make support only available via email.

Basic shipping supplies

A heads up.

Basic shipping supplies are going out fast. Everyone is shipping online and this is causing a shortage of affordable poly mailers, barcode labels and other basic shipping supplies.

Took about 10-14 days to get USPS flat rate padded envelopes. Every USPS we visited didn’t have them or wouldn’t give us any.

The most popular poly mailer sizes continue to go out of stock and barcode labels for the size we need jumped in price by 30-50%.

Like everything else this year, I highly recommend to stock up on the basic essentials. No point in having product if you are blocked because of something as basic as not having the proper size bag.

Back to basics during these times.

Getting help off Craigslist

I’ve had some extreme good fortune hiring off Craigslist. A key employee came in through Craigslist and worked his way up from the warehouse to being my right hand in operations.

But lately, (in the US) specifically, it’s been a train wreck. For all the news you hear about people wanting to work and looking for jobs, 8 out of 10 people end up no showing.

Looks like my main competitor, is not other businesses, but the unemployment office giving people an extra $600 per week.

Here’s a system that’s working though.

I’ve turned the job post into a “schedule your own working day” type appointment booking. People see the ad, if they want to work, they use the calendar link and schedule themselves.

If you find yourself in a similar positions, here’s how I did it.

  1. Using a free account on calendly.com, I’ve hooked it up to a shared company Google calendar and created an event.
  2. I first set the limit of people per day to 5, but raised it to 10 when no one showed up after all slots were full. (Depending on your area, you could have 20 people book themselves and have nobody show up.)
  3. Put up the ad on Craigslist with the link to the calendar included in the ad.
  4. Tell them to schedule themselves and not to contact or reply to the ad.
  5. Automatically gets added to the calendar with text and email reminders.

April COVID19 update at $598K 11

Using this shotgun method, went from 2 people showing up in the week, to 9 people and managed to ship out a boat load of product.

Wholesale and our online store

No wholesale orders.

Online store sales is immaterial compared to Amazon, but traffic is up, SEO is improving and sales are coming in consistently.

Hard to tell whether it’s due to our content marketing finally getting recognized by Google after the major updates, or whether it’s because the retailers that sell our products are all closed.

Walmart is also another surprise. Sales have increased 2-3x what it used to do. I think it also has to do with extra products we’ve added to the catalog. Looks like there is more potential on Walmart for one of our product lines.

New updates and tutorials

We’ve published some awesome tutorials and guides for Amazon sellers.

Free Amazon FBA spreadsheets for all

If you have messy sheets and need something refined to help run your numbers, get the free Amazon spreadsheets.

pro spreadsheets fba pricing

You can download it immediately without having to sign up for anything.

Just copy straight to your account.

If you want to get updated data straight into your own Google sheets, you can use Gorilla ROI. It makes work so easy when you don’t have to manually update data or log into accounts constantly and wasting time.

How to track whether you are winning or losing the buy box

Another function has been released: BUYBOXWINNER() will quickly and easily show you whether you are winning the buy box of your listing.

As always, we update documentation consistently and in multiple locations to make it easy to find.

  1. Official page of all the functions we support
  2. Google Docs version
  3. Website documentation for easier navigation
  4. On any Google sheet > menu > addons > Gorilla > 2.See Supported Functions and examples

How to track whether you are winning or losing the buy box 12

Quickly see if you are winning or losing the buy box

Another basic requirement is to know when another seller has taken over the buy box or a hijacker has taken over.

aamzon buy box

We have other buy box functions such as:

  • BuyBoxOffers – Get the list of sellers competing for the buy box
  • BuyBoxPrice – Get the current winning buy box price

BuyBoxWinner() is a simple version that will display whether you are the “winner” or “loser” of the buy box.

This is one example of how you can use it.

amazon buy box winner status
Amazon buy box winner status per SKU or ASIN

How to use BUYBOXWINNER

How to track whether you are winning or losing the buy box 13

GORILLA_BUYBOXWINNER(sku, [marketplace])

Easiest example:

=GORILLA_BUYBOXWINNER(A1:A100)

This simple example will display “winner” or “loser” for each of the SKUs or ASINs listed from A1 to A100 for the US marketplace.

You can enter the marketplace like “US” or if you leave it out, it will use your default marketplace.

