If you are gonna sell on Amazon, you gotta know your numbers and understand the traditional costs asscoated with each product. Many Amazon sellers before and even after they get started use the Amazon Revenue Calculator. View this amazon video tutorial on how to use it. But you simply take a product you’re interesting in selling and is similar to what you want to sell and place the ASIN number in the search bar. Hit search and then add the price you can expect to sell it at. You will see a bunch of numbers and a final calculation on how much that particular seller in earning for unit for each one sold at that selling price.
In our experience, these are the only fees and costs you should be worries about when selling Amazon FBA private label.
Can’t get simpler than this. This is the price of the item and you expect to sell it for. As a point of reference, the picture above is the ATR-2500 audio technica which is selling for $64.99. If you want to make sure you’re determining your price appropriately, we may suggest you lower your price by 10% to ensure you’re getting the most conservative margins possible.
Amazon Referral Fee
Amazon charges a referral fee for each sale it gets for you. The minimum charge is $1 or 15% of the sales price of the item, whichever is great. That is why the Amazon referral fee above is $9.75. This is also the reason why we suggest not selling items below $8 – $9. $1 in amazon referral fees in addition to the costs we’ll spell out below really eats into your margins over time.
This is a fulfillment cost associated with simply taking the order and managing your order via their platform. This is like a technology fee in which they’re granting you access to view all of your orders and remain in touch with the buyers.
Pick & Pack Fee
Someone has pick the items off of the Amazon shelves and pack them. There should be a charge associated with it. And that is what this fee is for. Notice that the pick and pick fee is relatively low at $1.04.
Weight handling is another small fee that in the U.S. averages around $0.63/unit. This is for most items that are not oversized items. Refer to Amazon size and weight charge to get a feel for what items will cost more versus less.
30 Day Storage
Amazon charges a 30 day storage fee per unit that can range from $0.02 – $.10 per unit depending on the size of the unit. Remember Amazon has these fulfillment warehouses and if they’re not selling product they’re not creating space for new product. The fee again is small but could add up over time.
This is the top level costs for selling on Amazon. Really this only includes referral fee Amazon is charging you. This is important for mainly Merchant sellers who are not fulfilling their inventory by way of Amazon.
Fulfillment costs are directly associated with order handling, pick & pack fees, weight handling, and 30 day storage. Amazon wants to give you this as a separate number so you know the cost to fulfill on their platform. Notice how the fulfillment cost is less than 10% of the sales price. That is why having Amazon fulfill your items is much more cost effective and time efficient than you fulfilling them yourself.
Margin impact is the final amount that Amazon will deposit into your account for each item you sold. Notice the margin impact for this item is 21% of the selling price. This is because the selling price is relatively high versus a selling price of $10 – $20.
Do not be fall into the trap of picking products thinking 21% is the margin impact alone. The last step Amazon does not do for you is subtract your inventory and shipping cost. Even though the item above produces a profit margin of $51, it could have cost the company $20 to make and another $3 to ship thus creating a final profit of $28 for the item. Many many Amazon sellers forget to factor this in when deciding what items to sell on Amazon. Do not fall into that trap and you’ll know your numbers very well.