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Understanding profitability is fundamental for every business, but perhaps even more so for eCommerce and, in particular, Amazon FBA sellers. There are various fees and costs associated with selling physical products online. With constant fluctuations in demand and shipping costs, knowing how profitable your products are can help you make better business decisions.
One of the most important steps you should take when researching a product you plan to launch on Amazon is to really dig into the potential profitability. Use an Amazon fee calculator to quickly calculate fees, then get to know your supplier/manufacturing costs, understand your shipping costs, and consider what kind of advertising budget you might need before you decide to launch something. You’ll also want to consider estimated sales and anything that might impact those numbers, such as selling a seasonal item.
After your products are listed on Amazon, make sure you are staying on top of your numbers. Unfortunately, many Amazon sellers are losing money. If you’re not considering all costs and fees associated with sourcing, selling, and fulfilling orders for your products, it’s likely that you’re one of them. Inflation and price volatility have made it even more challenging for Amazon sellers to truly understand their profitability.
The good news is that it doesn’t have to be complicated! We’ve got a great Amazon profitability analysis template you can use to help you understand your numbers. Keep reading to find out how to understand your FBA profitability.
You can quickly estimate the cost and profitability of selling an item via FBA with the FBA Revenue Calculator available in Seller Central. Simply search for an existing product on Amazon to see the results.
After selecting a product that you plan to sell (or one that is similar to an item you plan to sell), you’ll select the program you plan to use to fulfill orders, whether you plan to fulfill yourself, use Amazon Fulfillment, or utilize the FBA Small and Light program.
You can quickly compare fulfillment costs for each option by entering your fulfillment cost (labor, packing materials, shipping, and customer service) and storage cost (monthly cost per unit, average units stored, and estimated monthly sales). Amazon fees, FBA fulfillment costs, and storage costs are automatically generated. Additionally, you can include the cost of goods sold and miscellaneous costs to get a more accurate cost and profit calculation.
You’ll receive an Amazon fee calculation that includes your net profit and net margin for each fulfillment option.
If your product or a similar product isn’t available on Amazon yet, you can use the Define product option to enter your product details to compare the costs and profitability of different fulfillment choices.
Keep in mind that Amazon FBA fees will vary by the marketplace selected. Make sure you select the correct marketplace from the Amazon store dropdown before entering your costs to ensure an accurate calculation.
You can use the calculator to get a bulk estimate for your existing products or new products. You can also search for products that already in Amazon's catalog.
You can estimate the profit margin potential for each of your products by combining this Amazon fee calculator with eComEngine's FBA profit analysis template. Keep reading to see how it works.
It can be challenging to keep track of everything you need to consider in terms of product profitability. This free template helps you quickly analyze a product's profit potential.
Simply input the following data to get started:
The spreadsheet will crunch the numbers for you, so you'll get a detailed profit analysis in seconds. You'll see your potential margin and ROI with all the above variables accounted for.
If you'd prefer to automate this process, ditch the spreadsheets and give RestockPro by eComEngine a try! This specially designed FBA inventory management software can also help you quickly and easily understand your FBA fees and other costs.
Since fees are automatically included in your estimated margin calculation for each product, you can factor them in immediately when making decisions about what and when to restock for FBA. RestockPro instantly updates FBA fees when Amazon makes a change.
