Fulfillment by Amazon allows you to outsource storage, packaging, shipping, and customer returns to Amazon.
Therefore, Amazon charges you fees that significantly impact your net profit. Amazon FBA fees depend on several factors, which we will discuss later in this article.
Since it's a lot of work to calculate these fees manually, you should use the AMZScout FBA Calculator.
All you need is to enter information such as production or shipping costs. Then, the AMZScout FBA Calculator automatically calculates your profit margin.
If you want to know how to use the AMZScout FBA Calculator, you've come to the right place. This post shows you how to use the calculator to estimate your costs and profits.
The AMZScout FBA Calculator is available at the Chrome Store. You can also head over to the AMZScout website and download the Chrome Extension:
After you've installed the Chrome Extension, the AMZScout symbol shows up next to the right of the URL entry:
Click on the logo to start the Chrome Extension:
You can enter data like production costs, shipping costs, taxes, or Cost-per-Click within the Chrome Extension. The tool automatically identifies data such as the size or weight of a product.
It's important that you first select a product on Amazon and then activate AMZScout. The calculator then gathers all the essential data.
The production costs per unit vary depending on the supplier, order quantity, and negotiation skills. In general, the more units you order, the lower are the costs per unit.
Always keep the costs per unit low since these costs directly influence your profit margin. Enter an estimated value if you don't know the exact costs yet.
Besides production costs, shipping costs also play a crucial role.
The costs vary depending on the supplier's location and your desired delivery time.
Generally, you can ship products by sea freight (low cost) or air freight (high cost).
Keep in mind that you also have to calculate shipping costs per unit. Assuming you've ordered 300 units and you've to pay $300 for shipping, the shipping cost per unit is $1.
As with production costs – the more units you order, the lower your shipping costs per unit will be. Try to keep these costs low.
If you launch a new product on Amazon, you've to promote it. Otherwise, you won't be successful… and of course, you need to consider these costs in your calculation.
You have to pay taxes on every single sale you make. Taxes mainly vary depending on the location of your business. To simplify things, you can assume a tax rate of 20%.
The selling price of your product on Amazon – don't consider any planned discounts. Enter the real selling price of your product.
Estimated monthly revenue is the number of items sold per month. If you have no idea what the sales potential of your product is, you should check out this article about Helium 10 Chrome Extension.
The AMZScout FBA Calculator suggests a value based on historical sales data. Try to slightly decrease this value to minimize the risk of miscalculation.
Amazon FBA fees vary depending on the size and weight of an item and are mainly divided into the following categories:
Amazon charges a monthly storage fee. The Amazon FBA Calculator shows you these estimated monthly storage fees automatically.
The dimensions and weight of a product determine the fulfillment fees. Therefore, you have to consider the size of an item since it has a significant impact on your profitability.
In addition to the fees mentioned above, Amazon also charges a referral fee. The referral fee is 15% of the selling price on average.
I highly recommend checking out this article for a detailed overview of all Amazon fees.
Besides all the benefits of Amazon FBA, there are also some drawbacks. You have to pay a lot of fees that lower your profit margin.
The costs to sell on Amazon become expensive if you sell a large or heavy product.
If you want to become a successful Amazon seller, you need to calculate your costs and profits exactly… and you should use the AMZScout FBA Calculator to do this.
The calculator shows your Profit Margin, Return on Investment (ROI), and the Estimated Monthly Turnover.
The calculator is extremely helpful when planning an FBA business, which is why every Amazon seller should use it.