If you’re interested in selling using Amazon FBA, one of the first questions to ask yourself is “How do I figure out how much money I will make if I use Amazon FBA?”
Fortunately, Amazon provides a free FBA revenue calculator tool that allows you to calculate exactly what you will make per sale of your product. Unfortunately, you need a Seller Central account to access it. If you don’t have a Seller Central account yet, you can create one here at Amazon’s official FBA sign-up page.
How to Use the Amazon FBA Revenue Calculator
If you have an active Seller Central account, you can navigate to the revenue calculator via this link, and read a short set on instructions on this page. Below is a screenshot showing what it looks like.
To use the revenue calculator, first enter a search term or an ASIN (Amazon Standard Identification Number) of the product you want to calculate your revenue for, and click “Search”.
If the product you want to estimate revenue for isn’t already sold on Amazon, fill in the package dimensions, unit weight, and select a product category, and click “Estimate”.
If the product is already being sold on Amazon, the next screen asks you to enter fulfillment cost information such as item price, shipping, etc. for each fulfillment type (“Your fulfillment” versus “Amazon Fulfillment”).
Carefully fill in each field, noting that some costs only apply if you fulfill the item yourself versus having Amazon fulfill the item, such as the cost to ship a product to the customer. If you have any doubt about what is required in each field, hover your mouse over the question mark symbols next to the field name, and you’ll see a short description of what needs to be entered.
Once you’ve filled in all the fulfillment cost information, click the “Calculate” button at the bottom to see the results. I’ve filled in some example information so you can see the net results the calculator gives you.
There are also charts that are generated to provide a visual representation of the estimated revenue, cost, seller proceeds, and net profit. This is what the revenue chart looks like using an example selling rate of 20 units per month:
You can also model what would happen if selling using FBA increases your sales by a given percentage versus fulfilling orders yourself (screenshot below).
I know from experience that Amazon favors sellers that use Amazon fulfillment (FBA) over sellers that fulfill orders themselves, and depending on the product, the estimated monthly sales increase could be as high as 50% or more.
One nice thing about the calculator is you can adjust the values you enter and calculate the final revenue over and over again. You can calculate the profit and margin of as many different fulfillment cost scenarios as you need to, such as if you wanted to compare the cost of using a 3rd party fulfillment service versus doing the fulfillment yourself versus the cost of Amazon fulfillment.
Drawbacks to the Amazon FBA Revenue Calculator
There are a few drawbacks to the revenue calculator, such as:
It’s Not as Simple as it Looks
If you look at the net profit and net margins from the example above, you may wonder why you can make more profit per sale fulfilling an item yourself versus having Amazon fulfill it for you.
If you fulfill an item yourself, you provide the labor to do this yourself, so you save the labor fee of not having Amazon fulfill the item, and you make more profit per sale.
However, if a customer buys from you and you fulfill the order yourself, they won’t get Prime shipping speed, which is a major benefit of buying products from Amazon as a customer, and using FBA as a seller.
Because of the slower shipping speed, sellers who fulfill their own orders usually have to charge a lower price than someone selling a product using FBA fulfillment to entice customers to accept the slower shipping speed of their order.
Think about it this way: if you were considering buying the exact same product from 2 different sellers, and their prices were the same, but one seller offered 2-day shipping, and the other seller offered 5-day shipping, wouldn’t you choose the 2-day shipping time?
This is why sellers who fulfill their own orders usually sell the same product for a lower price, and is also why I chose the $10 selling price for “Your fulfillment” versus a $15 selling price for “Amazon fulfillment” in the example revenue scenario.
There Are Other Fees Too
Another drawback to the revenue calculator is that there are fees the calculator doesn’t include. These fees aren’t part of the fees paid during a sale, which is why they aren’t accounted for in the calculator, but they are fees you may have to pay just the same.
Here is a list of the other fees, as described on Amazon’s revenue calculator instruction page:
- Monthly subscription fees
- Long-term storage fees
- Per-item fees
- Removal order fees
- Return processing fees
- Unplanned service fees
- FBA inventory storage overage fees
- Refund administration fees
- Rental book service fees
- High volume listing fees
- Other less common fees not explicitly listed as included
For a better understanding of the fees Amazon may charge you, I recommend reading my post that goes into detail about Amazon’s fees and their fee calculator.
What About Estimating Sales Velocity?
Another important thing to know is the revenue calculator is only for revenue estimating. It doesn’t estimate a product’s potential demand, or how many units it will sell in a given time period, also known as sales velocity. This is important because most businesses will accept a lower net margin for a product if it sells many units in a given time period, and will want a higher net margin if the product sells just a few units in the same time period.
Advertising Costs Not Included Either
Another cost not mentioned on the revenue calculator page is advertising cost. If you’re listing a product for sale on Amazon that has never been sold on Amazon before, or if you’re creating a new product or brand of products to sell on Amazon, advertising will be a large cost you have to budget for.
Advertising on Amazon is a complex topic, so to learn more about it, follow this link to their official advertising page.
Overall, the Amazon FBA Revenue Calculator is a useful, and free, tool to estimate revenue of fulfilling customer orders yourself versus having Amazon do the fulfillment for you. As long as you know you’ll need another way to estimate a product’s demand and sales velocity, and that there are other fees and costs involved in selling on Amazon, the revenue calculator is a great tool to help you on your Amazon selling journey.
Interested in reading about how my Amazon business has evolved since I started selling in 2015? See this post.
Looking for products to sell on Amazon? See this post for 3 categories of stores you could visit to buy products from today.