Tips on using Amazon FBA Calculator for every Amazon Seller

I've always said to myself that if a little pocket calculator can do it why shouldn't I?

- Roald Dahl

Don’t you want to know the precise amount of money you are making/losing on every transaction on Amazon?

Do you get put off by the mere thought of calculations and spreadsheets and eventually end up looking at overall numbers instead of optimizing everything?

 Almost two out every three people, I have talked to, say YES to the first question and three out of three say YES to the second one.

In my opinion, every seller should calculate the profit before and after the launch of a product. For a profitable FBA business, the sellers must carry out all the research and calculations on their initial investments, product cost price, marketing expense and other variables like estimated sales, etc.

To estimate the potential profit from a product, the seller should fully understand the different pricing points, cost of products, shipping, and delivery costs. An FBA Calculator is just the right tool to calculate all this and it can also suggest an optimal price range.

FBA CALCULATOR! YES

It gives you a definite idea of the profit you will make on each item and each sale and a detailed break-up of the expenses involved in Fulfilment by Amazon. It even calculates to fine details, the costs such as those of monthly storage, labor, packing material, shipping cost and customer costs. It calculates the optimal profit percentage for different selling points and sourcing cost. It takes and makes use of all information from the official Amazon's FBA revenue calculator site.

Once you get the hang of using the FBA calculator, you will stop using your electronic calculators or spreadsheets. Why use something else when FBA Calculator is the best way to get a close and precise idea of the profit you are making on each transaction?

 HOW TO USE THE FBA CALCULATOR

Let’s take the case of this pink elephant which we want to sell on Amazon.

STEP 1

To start using the FBA calculator for product research, you can use search terms associated with the product or even its ASIN, EAN, or ISBN.

Amazon Standard Identification Numbers (ASINs) are unique blocks of 10 letters and/or numbers that identify items. For books, the ASIN is the same as the ISBN, but for all other products a new ASIN is created when the item is uploaded to Amazon’s catalog.

Let’s use an ASIN for our demonstration. You can find the ASIN on the item’s product information page at Amazon.com.

Once you have the ASIN, just copy and paste it to the FBA Calculator Search Bar and clieck "Search".

 STEP 2

Now that the relevant product has been found, you may begin inserting the values in the Amazon fulfillment column. By doing so, you will determine the potential profit margin for this product.

Please note that I have assumed that the seller is already an FBA seller, and therefore we will only focus on “Amazon Fulfillment.” In the box provided, enter the desired item price.

For this example, we will input $12.99 as the product’s sale price or the item price.

STEP 3

After entering the item price value, you will now have to input the value for “Ship to Amazon” under the Fulfillment cost. The designated input box indicates the average per-unit price of an item that a seller is planning to sell.

However, if you are not familiar with the average per-unit price, you may leave the box blank. For this example, we will assume that the shipping cost would be $0.50 per unit of the toy product. 

STEP 4

After the “Selling on Amazon Fees”(visible in one of the images below in this article) you have now to fill in the “Cost of Product box.” This is the most important box for the product, for this pertains to the “all-in cost” of the item that you will be selling on Amazon. This cost refers to the overall cost of buying the item from the wholesaler or manufacturer. Expenses such as packaging materials, shipping, and customs charges will be included in the computation and are included in this.

For this example, let us assume the cost to be of the value of & $4.50. After inserting the value, you may now click the “Calculate” button.

RESULT

Having completed the four steps, the calculator will now show you the net profit and net margin of the toy product based on the values you have input. "Selling on Amazon" fees and "Fulfillment by Amazon" fees are calculated AUTOMATICALLY, and the result gives you the Total Fulfillment Cost.

In our example, the Amazon Referral fee is automatically calculated and turns out to be $1.95. The monthly storage fees turns out to be $0.26. Amazon Fulfillment fees is $3.98. 

The Calculator displays the net profit and the profit margin for us quickly and accurately.

Net Profit : $2.30

Net Margin : 17.71%

CAN WE DO SOME MORE ANALYSIS?

As much as we might like the ease of getting the margins and profits from the Calculator, the real power of the Calculator lies in the graphs which are displayed on the RHS. 

By tinkering with various values you can now get a much clearer overview of the margin impact. The FBA Calculator can tell you how long it will be until your business becomes profitable.

To illustrate, you may change the item price and check as to whether the net profit will improve. As seen in the image below, the item price has been changed to $20.00 and as observed on the recalculated output, net profit has drastically increased. 

AREN'T THERE ANY PROBLEMS IN USING THE CALCULATOR?

With all its advantages, an FBA Calculator also needs some extra effort. Inputting of the numbers into the FBA calculator can be time consuming if you have plenty of items to check. The FBA calculator does not include other additional costs like long term storage fees, advertising expenses, marketing costs, etc.

The biggest shortcoming is that the Calculator does not allow you to save data to compare it with your list in Excel and does not even let you copy it into your files.

But then isn’t all of this secondary to knowing the amount of cents or dollars you are making on every transaction?

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