An FBA product can look profitable at its selling price and still lose money once Amazon takes its fees. The fees come in separate pieces, and you need all of them before you can judge a product. This guide walks through each piece in order.
How it works
Three fees matter most. The referral fee is a percentage of the selling price and varies by category. The fulfilment fee covers picking, packing, and shipping, and depends on the size and weight of the item. Storage fees are charged monthly per cubic foot and rise for inventory that sits too long. Add all three to your product and shipping costs, then subtract the total from the selling price to get your profit per unit.
Step by step
- Find your product category referral fee percentage and apply it to the full selling price, including any discount price.
- Measure and weigh your packaged product, then find its size tier: small, standard, or oversized.
- Work out dimensional weight where it applies: length times width times height divided by the carrier divisor, and use the larger of actual and dimensional weight.
- Look up the fulfilment fee for that size tier and weight.
- Add monthly storage: volume in cubic feet times the storage rate, divided by units stored.
- Add referral, fulfilment, and storage to product cost and inbound shipping, then subtract from the selling price.
Worked example
You sell a kitchen item for $24.99. The referral fee at 15 percent is $3.75. The standard-size fulfilment fee is $4.50. Storage works out to $0.40 per unit for the month. Product cost plus inbound shipping is $8.00. Total costs are 3.75 + 4.50 + 0.40 + 8.00 = $16.65. Profit per unit before ads and returns is 24.99 – 16.65 = $8.34. If ad spend averages $2.00 per sale, real profit is $6.34 per unit.
Common mistakes
- Applying the referral fee to your profit instead of the full selling price.
- Using the item weight alone and missing dimensional weight on light, bulky products.
- Forgetting storage fees, especially on slow-moving stock held over several months.
- Using last year fee tables. Amazon updates fees, so always check the current rate card.
Try it with the free tool
You can follow every step above by hand, but the free tool below does the same calculation instantly. Try your own numbers in it, then check one result by hand so you trust the method as well as the answer. Open the full tool here: open the tool.
Checklist before you finish
- Write down every input number first, with its unit, before you calculate anything.
- Work through the steps in order, and do not skip the unit conversions.
- Check the answer against the worked example above: is it the right size, and does the direction make sense?
- Round only at the end, and keep the unrounded figure for any follow-up calculation.
Practice with your own numbers
Pick three cases of your own and work each one by hand. First, try a simple round-number case you can check mentally. Second, try a realistic case with awkward numbers, the kind you will actually meet. Third, try an edge case, such as a very small or very large input, and confirm the answer still behaves sensibly. If any case gives a surprising result, re-check the units and the formula step by step before you trust it.
If your answer looks wrong
Most errors come from a small set of causes. Check that you used the same units throughout, that you divided where the formula divides and multiplied where it multiplies, and that you applied any percentage as a decimal. Check the order of operations: powers and brackets come before multiplication and division, which come before addition and subtraction. Finally, test the method on the worked example in this guide. If your method reproduces the example answer, the method is right and the inputs deserve a second look.
Quick tips
Run the numbers at your discounted price, not your list price, because referral fees follow what the customer actually pays. Keep slow stock moving; storage fees quietly eat the margin on items that sit.