How to Know the Profitability and Revenue on Amazon

While selling on Amazon FBA, sellers usually worry about what their revenue share will look like after adding up all the fees and other expenses. They fear that it could amount to a lot and eat into their profit margins. For this purpose, it is most feasible to use an Amazon FBA calculator. It is instrumental in analyzing exactly how profitable a product is along with choosing the best fulfillment method for your items that will give you good returns.

To know your profitability and revenue, you have to first know exactly how much you’ll be spending on different kinds of fees like registration, referral fees, FBA/FBM fees, advertising costs, etc. Only when you have a clear understanding of these charges will you be able to know how much profits you have made.

Different kinds of Amazon fees

• Firstly, depending on the type of seller account you have, you will be charged accordingly. Amazon Individual sellers pay $0.99 for every item that they sell and Professional sellers have to pay $39.99 every month.
• There is a referral fee that sellers have to pay Amazon which typically varies between 8% to 15% and can go up to a maximum of 45% depending on the category that you’re selling in.
• FBA and FBM charges also have to be factored in. FBA fees for storage and shipping depend on the size and weight of your products. There are also other fees charged for refund administration and inventory that is stranded in the FBA warehouses. The Amazon FBA fees are deducted from your sales and your account will be credited with your profits once every two weeks.
• Advertising is crucial to earning profits on Amazon. Ads on Amazon follow a PPC (Pay per click) model and the cost per click is usually about $0.81.
• Keep in mind all of the overhead costs associated with selling on Amazon.

Recommended Guide: Amazon Lightning Deals.

Important steps to ascertain profitability and revenue

• First, take a look at your sales figures on your Amazon seller dashboard.
• Once you have a general overview, take a look at the payments report on the Payments page to know how much of your Amazon expenses cut into the revenue you generate. You will then have a good idea as to how much you have spent on different kinds of Amazon fees. When you look at the amount you’ve spent and the revenue you’ve earned, you know what percentage of your revenue is spent on fees and the rest is your profit.
• One thing that helps to stay profitable is to decide on a fee percentage that you’re willing to pay. This fee percentage should be one that you’re comfortable with paying and you must strive to ensure that you don’t spend anything over that amount. This is so that when you do your calculations, you instantly realize that you’re not going to be earning as many profits as you determined when the fee percentage turns out to be much higher than what you had originally decided on. You can then go about scaling back on functions like amazon advertising. which could be reducing your revenue and consequently your profits.

Calculating profitability

Once you start selling on Amazon, most sellers start seeing profits after the first 12 months of their Amazon business. To know your profitability for a certain period of time, you need to take into account the revenue you have generated, the cost of all the goods you’ve sold, and all the other charges you’ve paid for using the Amazon platform.

This isn’t a universal method that all sellers can use to calculate their profits because different sellers might spend more on different aspects of selling. But you can use this as a sort of starting point for your calculations.

Calculating revenue

When it comes to calculating revenue, you need to take into account your sales numbers. SellerApp’s Amazon Profit Dashboard is designed for precisely this purpose and gives you accurate insights into your profits and sales. Apart from sales numbers, you need to subtract refunds processed for your customers along with reimbursements from Amazon for mishaps on their part during order fulfillment. This will give you the revenue you have generated.

Check out this video for monitoring your amazon profits:

Amazon Seller Central FBA calculator

When you log in to Amazon Seller Central, on your dashboard you will be able to find an FBA revenue calculator that Amazon provides its sellers for free. All you have to do is enter your ASIN and you will be shown all the fees that will be applicable to your products along with the profits that you can earn. This calculator can be used every time you’re repricing as well so that you’ll know where you stand financially.

While selling on Amazon, your product research could tell you how viable a product is to sell but the profit margins matter if you want to sustain yourself. The simplest thing to do is to subtract all your additional or overhead costs and the amount spent on purchasing the goods from the final sale price. Make sure you go through all the Amazon fees carefully especially if you’re a new seller so that you know exactly what to expect and can calculate your expected profits accordingly.