Follow this step by step guide to forecast your expenses and profits when using Amazon's FBA service
After you have worked out your landed costs you will want to work out how much profit is available when using FBA. This is something Lewis talks about at the end of the Research & Ordering video series - Calculations & Ordering which can be found here
1. It’s important to remember that there will be additional costs to prep the products ready for FBA. This will include: individual bags & labels and shipping costs to the Amazon FBA warehouse.
2. Research your target price on Amazon. In this example we will be using the Beard Shaping Tool
3. Use a FBA calculator
4. Enter the product search term
5. Select a product that matches yours
6. Make sure the dimensions and weight are similar to your product. This is so Amazon can work out the postage and pick & pack fees
7. Insert the Selling price & the unit cost. In this example we will take the landed cost and add a small amount for for FBA packing and shipping: £0.47 + £0.06 = £0.53. We will work out the figures based on a selling price of £7
In this particular case there is a potential margin of 61.86% giving a potential profit of £4.33 per unit.
NB - If you are not VAT registered you will need to add VAT to the FBA fees. In this example:
Amazon selling fee @ £1.05
FBA fee @ £1.09
VAT @ 20% £0.43
Total Fees £2.57
Selling @ £7.00, product cost of £0.53, Amazon fees of £2.57 = £3.90 profit per unit with a margin of 55.7%