How to Use Amazon’s FBA Calculator
Originally published on October 25, 2023 by Logiwa Marketing, Updated on October 25, 2023
Whether you are an online retailer, major brand or independent seller, leveraging Amazon’s FBA calculator can help optimize your pricing structure as well as evaluate your fulfillment strategies in a variety of ways. Let’s discuss the FBA calculator: what it is, how it works and some best practices for getting the most out of it.
- Amazon’s FBA Calculator helps online sellers estimate costs, revenue and profit margins related to selling on Amazon and using FBA services.
- The FBA calculator incorporates package dimensions, selling price, referral fees, fulfillment costs and additional service fees to provide insights into costs per unit, net profit, and net margin percentage.
- Benefits of using the calculator include the ability to optimize pricing and fulfillment strategies, choose the right fulfillment program, and make informed product decisions.
- Non-Amazon sellers can benefit from this tool by gauging market prices and ensuring competitiveness across various ecommerce platforms.
- Some tips for getting the most out of the calculator include: experimenting with numbers, comparing services, considering return charges, and more.
What is Amazon’s FBA Calculator?
Regardless of whether you opt for Fulfillment by Amazon (FBA), Fulfillment by Merchant (FMB) or Seller-Fulfilled Prime (SFP), there are a variety of fees associated with selling on Amazon and using its fulfillment services. Luckily, Amazon’s FBA revenue calculator provides transparent insights into the costs and potential profit margins one can expect from selling on Amazon and using FBA services.
Amazon’s FBA calculator estimates the profitability of items and ROI by factoring in:
- Your selling plan (i.g. Professional selling plan vs. Individual selling plan)
- The selling price of your individual items
- Referral fees
- Fees associated with your preferred fulfillment plan (i.g. cost of storage, picking, packing and shipping fees, etc.)
- Additional Amazon-related service fees
When used correctly, the FBA calculator can provide powerful business insights that empower informed decision-making to ensure a higher chance of profitability for ecommerce operations.
How Does Amazon’s FBA Calculator Work?
The Amazon FBA revenue calculator helps estimate costs, revenue and profit margins when selling on Amazon. In order to get started, you will need to provide a number of basic details related to package dimensions (size and weight), product details (unit of measurement, product category and selling price) and shipping charge to start the calculation. Some things to note when entering using the calculator:
- Do not forget to select the location country of your Amazon store.
- Package dimensions are not the same as product dimensions. The package an item will be shipped in will be larger than the item itself.
- You’ll be asked for the shipping charge for your item. If you’re using Amazon FBA, you don’t have to put anything in this section.
Once the information is provided, the calculator will display three different options: Amazon Fulfillment costs (if you’re using FBA), the seller’s fulfillment costs (if you do it on your own), and an option to compare Amazon Fulfillment costs with different selling prices for an item.
There are several different fees and costs you will see in the calculator:
- Referral fees: the fees Amazon charges when an item sells (typically 15-20% of the sales price).
- Fulfillment fees: costs related to the fulfillment services used to complete each order (this number will increase or decrease depending on the size and weight of a package).
- Storage costs: rates calculated based on the size and weight of a package.
Depending on the time of year a product is being sold (January – September or October – December), storage fees will vary by as much as 3%.
You will also need to input the number of units stored at the Amazon Fulfillment Center and the estimated number of items sold per month. The calculator will then provide a number for storage cost per unit sold.
Finally, you will need to provide the cost of goods sold—how much it costs to produce an item or purchase it from a supplier and deliver it to Amazon.
Based on the information provided, the calculator will provide:
- The estimated cost per unit.
- The net profit per unit.
- The net profit based on the estimated number of units sold per month.
- The net margin percentage.
Remember, the whole goal of using the Amazon FBA Calculator is to determine if a product you intend to sell will earn you the profit you would like.
Benefits of Using Amazon FBA’s Calculator
There are a number of benefits to using Amazon’s FBA calculator, for Amazon-users and non-users alike. Here are a few of the key benefits to keep in mind.
Amazon’s calculator can help you optimize your pricing structure and fulfillment strategy.
Since Amazon’s calculator factors in selling price, referral fees, and charges related to your Amazon seller plan and fulfillment methods, you can easily evaluate the cost-efficiency of your operations and find ways to boost profitability.
