It’s easy to get excited about your Amazon sales numbers. Seeing revenue pile up feels great. But here’s the catch—revenue does not equal profit. You might be making sales, but are you actually making money? This is where many Amazon sellers get stuck. So how do you fix this? In this guide, you’ll learn how to calculate your true profitability on Amazon FBA by factoring in all costs and using smart tools to make better decisions.
Why Revenue ≠ Profit on Amazon
The main problem sellers face is thinking revenue is the same as profit. It’s not.
Why does this matter? Because many sellers celebrate high sales numbers, only to find out their profits are tiny or negative after all fees and costs are accounted for.
Here’s the reality:
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You sell a product for $25.
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But product cost, Amazon fees, shipping, and returns can eat up 70% or more of that.
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What’s left is your actual profit.
So how do you fix this? You need a clear, complete picture of all your costs, not just revenue.
Start by listing every expense:
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Cost of goods sold (COGS)
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Amazon referral fees (often 15%)
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FBA fulfillment fees (packing, shipping)
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Shipping products to Amazon warehouses
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Returns and refund costs
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Storage fees
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Advertising spend
Example: If your product costs $10, and Amazon fees + shipping + returns total $12, selling at $25 gives you only $3 profit.
Factoring in FBA Fees, Shipping, and Returns
Many sellers underestimate how much FBA fees, shipping, and returns cut into profits. That’s a big problem.
Why it matters? Because these can silently drain your margins, especially returns that cost money in fees and lost inventory.
Here’s how to factor them in:
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Use Amazon’s fee schedule to find fulfillment fees for your product size and weight.
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Add shipping costs for sending inventory to Amazon.
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Calculate a return rate (e.g., 10%) and multiply by per-return cost.
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Remember storage fees, especially for items stored long-term or during peak season.
Example: Your FBA fees might be $5, shipping $2, and returns $1 per unit. Add that to your product cost, and your costs might be way higher than expected.
The solution? Add these costs into your profit calculator before pricing your product.
Using Profit/Loss Dashboards for Clarity
Tracking profitability by hand is tough. You need smart tools to avoid flying blind.
Why it matters? Because profit and loss dashboards give you clear, real-time views of your business health. They catch hidden costs and trends you might miss.
How to get clarity:
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Use Amazon seller reports plus third-party dashboards like My Real Profit.
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Track key metrics: profit per SKU, total fees, refunds, advertising efficiency.
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Link these dashboards with your accounting software for the full picture.
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Set up alerts for unusual changes in costs or sales.
Scenario: You notice a product’s refunds jumped last month, increasing costs and reducing profits. Your dashboard alerts help you fix the listing quality or packaging before losses grow.
Common Costs Sellers Forget to Calculate
Here’s a typical seller mistake—they forget some costs and think their profit is higher than it really is.
Why does this matter? Even small overlooked costs add up, shrinking your bottom line.
Costs often forgotten:
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Long-term storage fees for inventory stored over 365 days
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Return processing fees charged by Amazon
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Prep and labeling fees if not handled before shipping
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Software and tool subscriptions
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Packaging materials and costs
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Cost of advertising campaigns
The fix is simple: Make a checklist of every possible expense and review monthly reports. Factor all these costs into your unit economics for a realistic profit picture.
Example Calculation for Better ROI Decisions
Let’s break down an example calculation for a small kitchen gadget:
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Selling price: $30
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Product cost: $10
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Amazon referral fee (15%): $4.50
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FBA fulfillment fee: $5
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Shipping to Amazon: $1
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Returns cost (10% return rate at $2 processing): $0.20
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Storage fees per unit: $0.30
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Advertising cost per unit sold: $3
Total costs = $10 + $4.50 + $5 + $1 + $0.20 + $0.30 + $3 = $24
Profit = $30 – $24 = $6
ROI = Profit / Total Cost = $6 / $24 = 25%
This clear calculation helps you decide whether this product meets your profitability goals or if you should source something better.
Storm Digitals gets how tricky these calculations can be. If this sounds familiar, our team at Storm Digitals can guide you through calculating your true profitability and making smarter product choices.
Conclusion
True profitability on Amazon FBA is more than just revenue minus product cost. You must factor in all fees, shipping, returns, and hidden costs to get the full picture. Using dashboards and detailed calculations ensures you don’t get surprised by losses. Aim for clear, data-backed ROI decisions and keep your business thriving.
