If you are considering selling on Amazon, the Amazon FBA Calculator is vital tool for evaluating products.The FBA Calculator by Amazon is a free tool provided by Amazon. Since the data is coming directly from Amazon — you know you can trust the results and information provided in the FBA calculator.The Amazon FBA Calculator can be confusing at first, so we will break down how the Amazon FBA calculator works. It is one of the first Amazon seller tools that you should learn to use.We at have a concise, visual explanation for you of the FBA seller calculator below.
First Pick your Country
For starters make sure your FBA calculator is set the proper country.
First find your Amazon FBA product
Enter an item into the Amazon FBA Calculator in the "find your product" search bar. Enter your product item by name and related listings already on Amazon will appear.
After clicking on search the FBA calculator has a popup window where can choose the product you are selling on Amazon.
Enter Your Amazon Product Pricing Information
You'll see two columns in the Amazon seller calculator; one says "your fulfillment" while the other says "Amazon fulfillment".
What's confusing about the Amazon FBA Calculator is that the two columns do not interact with each other whatsoever."Your fulfillment" is the column that describes what it would be like if you fulfilled the Amazon product yourself (i.e. package & ship it out to the customer)."Amazon fulfillment" is with Amazon taking care of the product packing, shipping and storage for you (hence "Fulfillment by Amazon").After entering prices, enter your shipping fee you would charge for non-FBA Amazon orders.[Tweet "How to Use the Amazon FBA Calculator"]
What is Your Amazon Fulfillment Going to Cost?
The Amazon FBA Calculator gives you a convenient way to estimate expenses for products you ship on your own.
On the right hand FBA column of the Amazon calculator enter in the shipping cost per item to ship to Amazon’s warehouses (for eventual FBA fulfillment).
Remember Amazon does not pay for you to ship packages of your FBA products to their warehouses. Ship in bulk and set up an Amazon shipping plan to save money.We now can take a look at results by clicking the calculate button in the Amazon seller calculator:
On the left column the Amazon FBA Calculator shows your Amazon profit margin if you do the packaging & shipping on your Amazon sales.Wow 22.81%! Time to load up on some Listerine!The right column shows your Amazon FBA profit after the cost of Amazon storage and shipping fees. Are you feeling bummed that this is only half the profit?
Double the Profit? So Why Go with Amazon FBA? Is FBA Overrated?
So in this example, I left out something pretty vital.Did you notice what?In the cost of seller fulfillment field we have a total of $2.45 based on package and postage costs. But we left out labor costs!"But Kevin, I am going to package these items myself!"Even if you are shipping these products yourself, consider time spent packaging for a true comparison between Amazon self-fulfillment and Amazon FBA.This is your opportunity cost and smart entrepreneurs always factor that in.
Drinking Mojitos > Packaging Amazon Shipments
Using FBA could mean drinking mojitos off the dock at Key West while your Amazon business makes you money. And if you use JoeLister even your eBay sales could be fully automated!So let's do a recalculation to keep this real and not consider your labor as free. Even if you hate mojitos, this is time you could be billing hours for someone else or starting another business.What is an hour of your time worth?Newer entrepreneurs tend to treat their time like it is worthless. Your time is precious. Outside of a time machine — once it is gone, it is gone.While too low for most entrepreneurs, let's go with $50 as an example.
For each order you have to pull up the order info, pack the item, tape it up, and print postage. Let's say you can do a package in 5 minutes.That gives us 12 packages per hour. So you have a labor cost of $4.16 per package.You know what is going to happen to the Amazon calculations now.Brace yourself...
This is what a fair comparison Amazon Merchant sales vs Amazon FBA looks like.You can have a profitable and scalable business using Amazon FBA to process your orders or work for nothing.These Amazon FBA calculator numbers also do not take into account the increased sales velocity you should expect from FBA sales compared to self-fulfillment Amazon orders.Consider how everyone has become addicted to 2-day free shipping on Amazon — who does not have Amazon prime now?Even my mother has it (and mother-in-law too!).
Conclusions on Amazon FBA product calculations
Choosing Amazon FBA for each product you want to sell on Amazon may not be a slam dunk, but it is for this example.Use the Amazon FBA Calculator to make an educated plan before you decide to load up on inventory to ensure your resulting Amazon profits will be worth the trouble.If you take your time to thoughtfully enter in your product information, costs, shipping, and labor costs you can prevent situations where your resulting profit was a disappointment.At the end of the day, you want to optimize both profits and increase sales volume.The intersection of success for both of those will result in thriving Amazon business.Happy calculating! You can find the Amazon calculator here:https://sellercentral.amazon.com/hz/fba/profitabilitycalculator/index?lang=en_US