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      Forecasting Product Profitability with Amazon’s FBA Revenue Calculator

      Forecasting Product Profitability with Amazon’s FBA Revenue Calculator
      Posted by James Hyatt on July 18, 2022

      The Amazon FBA Calculator is a useful tool for any seller deciding whether or not to use Fulfillment by Amazon (FBA). This tool allows sellers to calculate the fees associated with FBA so they can compare them to the costs of FBM (Fulfillment by Merchant).

      Amazon FBA Calculator Disclaimer

      According to Amazon, the FBA Calculator should only be used as a guide in evaluating FBA fees, as it may not be 100% accurate. Therefore, if you decide to fulfill by Amazon, note that the fees quoted in the calculator won’t always reflect actual costs.

      Amazon FBA Calculators for Different Countries

      There are different calculators available for Amazon sellers in various countries, each accounting for the currency and individual fees of its respective country.

      Calculator

      Fees Included in the Amazon FBA Calculator

      There are a lot of different fees associated with FBA, and without a tool like the FBA Calculator, it can be really difficult to get a close enough figure of what FBA actually costs.

      Selling on Amazon Fees

      The fees that concern selling on Amazon are made up of two parts: a referral fee and a variable closing fee (where applicable). While most referral fees are between 8–15%, the amount may vary depending on product category. The variable closing fee only applies to media products such as books, music, videos, DVDs, video games, consoles, and software (BMVD products).

      Fulfillment by Amazon Fees

      FBA fees are calculated based on the dimensions and weight of an item, and are comprised of two components: a fulfillment fee and a monthly storage fee. The fulfillment fee covers the cost of labor for pick, pack, and ship as well as packaging supplies, shipping to the customer, and customer service. The monthly storage fee is calculated based on product volume (measured in cubic feet).

      FBA Fees NOT Included in the FBA Calculator

      While the FBA Calculator is a handy tool for estimating costs, the rough-estimate figures generated aren’t always all-inclusive. There are other FBA fees that only apply in specific circumstances, so it’s critical to understand what those fees are as well as the conditions they exist under.

      Long-Term Storage Fees

      In addition to monthly storage fees, sellers are billed twice a year for the long-term storage of their inventory in Amazon’s fulfillment centers. If you order a lot of product and it doesn’t sell quickly, these fees could hurt your margins.

      Returns Processing Fees

      This type of fee is charged for orders in which Amazon offers free return shipping (apparel, watches, jewelry, shoes, handbags, sunglasses, and luggage). The amount is equal to the total fulfillment fee for the product.

      Unplanned Service Fees

      When your inventory arrives at a fulfillment center without proper preparation or labeling, Amazon will do the service for you – charging a per-item fee – so be sure to follow all the requirements for product prep and labeling; otherwise, you should include these fees in your product cost to get an accurate margin calculation.

      Removal Order Fees

      In the event you need your products returned from Amazon’s warehouses, a per-unit charge exists in addition to disposal and/or liquidation fees.

      Note: Don’t forget that Amazon charges a recurring fee for its selling plans. The “Individual” plan costs $0.99 per item sold, while the “Professional” plan is $39.99 per month. Additional selling fees may also apply.

      guy looking at list

      When to Use the Amazon FBA Fee Calculator

      One of the most helpful times to use the FBA Calculator is when you are researching new products to sell. The tool will give you a ballpark net profit and net margin that you can expect if you decide to sell that item on Amazon via FBA.

      If you plan to sell physical products using FBA, you must first determine your profitability. This is important to know before and after launching a product because you’ll need to calculate estimations of your revenue potential beforehand as well as take into account initial investment costs, FBA fees, and estimated sales. After your product goes live, you’ll then need to stay atop your fees to make sure you’re running your business profitably.

      Additionally, the FBA Calculator can help you understand your margin impacts if you’re planning to raise or lower the selling price of an item. You can also use the calculator’s data to determine a product’s target budget range in order to remain profitable, or if you’re planning to switch from FBM or SFP to FBA.

      How to Use the FBA Calculator to Research Products for Sale on Amazon

      Using the FBA Calculator can be intimidating at first glance. Here are the steps to help you navigate this useful tool.

      Step 1: Input an identifier to pull up the product you’re researching (you can use the ASIN, EAN, ISBN, or search term).

      Step 2: Once you’ve identified the product, input the values in the fields of the “Amazon Fulfillment” column to calculate the margin for that specific product. The first value is the “Item Price.” Research similar products to get a sense of proper pricing, then play around with this value and see what kind of margin impacts you get from raising or lowering the price.

      Step 3: The next field you’ll write in is “Ship to Amazon.” If you already sell products on Amazon, you may have a sense of what the average per-unit cost is to ship your products to Amazon’s warehouses; however, it will vary based on the size and weight of the product as well as the quantity you ship at any given point. You can also leave this field blank, but if you do, don’t forget that there will be additional costs incurred down the road.

      Step 4: Finally, fill in the “Cost of Product” field by entering the per-unit price of your product from a manufacturer or wholesaler. This should be an “all-in” cost that includes any charges for packaging materials, shipping, customs, or other expenses related to the purchase of your item. Once done, you can click the “Calculate” button.

      Warehouse

      Results: The calculator will provide you with the net profit and net margin for the product, based on the values you input. You’ll also notice that Selling on Amazon fees has been calculated, as well as Fulfillment by Amazon fees, giving you a total fulfillment cost.

      The calculator also produces a series of bar graphs to give you a visual representation of the revenue, cost, seller proceeds, and net profit.

      Start Increasing Your Profit Today

      Knowing how to calculate FBA fees with the Amazon FBA Calculator can help you feel significantly more confident about operating your brand. Whether you’re launching new products or managing a preexisting business on Amazon, remember that you should never try to “guesstimate” your fees.

      Understand the fees Amazon charges so you can keep a firm handle on your business’ finances.

      Need help boosting the profitability of your own Amazon business? Let’s discuss where you are now, your targets, and your long-term goals. Book a call with us today!

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      About the Author

      James Hyatt

      James Hyatt is the founder and CEO of Rank N Bank, an Amazon Advertising Agency that prides itself on quick, clear communication, transparent pricing, and industry-leading expertise. He graduated with a degree in Business Management at San Diego State University. A self-made entrepreneur, he has built Rank N Bank with no funding or debt, with the sole purpose to help clients grow their businesses profitably.

      Outside the business sphere, James is passionate about racing sports cars at the well-known Willow Springs Raceway, surfing the famous wave breaks on the East and West coast, and challenging himself out on the mountain trails around the U.S.