Selling on Amazon through the Fulfillment by Amazon (FBA) program offers incredible scale, but it comes with a complex web of fees. To run a sustainable e-commerce business, you must look beyond the "Top Line" revenue and focus on your "Bottom Line" net profit.
The Main Components of FBA Fees
Referral Fees: This is Amazon's commission for selling on their platform. For most categories, this is 15% of the total sales price.
Fulfillment Fees: These fees cover picking, packing, and shipping your product to the customer. They are determined by the weight and dimensions of your product.
Storage Fees: Amazon charges a monthly fee for holding your inventory in their warehouses. These rates increase significantly during the Q4 holiday season.
Cost of Goods Sold (COGS): This is what you pay the manufacturer for the product, including any packaging and inspection costs.
Example Calculation
Imagine you sell a yoga mat for $40.00. Your manufacturing cost is $10.00 and shipping to the Amazon warehouse is $2.00 per unit. Amazon takes a 15% referral fee ($6.00) and charges an FBA fee of $7.50. After accounting for $0.50 in storage, your total cost is $26.00. Your net profit is $14.00, resulting in a 35% profit margin and a 140% ROI on your inventory spend.
How to Improve Your FBA Profitability
If your margins are slim, consider these strategies:
Optimize Packaging: Reducing the size or weight of your box can drop you into a lower FBA fulfillment tier, saving dollars per unit.
Bundle Products: Selling two or more items together allows you to pay the FBA fee once while increasing the average order value.
Monitor Inventory Health: Avoid "Aged Inventory" surcharges by only sending in what you can sell within 60-90 days.
function calculateFBAProfit() {
var salePrice = parseFloat(document.getElementById('salePrice').value) || 0;
var unitCost = parseFloat(document.getElementById('unitCost').value) || 0;
var shippingToAmazon = parseFloat(document.getElementById('shippingToAmazon').value) || 0;
var referralFeeRate = parseFloat(document.getElementById('referralFeeRate').value) || 0;
var fbaFulfillmentFee = parseFloat(document.getElementById('fbaFulfillmentFee').value) || 0;
var monthlyStorage = parseFloat(document.getElementById('monthlyStorage').value) || 0;
var ppcSpend = parseFloat(document.getElementById('ppcSpend').value) || 0;
var otherExpenses = parseFloat(document.getElementById('otherExpenses').value) || 0;
if (salePrice 0) ? (netProfit / (unitCost + shippingToAmazon)) * 100 : 0;
document.getElementById('resReferral').innerHTML = "$" + referralFee.toFixed(2);
document.getElementById('resTotalExpenses').innerHTML = "$" + totalExpenses.toFixed(2);
var profitEl = document.getElementById('resNetProfit');
profitEl.innerHTML = "$" + netProfit.toFixed(2);
profitEl.className = netProfit >= 0 ? "fba-result-value profit-positive" : "fba-result-value profit-negative";
document.getElementById('resMargin').innerHTML = margin.toFixed(2) + "%";
document.getElementById('resROI').innerHTML = roi.toFixed(2) + "%";
document.getElementById('fbaResults').style.display = 'block';
}