Selling on Amazon via the Fulfillment by Amazon (FBA) program offers massive scale, but the fee structure can be complex. To ensure your business is sustainable, you must calculate your net profit after all Amazon-related expenses.
The Core Formula:
Net Profit = Sale Price – (Cost of Goods + Shipping to Amazon + Referral Fee + FBA Fulfillment Fee + Marketing Costs)
Understanding the Key Metrics
Referral Fee: This is essentially Amazon's commission for selling on their platform. For most categories, this is 15% of the total sale price.
FBA Fulfillment Fee: A flat fee charged per unit to pick, pack, and ship your product. This is determined by the size and weight of your item.
Landed Cost: The total cost to get your product manufactured and delivered to an Amazon warehouse.
ROI (Return on Investment): Calculated as (Net Profit / Total Investment) x 100. This tells you how much money you make for every dollar spent on inventory and shipping.
Example Calculation
Imagine you sell a Yoga Mat for $40.00. Your manufacturing cost is $10.00 and shipping to Amazon costs $2.00. Amazon takes a 15% referral fee ($6.00) and an FBA fee of $7.00. Your total expenses are $25.00, leaving you with a Net Profit of $15.00, a 37.5% margin, and a 125% ROI.
function calculateFBAProfit() {
var salePrice = parseFloat(document.getElementById("salePrice").value) || 0;
var unitCost = parseFloat(document.getElementById("unitCost").value) || 0;
var shippingToAmazon = parseFloat(document.getElementById("shippingToAmazon").value) || 0;
var referralFeePercent = parseFloat(document.getElementById("referralFee").value) || 0;
var fbaFee = parseFloat(document.getElementById("fbaFee").value) || 0;
var otherCosts = parseFloat(document.getElementById("otherCosts").value) || 0;
// Logic
var referralFeeAmount = salePrice * (referralFeePercent / 100);
var totalFees = referralFeeAmount + fbaFee;
var totalLandedCosts = unitCost + shippingToAmazon + otherCosts;
var totalExpenses = totalFees + totalLandedCosts;
var netProfit = salePrice – totalExpenses;
var margin = 0;
if (salePrice > 0) {
margin = (netProfit / salePrice) * 100;
}
var roi = 0;
if (totalLandedCosts > 0) {
roi = (netProfit / totalLandedCosts) * 100;
}
// Display
document.getElementById("fbaResults").style.display = "block";
document.getElementById("resRevenue").innerText = "$" + salePrice.toFixed(2);
document.getElementById("resFees").innerText = "$" + totalFees.toFixed(2);
document.getElementById("resLanded").innerText = "$" + totalLandedCosts.toFixed(2);
var profitElement = document.getElementById("resProfit");
profitElement.innerText = "$" + netProfit.toFixed(2);
if (netProfit >= 0) {
profitElement.className = "profit-positive";
} else {
profitElement.className = "profit-negative";
}
document.getElementById("resMargin").innerText = margin.toFixed(2) + "%";
document.getElementById("resROI").innerText = roi.toFixed(2) + "%";
}