Once you see the potential outcome of certain sales prices and operational fees, you can easily adjust your prices and fulfillment services to better align with your unique business goals. This can help with boosting your profit margins (by increasing your prices to cover associated fulfillment costs), staying within your budget, opting for more cost-efficient fulfillment plans and attracting more customers.
Amazon’s calculator can help you choose a fulfillment program.
Amazon’s FBA calculator can help you decide what type of fulfillment service is best for your operation. Whether that is Fulfillment by Amazon (FBA), Fulfillment by Merchant (FBM) or Seller-Fulfilled Prime (SFP) – where you ship Amazon-sold products direct from your own warehouse – or an entirely different logistics path, the FBA calculator can help shed light on the costs of using FBA.
By looking into Amazon’s various pricing structures, you can gain clarity around whether you want to use Amazon’s fulfillment services or take them on yourself. For more information on the pros and cons of Amazon FBA, check out Logiwa’s blog, “A Guide to Amazon FBA – Is Fulfillment by Amazon Right for You?”
Amazon’s FBA calculator informs product initiatives.
Whether you are working with Amazon or not, Amazon’s calculator can help provide information on the market value of the products you wish to sell. By plugging your product information into the FBA calculator, you can see the potential in the ecommerce market.
By checking the initial start-up costs (i.e. the cost of selling your items, partnership fees, etc.) and projected profits from sales, you can determine the viability and potential success of the products you plan to sell. If you’re planning to sell in specific locations, the FBA calculator can also help you determine product success by location.
Amazon’s FBA calculator empowers non-Amazon sellers.
Amazon’s FBA calculator is not just for Amazon-users. For non-Amazon sellers, it can help with assessing whether or not to sell on Amazon or use FBA. By shedding light on the potential profits and fees involved, it can also help non-Amazon sellers gauge market prices and make competitive adjustments across other ecommerce platforms.
By optimizing the fee structures and pricing strategies used by Amazon, sellers can help ensure competitiveness in the broader market landscape. In essence, the FBA calculator serves as an indispensable asset, empowering online sellers to make informed decisions, enhance profitability and thrive in the ever-evolving digital marketplace.
If Amazon is your primary marketplace, the FBA calculator gives you an effective tool for strategically pricing items to cover all associated fulfillment costs, turn a profit and remain appealing to customers as markets fluctuate.
Tips and Tricks for Using Amazon’s FBA Calculator
- Play around with your numbers. Look at what happens if you increase the number of units stored or your selling price.
- Don’t be afraid to compare services. Other fulfillment services are available, so be sure to compare prices, rates, and terms with different providers.
- Keep in mind that there are charges associated with product returns.
If you’re starting your ecommerce business or looking to grow, getting your products in your customer’s hands is the top priority. Finding a fulfillment partner that can meet your needs at a price that fits your budget is essential.
Logiwa makes it easy to manage Amazon FBA right from our cloud fulfillment platform. Learn more about our FBA integration in our blog, “For Amazon FBA Users, Logiwa is the Ideal Fulfillment Solution.”
FAQs Related to Amazon’s FBA Calculator
What is the Amazon FBA calculator?
The Amazon FBA (Fulfillment by Amazon) Calculator is a tool designed for sellers to estimate costs and potential profits when using Amazon’s fulfillment services. It helps sellers calculate fees, including fulfillment and storage costs, providing valuable insights into product profitability. By inputting details like product size, weight, and selling price, sellers can make informed decisions to optimize their Amazon FBA business.
How is FBA cost calculated?
FBA costs are calculated based on various factors such as product size, weight, storage duration, and fulfillment fees. Amazon’s FBA fee structure considers these elements to determine the total cost of using their fulfillment services. Sellers can use the FBA Calculator provided by Amazon to input specific details and accurately estimate the costs associated with storing, packaging, and shipping their products through the FBA program.
What information do you need to use Amazon’s revenue calculator?
To use Amazon’s FBA calculator, you’ll need specific details about your product, including its size, weight, and selling price. Additionally, you should know the category your product falls under, as different categories have varying fee structures. By inputting this information into the calculator, you can accurately estimate fulfillment fees, storage costs, and potential profits, enabling you to make informed decisions about your Amazon FBA business.