If you’re about to launch an Amazon business, you’ve certainly heard about the benefits of using Amazon FBA as your fulfillment model. With Amazon FBA, you do not have to worry about spending huge upfront costs on storage facilities and other resources for handling fulfillment.
Amazon stores your inventory in their gigantic fulfillment centers. Then, when a customer buys your product, Amazon will pack and ship the product to the customer. They’ll also provide customer support and process any returns, refunds, or exchanges after the sale.
Amazon does not provide these services for free. So, you will have to pay Amazon FBA fees if you decide to sell on AMZN through FBA. And you may be wondering, “How much does Amazon FBA cost?” Will I be able to make any profit after paying Amazon FBA fees? Am I better off fulfilling orders myself? There’s one way to find out: estimate your business costs using an FBA Calculator.
In this article, we’ll talk about the FBA fee Calculator, why you should use it, and how to use it. Let’s get started.
Why You Should Use The FBA Calculator
The FBA Calculator is a useful tool for Amazon sellers, before and after they launch their products on Amazon. Here’s why you should use the FBA Calculator for your Amazon business.
- Finding Profitable Products: Your Amazon business starts with finding the right product to sell. Before you launch a product on Amazon, you have to estimate the profit potential you will earn on the product. This means you have to take into account some factors such as:
- Product costs (samples, manufacturing, product packing and labeling, international shipping costs, etc.)
- Seller fees (selling plan fees, referral fees, variable closing fees)
- Amazon FBA fees (fulfillment costs, inventory fees)
- Shipping costs (if using Amazon FBM)
- Estimated sales
- Cost price
With the Calculator, you can determine the net profit and profit margin of product ideas. This will guide in deciding what products to sell on Amazon.
- Choosing A Fulfillment Channel: If you sell on Amazon, you can either use the FBM model, where you fulfill orders yourself, or the Fulfillment by Amazon model, where Amazon fulfills orders on your behalf.
Under the FBM model, you store your inventory yourself. You also pack and ship orders to customers, provide customer service, and process refunds and returns. Under the FBA model, you send your inventory to the Amazon warehouse for storage. Amazon packs and ships orders to customers. Amazon also handles all customer service operations, including returns.
Here are some benefits of using the Fulfillment by Amazon model:
- Faster delivery to customers at lower costs
- Automatic qualification for Amazon Prime Free Shipping
- Improved chances of winning the Buy Box
- You leverage Amazon’s top-notch customer service
- You benefit from Amazon’s return policy and Amazon processes returns for you
Although Amazon FBA presents many benefits, it may not necessarily be the right option for every business or product type. For example, if your product is heavy or oversized, you’re likely to pay expensive FBA fees, especially if the product does not sell quickly.
With the Calculator, you can compare the costs of fulfilling orders yourself or fulfilling orders through Amazon FBA. You can then choose the more profitable option.
- Price Adjustment: Even after launching a product on Amazon, you still need to monitor the performance of your product in your Seller Central account. Sometimes, you have to increase or lower your prices. You can use the calculator to assess how that will affect your profit margins, and how you can cut costs.
What Fees Does the Amazon FBA Fee Calculator Cover?
When trying to calculate FBA fees and estimate your net profit, the calculator takes the following fees into account:
Selling on Amazon fees
- Referral fees: Amazon earns a commission on every sale you make, which is known as a referral fee. The referral fee is a percentage of the product’s total price, usually varying from 8% to 15% based on the product category.
- Variable closing fees: Amazon charges a variable closing fee of $1.80 on items in the Media Category, such as books, music, video games, software, etc.
FBA Fees
The two major types of FBA fees are:
- Fulfillment costs: Fulfillment fees are charged per unit and include the picking, packing, and shipping cost. It also includes handling, product returns, and customer service. The cost of fulfillment varies and depends on the weight and dimension of the item.
- Inventory storage costs: There are two types of inventory fees; monthly storage costs and long-term inventory fees. The monthly storage fee is charged monthly and includes the cost of storing your items in the Amazon fulfillment center. Your monthly storage fee and long-term storage fee are charged based on the size of your product (the amount of space it occupies in AMZN’s warehouse).
How does the Amazon FBA Calculator Work?
To use the Amazon FBA Calculator, take the following steps:
- Open the Calculator for your Amazon Marketplace. Here are the links to the FBA Calculators for each Marketplace.
- US FBA Calculator
- UK FBA Calculator
- Canada FBA Calculator
- India FBA Calculator
- Germany FBA Calculator
- Mexico FBA Calculator
- Italy FBA Calculator
- France FBA Calculator
- Spain FBA Calculator
- In the search box, enter the name of your product and choose an item that closely resembles it from the search results. You can also enter the UPC, ASIN, EAN, or ISBN of any similar item on Amazon.
- On the right-hand column in the calculator, provide the price of the item, the cost of shipping the item to Amazon’s warehouse, and the total product costs. Then click the ‘Calculate’ button.
- The Amazon FBA Calculator will provide an overview of your Selling on Amazon fees, cost of fulfillment, and storage costs per unit sold.
You should bear in mind that the calculations provided by the FBA profit calculator are merely estimations to help you in assessing your FBA fees. The results should not be regarded as completely accurate. Amazon provides a disclaimer to that effect, advising that you conduct an independent analysis of the calculations.
Conclusion
This is a useful tool for estimating the profitability of potential amazon products and fulfillment options. With the FBA profit calculator, you can properly take all costs and fees into account when pricing your products.
In addition to this tool, you can use an all-in-one software like Zonbase to evaluate your product’s profit potential, validate your product ideas, and choose winning products.
Sign up for a free trial here.