=GORILLA_BUYBOXWINNER("B00YD545CC", "US")

=GORILLA_BUYBOXWINNER("B00YD545CC")

Detect hijackers with BuyBoxWinner

The most obvious benefit with knowing whether you are winning or losing the buy box is if you sell your own custom product and a hijacker takes over your listing.

Add some color formatting like the screenshot above and you can quickly detect changes.

To see other functions and examples, visit the functions page for all the features we support.

ASINSTATUS shows if your ASIN is active or inactive

A new function has been released: ASINSTATUS() will quickly and easily show you whether your listing is currently active or inactive.

As always, we update documentation consistently and in multiple locations to make it easy to find.

  1. Official page of all the functions we support
  2. Google Docs version
  3. Website documentation for easier navigation
  4. On any Google sheet > menu > addons > Gorilla > 2.See Supported Functions and examples

ASINSTATUS shows if your ASIN is active or inactive 14

Find out if your ASIN(s) or SKU(s) are active or inactive

In seller central, you can easily filter and see which ASIN or SKU are active or inactive.

ASIN status from <a href=

But what happens if one of your ASINs suddenly get deactivated and become inactive?

Amazon does not always send you a notification or email unless it was due to a Negative Customer Experience (NCX) or performance shut down.

If your item goes out of stock or a keyword or review triggers a red flag and your ASIN becomes suppressed, it is up to you to find out and address it.

This is where GORILLA_ASINSTATUS() will help.

How to use ASINSTATUS

Find the status of your ASIN. Returns "active" or "inactive".
Find the status of your ASIN. Returns “active” or “inactive”.

Easiest example:

=GORILLA_ASINSTATUS("US", A1:A100)

This simple example will display “active” or “inactive” for each of the SKUs or ASINs listed from A1 to A100 for the US marketplace.

If no marketplace is entered, it will use your default marketplace.

=GORILLA_ASINSTATUS( , A1:A100)

asin status active inactive results

Best use case to stay on top of your listings

The best and easiest way is to add it to a column where you list your entire product list.

We maintain a separate product list with SKU, ASIN, FNSKU, Title, Image and the required basics that you find inside the manage inventory section of Seller Central.

This ASINSTATUS() function can now go right alongside it.

Here’s an example.

Basic product tracking template idea to stay on top of your listings and know when something is active or inactive.
Basic product tracking template idea to stay on top of your listings and know when something is active or inactive.

A very easy, but convenient and powerful way to stay on top of your listings and operations directly within Google Sheets.

To see other functions and examples, visit the functions page for all the features we support.

March COVID19 monthly update at $325K

march 2020 fba sales income chart and goals

Here’s the current Gorilla ROI Amazon sales progress. To see the interactive version, go to this page.

Note: These monthly updates are for educational purposes.


What a crazy March.

  • Stay at home orders
  • safety precautions
  • limited maneuverability
  • inbound products blocked
  • delay in shipments to customers
  • surge in sales
  • and more

A shout out to~

I feel very much for the sellers who are unable to restock, sell and operate. As small business owners or operators, there aren’t many people who understand what we go through.

A shout out to you guys. We are in this together.

March highlights

  • Finished the month at $325k in sales
  • 45% growth from the same month last year
  • 36.5% growth from last month
  • 2020 Q1 was up 36% from 2019 Q1
  • Conversion rate across the account jumped to 24.4%. Normally between 20-21%.
  • Bestseller was not blocked from inbound or delayed shipping
  • Amazon finally switched the algorithm to favor FBM
  • Drastically cut Amazon PPC

Lowlights for March

  • COVID making each day interesting and scrambling to keep ahead of changes
  • 7 out of our top 10 best sellers were classified non-essential
  • Our #2 and #3 best seller were in the wrong category so it doesn’t look like it will be released anytime soon
  • Increase in expenses for all the changes

How inventory planning has helped us thrive during this Coronavirus scramble

First, we are definitely lucky.

Our main category is consumer cleaning goods, so we are considered part of the “essential” products.

Still, a lot of our products were blocked from inbound but the saving grace is that our #1 best seller is whitelisted and that has picked up the slack to offset the other products and more.

If your products are whitelisted and shipping at Prime speeds, I published a detailed article on what we can do to be proactive during this time.

We are putting new product development on the backburner while we focus on making sure our products do not go out of stock.

Inventory planning is critical at this point and we’ve also benefited from the majority of our competitors going out of stock, while we are maintaining a 20-40day supply of inventory.

