How to Calculate Amazon FBA Profit - Complete Step-by-Step Guide
Calculating Amazon FBA profit accurately is essential for making informed business decisions. This comprehensive guide walks you through every step, formula, and consideration needed to determine your true profit margins.
Why Accurate Profit Calculation Matters
Many Amazon sellers lose money because they don't account for all fees and costs. Accurate profit calculation helps you:
- Make informed product sourcing decisions
- Avoid listing unprofitable products
- Set competitive yet profitable prices
- Plan for growth and scaling
- Identify areas to reduce costs
Use our free FBA profit calculator to automate these calculations, or follow the manual steps below.
Step 1: Calculate Gross Revenue
Formula
Gross Revenue = Selling Price × Quantity Sold
This is your total sales before any deductions.
Example
If you sell 100 units at $25 each:
Gross Revenue = $25 × 100 = $2,500
Step 2: Calculate Product Costs
Formula
Product Cost = Cost Per Unit × Quantity
Include manufacturing, sourcing, and any product-related expenses.
Example
If each unit costs $8 and you sell 100 units:
Product Cost = $8 × 100 = $800
Tip: Include all costs: manufacturing, quality control, customs, duties, and any product modifications.
Step 3: Calculate Amazon Referral Fees
Amazon charges a referral fee based on your product category. This is a percentage of your selling price.
Formula
Referral Fee = Gross Revenue × Referral Rate
Referral rates vary by category (typically 8-20%).
| Category | Referral Rate |
|---|---|
| Electronics | 8% |
| Home & Kitchen | 15% |
| Clothing & Fashion | 17% |
| Beauty & Personal Care | 15% |
Example
For Home & Kitchen (15% referral rate) with $2,500 gross revenue:
Referral Fee = $2,500 × 0.15 = $375
Step 4: Calculate FBA Fulfillment Fees
FBA fulfillment fees depend on your product's size and weight. Amazon uses size tiers to determine these fees.
Formula
FBA Fee = FBA Fee Per Unit × Quantity
Fees range from $3.22 (small standard) to $75+ (large oversize).
Example
For a small standard item ($3.22 per unit) with 100 units:
FBA Fee = $3.22 × 100 = $322
Tip: Optimize your product dimensions to fit into smaller size tiers and reduce fees.
Step 5: Calculate Storage Fees
Amazon charges monthly storage fees based on the volume your inventory occupies. Fees are higher during peak season (October-December).
Formula
Storage Fee = Cubic Feet × Rate × Months
Rates: $0.75/cubic foot (Jan-Sep) or $2.40/cubic foot (Oct-Dec).
Example
For 2 cubic feet stored for 3 months during standard season:
Storage Fee = 2 × $0.75 × 3 = $4.50
Warning: Storage fees triple during Q4. Plan inventory carefully to avoid excessive costs.
Step 6: Calculate Other Costs
Don't forget these additional costs that impact your profit:
Step 7: Calculate Total Costs
Formula
Total Costs = Product Cost + Referral Fee + FBA Fee + Storage Fee +
Shipping + Packaging + Returns + Advertising + Other Costs
Example Calculation
Step 8: Calculate Net Profit
Formula
Net Profit = Gross Revenue - Total Costs
Example
With $2,500 gross revenue and $2,302 total costs:
Net Profit = $2,500 - $2,302 = $198
Step 9: Calculate Profit Margin and ROI
Profit Margin
(Net Profit / Gross Revenue) × 100
Example: ($198 / $2,500) × 100 = 7.92%
ROI (Return on Investment)
(Net Profit / Total Costs) × 100
Example: ($198 / $2,302) × 100 = 8.6%
Common Calculation Mistakes
- Forgetting storage fees: Especially during peak season when fees triple
- Not accounting for returns: Return processing fees add up quickly
- Ignoring long-term storage: Items stored 365+ days incur additional fees
- Underestimating advertising: PPC costs can be 20-40% of revenue
- Using wrong category: Higher referral fees significantly impact profit
- Not including all shipping costs: Both to Amazon and customer returns
Use Our Free Calculator
Don't want to calculate manually? Use our free Amazon FBA Profit Calculator that automatically accounts for all fees, costs, and marketplace differences. Get accurate profit calculations in seconds.
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