How to check if a product is profitable on Amazon FBA

A product can look profitable at a glance and still lose money once every fee and cost is counted. Here is how to check if a product is profitable on Amazon FBA, step by step, with a worked example you can copy.

1. Start from the Buy Box price

Use the price you can realistically sell at: the current Buy Box price, not the list price or the highest offer. If the price has been falling, use a lower figure; a product that is only profitable at today's peak price is not a safe buy.

2. Subtract the referral fee

Amazon takes a referral fee on every sale, a percentage of the selling price that depends on the category. For most categories it is 15 percent, with a minimum per item. Media categories also have a closing fee.

3. Subtract the FBA fee

The FBA fulfillment fee pays for picking, packing and shipping the order. It depends on the size tier and the shipping weight of the package, so a heavy or oversized product can have a much higher fee than its price suggests. Check the product's package dimensions and weight.

4. Add up your landed cost

Your cost is more than the supplier's price. Add everything you pay per unit to get it into Amazon's warehouse: shipping from the supplier, prep and bagging, labels, the inbound shipment to Amazon and any customs duty. This is your landed cost, and it is the number your ROI should be based on.

5. Work out profit, ROI and margin

• Profit = Buy Box price − referral fee − FBA fee − landed cost
• ROI = profit ÷ landed cost: what each dollar you invest earns back
• Margin = profit ÷ selling price: how much of each sale you keep

Wholesale sellers usually decide on ROI, because it tells you how hard your cash works. Margin shows how much room you have if the price falls. See ROI vs profit margin for when to use each.

A worked example

Buy Box price	$24.99
Referral fee (15%)	−$3.75
FBA fee	−$4.15
Supplier price	$11.20
Shipping, prep and labels per unit	$1.00
Landed cost	−$12.20
Profit	$4.89
ROI ($4.89 ÷ $12.20)	40.1%
Margin ($4.89 ÷ $24.99)	19.6%

Leave out the $1.00 of landed costs and the ROI looks like 52.6 percent. That gap is why so many products that look profitable on paper disappoint after they sell.

Profitable is not the same as a good buy

A good profit per unit is only the first test. Before you order, also check that the product sells often enough, that you are allowed to sell it, that Amazon is not on the listing, and that a price war is not on its way. Our guide to analyzing a supplier price list walks through every check.

Check one product, or a whole list

For a single product, use our free Amazon profit and ROI calculator. For a whole supplier price list, Wholesale Analyzer calculates the fees, landed cost, profit, ROI and margin of every product at once, for FBA and FBM side by side, and tells you which ones are worth buying.