This has been possible because of our GORILLA_INVENTORY() formula. Sure this is a plug, and it’s not for everyone, but for our needs and many of our users, they are ahead of the competition who are relying on stale data from Amazon or getting behind by doing it manually.

If you can stay in stock 1 extra day thanks to GorillaROI, the tool has paid for itself.

We have been closely tracking daily and 3-day sales. Then comparing it against the last 7 days and 30 days to see how big the spike is compared to historical trends.

We’ve also updated our seasonality weighting to assign greater emphasis to the last 7 days. Both of these factors help us project inventory better based on current sales data. Not based on last 30 days data.

If we were using our old calculations, or software that couldn’t adjust to a tweaking of time periods and weightings, we were out of stock on many occasions.

amazon inventory days left table highlighted showing the actual days

The virus exposes your business weakness

The important things are never urgent.
The urgent things are usually never important.

This quote is one I try to base my life and business on.

Unfortunately, we all need something like this pandemic to show us what’s urgent (and not important) vs what’s important.

On the business side of things, examples of the urgent stuff are:

  • getting shipments out on time
  • calculating numbers
  • writing reports
  • phone calls and meetings
  • new product development

The important stuff is pushed down the to-do list until it’s too late.

  • regular review of financial health
  • creating a rainy day fund
  • diversifying channels and business industries
  • working on operational preparedness
  • ways to improve employee retention and morale

I’ve been using some downtime to beef up the above points and other important parts to our business.

Our weaknesses exposed

For us, this virus has exposed the following weaknesses:

  • lack of manpower to handle an increase in sales
  • focused too much on FBA (struggling to keep up with FBM)
  • lack of automated equipment
  • inefficient and bad layouts of workstations

With this clearer view of where we need to improve, we are in the process of looking into and implementing:

  • automation in our warehouse for packing
  • have 2 separate workstations dedicated to FBM and our direct orders
  • duplicate equipment so that printers and laptops don’t become an unnecessary bottleneck
  • find ways to sell more product off of FBA

Amazon changed algorithms to promote FBM for delayed products

I don’t know when everything will return to normal.

Prepare for the worst. Hope for the best.

The article I recently published on COVID operational strategies is still very relevant. Be sure to check it out if you haven’t.

We’ve switched over our products that are delayed and blocked inbound, to FBM.

Currently, we are fulfilling 120-200 orders a day.

Our set up is best for about 50 orders a day. The current 3-4x demand is putting everything into overdrive and straining our operations.

It’s a shame that we don’t have massive margins like other industries.

There isn’t enough buffer to use a 3PL for kitting and shipping.

  • Shipping to the 3PL
  • Per unit fee for kitting
  • Warehousing fee
  • Shipping cost

The extra layers of cost will eat up the margins. We are looking at long term solutions like auto bagging machines to improve ROI.

Prepare for congestions

Talking about continued changes, congestion at the port is heavy. Not because business is booming, but because the number of cargo ships in operation is down and the people working at the ports are down.

Imagine how worse it will be if businesses start to come back on.

The backlog is going to be massive.

If you can, order inventory early, have it ready early, ship it to Amazon earlier.

When all sellers are back in full force, Amazon’s inbound department will be slammed with shipments.

Slashed PPC spend for delayed products

The big win for us is being able to slash our PPC spend. No reason to advertise and fight for top spots when you know your product won’t ship for a month.

Customers will click your ad and then bounce, or buy and then cancel.

It’s a lose-lose-lose.

  1. You lose money on the click
  2. Your listing metrics go down because of the lower conversion
  3. Your keyword rank goes down because of the lower conversion

PPC spend the past few weeks has dropped 40-50% which all goes towards profitability.

Booyah.

It’s also a great opportunity to “restart” our PPC campaigns and start fresh.

Wholesale and our online store

Zero.

No retail customer is buying anything wholesale at the moment.

Online sales have increased slightly.

Walmart has doubled, but still a fraction of Amazon.

New updates and tutorials

We’ve published some awesome tutorials and guides for Amazon sellers.

Books read and recommend

Recommending this, especially during this time.

Profit First

March COVID19 monthly update at $325K 15

It’s a very easy book. You probably don’t have to buy it.

It’s as easy as:

  1. Create multiple bank accounts (checking and savings) for “profit” and “savings”
  2. Profit = excess cash that you can draw or distribute at the end of the year
  3. Savings = taxes and required expenses
  4. Transfer money to each account every 2 weeks
  5. Transfer based on your current situation and cash flow

Looking at it in hindsight, this sub $20 purchase potentially saved our business. I started this at the end of 2018 and transferring cash to a different account gives it a “physical” separation where you know you can’t touch it and the business has to run with what it has.

Making work visible

March COVID19 monthly update at $325K 16

Another simple book. Mostly related to Kanban process like Trello.

It’s great for teams and eliminates asking or questioning what people are working on.

We utilize Trello heavily and have it integrated into our systems.

Quick and easy read with some refreshing insights.

Free FBA spreadsheets for all

If you have messy sheets and need something refined to help run your numbers, get the free Amazon spreadsheets.

pro spreadsheets fba pricing

You can download it immediately without having to sign up for anything.

Just copy straight to your account.

If you want to get updated data straight into your own Google sheets, you can use Gorilla ROI. It makes work so easy when you don’t have to manually update data or log into accounts constantly and wasting time.

Profit loss formula to build your P&L statement

profit loss formula

The new ProfitLoss() formula function is available for you to use.

Here’s the page for a deeper understanding and guide on how to use this Profit Loss formula.

As always, we update documentation consistently and in multiple locations to make it easy to find.

  1. Official page of all the functions we support
  2. Google Docs version
  3. Website documentation for easier navigation
  4. On any Google sheet > menu > addons > Gorilla > 2.See Supported Functions and examples

Profit loss formula to build your P&L statement 17

Spreadsheet formula to get profit loss data

We’ve added another free template for you to create a profit and loss statement spreadsheet, but it’s not as automated as I wanted it to be.

Thus the GORILLA_PROFITLOSS() is born.

gorilla profit loss amazon function

Easiest example:

=GORILLA_PROFITLOSS("2020")

This simple example will automatically load a consolidated table like the following:

amazon fba profit loss statement table results
amazon fba profit loss statement table results

Rather than looking up all the individual transactions and compiling it yourself, it is done automatically so that you can pull up this data by simply changing the time period you want to look up.

=GORILLA_PROFITLOSS("THIS YEAR")

=GORILLA_PROFITLOSS("2020-01")

=GORILLA_PROFITLOSS("2019Q4")

=GORILLA_PROFITLOSS("THIS MONTH") and more

You can see how easy your life becomes when you can verify your profit and loss on the fly.

Try doing this manually – It is a nightmare.

More Profit Loss Examples

You can also build a profit and loss statement per SKU.

=GORILLA_PROFITLOSS("THIS YEAR", "US", "SKUNAME721")

Profit loss formula to build your P&L statement 18

When you define a SKU, the profit loss table will not include Amazon Reimbursements, Income-Other and Amazon lending.

This is because certain transactions are NOT applicable to a sku. The transaction is matched to your seller account, not SKU.

Think about storage costs. If you look at your transaction data, storage costs are always associated with your seller account.

Amazon does not charge you per SKU. It is a single dollar amount each month.

You can also see the details of what is rolled up into each of the categories.

  • Sales
  • Discounts/Promotions
  • Amazon Reimbursements
  • Shipping Income
  • Income-Other
  • Amazon Lending
  • COGS
  • Amazon Fees
  • AdvertisingTax

To look up a category, use the expanded formula like:

=GORILLA_PROFITLOSS("LAST 30 DAYS", "FR", ,"AMAZON FEES", "YES")

By entering “AMAZON FEES” and “YES” at the end, it will list all the Amazon seller fees one by one and how much was transacted for each item.

Amazon fees breakdown profit loss
Amazon fees breakdown profit loss
=GORILLA_PROFITLOSS("THIS YEAR", "US",  ,"COGS", "YES")

Same thing here where I can drill down on what is rolled up into “COGS” by looking it up in the formula.

Profit loss formula to build your P&L statement 19

There you have it.

To see other functions and examples, visit the functions page for all the features we support.

Load Amazon FBA returns and refunds data into sheets

You can now load the total number of FBA returns and the values of the returns by SKU or across your entire account.

This is on the heels of the newly released Amazon salestax function. If you have data importing requests, leave a comment below and we’ll add it to our consideration board.

As always, we update documentation consistently and in multiple locations to make it easy to find.

  1. Official page of all the functions we support
  2. Google Docs version
  3. Website version for easier navigation
  4. On any Google sheet > menu > addons > Gorilla > 2.See Supported Functions and examples

Load Amazon FBA returns and refunds data into sheets 20

Our latest FBA refunds function

We have created two separate functions for refunds. One is to get the qty of FBA returns over any period for any sku.

The other is to get the total value of the refunds.

See how to use it below and the dedicated functions and documentation pages and links to see more examples and usage.

GORILLA_REFUNDSCOUNT()

Easiest example:

=GORILLA_REFUNDSCOUNT("THIS YEAR")

More examples on the RefundsCount() explanation page.

gorilla refunds count function

You can see how easy it is to use. The only requirement is to enter the time period.

The list of time periods is extensive and you can also use custom dates.

=GORILLA_REFUNDSCOUNT("CUSTOM", "FR", A2:A34, "2020-01-01", "2020-01-15")

Enter “custom” in the period attribute. Then fill up the other attributes following the onscreen formula popup.

In the above formula, it’s grabbing the refunded count for:

  • custom time period from 2020 Jan 1 to Jan 15
  • France market
  • for all SKUs entered in cells A2 to A34

Here’s another example of how this looks on Google sheets.

refunds count results gorilla roi

Using ranges can load all the data in one shot.

Getting the returns like this using RefundsCount() is the same concept as SalesCount(). Think of the two functions are sisters. They work the same, just different results.

GORILLA_REFUNDSTOTAL()

Easiest example:

=GORILLA_REFUNDSTOTAL("THIS YEAR")

More examples on the RefundsTotal() explanation page.

gorilla refunds total

This is the same concept as RefundsCount. The only difference is that this pulls in the dollar value of all returns.

If you have 100 refunds for a $10 product, it will load $1,000 instead of 100.

All the same time periods are supported as well as custom time periods.

Here it is in action.

amazon fba returns refunds total results
Amazon fba returns refunds total results

To see other functions and examples, visit the functions page for all the features we support.

New: Amazon SalesTax to get sales and tax data by state and city

The new SalesTax() function is available for you to start using immediately.

Here’s the page for a deeper understanding and guide to Amazon FBA sales tax.

As always, we update documentation consistently and in multiple locations to make it easy to find.

  1. Official page of all the functions we support
  2. Google Docs version
  3. Website version for easier navigation
  4. On any Google sheet > menu > addons > Gorilla > 2.See Supported Functions and examples

New: Amazon SalesTax to get sales and tax data by state and city 21

GORILLA_SALESTAX()

Warning: This function is NOT for accounting.
Do NOT use this for your taxes.

Best uses of this function:

  • help you prepare how much you will owe
  • know which states bring in the most sales
  • know which cities bring in the most sales

Easiest example:

=GORILLA_SALESTAX("LAST MONTH")

More examples on the formula functions page under SALESTAX().

gorilla sales tax functionIf you need to get an idea of how much you owe in taxes, what is being collected by Amazon and what you owe, this function will help you gain a good idea of the amount.

Again, I can’t stress enough that this is not for accounting purposes. The numbers will be off slightly (+/- 3-7%) because we import transactions daily. If a customer decides to return a product on the 23rd day, Gorilla does not redownload the transactions to reconcile for this refund.

With millions of transactions being processed, it is impossible to redownload everyone’s transactional history.

This is why for taxes, you must export the file directly from Amazon to generate the latest reconciled data.

Display Amazon SalesTax by city

The default results will group the sales by city.

It shows the sales of each City as well as the tax amount collected by Amazon or owed by you.

You can also see which city brings in the most sales for you.

This is useful if you want to target ads on Facebook or Google. Targetting towards the city with the most buyers is a good idea to increase conversion and keep ad spend low.

gorilla salestax formula google sheets
Displaying the salestax formula grouped by city

Display SalesTax by state

To group the sales and taxes by state, use the format as in the example below.

=GORILLA_SALESTAX("LAST MONTH", "US", "STATE")

Here’s what it looks like.

Gorilla FBA sales tax formula by state
Gorilla FBA sales tax formula by state

If you are registered in multiple states, this will help you organize your cash to figure out how much you can expect to owe.

You can also see where the majority of your buyers are.

Helping with local sales tax remittance

If you file local taxes monthly, you have to enter the cities where you had sales. Trying to do it manually is the worst thing possible.

I literally had to spend hours sorting the reports, combining the data and grouping them by city and state to provide the numbers to the state.

With this function, you can eliminate the majority of the grunt work.

The numbers are not 100% accurate, but they are close enough for you to figure out how much you will owe.