Amazon FBA Profit Calculation is the most important task in selling online. Many new sellers take profit calculation granted and think the balance that comes in their bank account is a reflection of actual profits. We have created a FBA Profit Calculator which you can download and use it for free in below sections.
Due to this wrong assumptions sellers do business in loss and the blame online platforms for their losses. As a business owner it is your responsibility to calculate accurate profits for your FBA business.
In this article we will touch on everything related to calculating profits on Amazon.
- Amazon Commission Fees
- FBA Fees
- Easy Ship Fees
- Easy Ship Prime Fees
- Self Ship Fees And Self Ship Prime Fees
- Understanding GST for eCommerce in Amazon India
- How to Calculate Amazon FBA Profit
- FBA Profit Calculation Example
- Free FBA Profit Calculator Chrome Extension
Amazon Commission Fees
Amazon is a third party marketplace where seller sell to Amazon customers. Since sellers are selling through Amazon and to their customers, amazon charges commission fees to you.
Before you start putting in the work to rank products on Amazon.
Amazon commission varies depending on the category of your products. It can range from 2% to 28% per order.
So if you make a sale of ₹2,000 on a product which belong to a category with amazon commission of 10% then Amazon commission would be ₹200.
Amazon charges this commission because it also needs to earn to run the platform.And like your business it needs to make profits too.
Some categories have commission based in the product cost. For Example, in Kitchen Non-appliances category if product value is less then ₹300 then commission is 5%, while for product value greater then ₹300 will have commission of 11.5%.
It is very important to know the commission of you category to calculate profits.
Amazon FBA is a program by amazon which allows you to keep your inventory in Amazon warehouse called Fulfillment Centers (FC). It have several advantages and disadvantages over other programs.
You can see all Amazon Fees from here
Below we have created a FBA Profit Calculator which can be used as an google sheet.
For this article we will stick to list different fees charged by amazon. Let look at them below.
- Amazon Commission
- Pick and Pack Fees: Amazon charges pick fees of ₹5 per order and packing fees of ₹5 per order. Pick and pack fees are charged so that Amazon associate can pick your product and pack them.
- Monthly Storage Fees: Keeping you products in Amazon FC have a charge associated with it. Monthly storage fees are calculated based on the volume of your product. In Amazon India it is charged at ₹20 per cubic meter.
- Weight Handling Fees ( Shipping Fees ): Amazon charges you for shipping the product to customers. Shipping is charged based on the weight or volume of the product whichever is higher. It varies based the location of the order. Local orders will be charged very less fees as compared to Regional orders, while regional orders will be charged less as compared to national orders.
- Fixed Closing Fees: This is a fixed fees which is charged by Amazon depending on the price amd category of the product. For FBA it is usually very less compared to Easy Ship.
Easy Ship Fees
Easy Ship is the default method of shipping in Amazon. Amazon Transport Service (ATS) will come for pickup of your orders and ship them to customers.
You will be storing the inventory in your warehouse only.
Below are the list of Fees charged in Easy Ship.
- Amazon commission
- Fixed closing Fees
- Shipping Fees: Remember FBA and Easy Ship have different Shipping Fees. But usually if you add the Pick and Pack fee to Weight handling fee in FBA, then it comes equal to Easy Ship shipping fees.
Easy Ship Prime Fees
Easy Ship Prime is an invitation based program in which your products are given amazon prime tag while still in your warehouse.
Order dispatch and return handling will remains same. The only difference is that now you products will be prime eligible and prime members will get one day and two day delivery on your products.
All the fees in this program are same as Easy Ship, with only one additional fees. Which is called ” Delivery Shipping Fees“
Delivery Shipping Fees: This fees is charged for all One day and Two day delivery orders by customer.
Currently as of FEB 2020, this fees is ₹65 +18% GST for each one day and two delivery order for Amazon India.
So if you are receiving many one and two day delivery orders then it can become a profit eating program for you.
Self Ship Fees and Self Ship Prime Fees
Self Ship program is for sellers who do not want to use Amazon courier services and would like to dispatch using their own couriers. You can use FBA Profit Calculator and input your costs, if some cost do not apply to you then simply enter 0 and it will work for self ship as well.
It is recommended that you should use Amazon courier services. As it has many advantages over self ship. If your product comes under oversize bulk where ATS do not provide the service then only you should choose self ship.
Since in self ship you are not using Amazon Transport service. Amazon will not charge you Shipping charges.
Below fees will be charged by Amazon for Self Ship:
- Amazon Commission
There is no other fees charged by Amazon. As you are responsible for shipping your own products.
For Self Ship Prime, amazon do not charge any other fees except Amazon Commission
Understanding GST For eCommerce In Amazon India & FBA Profit Calculation
GST is charged on every Sale of a product or service.
If you are a business owner then you will be paying GST on every purchase and collecting GST from customers on every Sale.
In India GST has replaced all the VAT, CST, Excise Duty, Octroi Duty. And it is the only tax that you have to deal with.
GST have very strict monthly deadlines for filing returns. If you miss any deadline then you will be liable to penalty as per the rules in GST. We suggest you to not miss any deadlines and file the GST on time.
There two monthly returns that you will be filing, GSTR-1 and GSTR-3B.
GSTR-1 (Sales Return)
This return is filed by every 10th of next month. So for example if this running month is June then you will have to file June return by 10th July.
In this return, you need to show all your sales to the government and claim TCS credits from marketplaces. Your Actual Sales is equal to Total Sales – Total Returns for the month.
The late filling fees for GSTR-1 is ₹200 per month (Rs. 100 as per CGST Act and Rs. 100 as per SGST Act).
GSTR-3B (Summary of Sales & Purchase)
This return is filled by every 20th of next month. For example: If current month is June then you need to file this return by 20th July.
GSTR3B is a consolidated summary of your inward and Outward supplies. For online sellers the Inward Supplies are Purchase Bills, marketplace commission tax invoices and TCS credits charged by marketplaces.
Outward Supplies would be Sales Invoices generated by you.
Your Tax Liability = Tax on Sales – TCS credit – Tax on Purchase paid
How to Calculate Amazon FBA Profit
So far we have looked at different fees charged by Amazon under different programs. Now let’s take a look at how to calculate actual amazon profit for you Amazon FBA business in India.
Let’s assume that Our product is a Watch which weights 560 grams and have length 10cm, width 10cm and height 10cm. The volumetric weight of the product would be (10 x 10 x 10)/5000 = 0.200 KG = 200 grams.
Based on below calculation you can easily calculate your profits for any Amazon program.
Use below steps to calculate your Amazon profits.
Step 1: Amazon Commission
Find Amazon commission for your product and note down it as “Amazon Commission”. Go to the url https://services.amazon.in/services/sell-on-amazon/pricing.html and type in your product or category. You can also use the Category drop down to select your product category.
For our example Watch have Amazon Commission of 13.5%
Step 2: Weight Handling Fees
Calculate Weight Handling Fees for your products. Refer to below table to find weight handling fees.
Amazon have 4 different fee structures for different item weight and sizes. Our product comes under Small size.Hence we can refer to the weight handling fees for Small Size.
Our watch have weight of 560 grams which is greater than 500 grams, hence total weight handling fees will be ₹56 (for first 500 grams) + ₹25 ( for next 500 grams) = ₹81
Note that here the actual weight of the product is greater then volumetric weight of the product. Hence we took the actual weight of the product into consideration.
Step 3: Fixed Closing Fees
Find Fixed Closing Fees for your product. Our item price will be Rs. 400 hence our closing fee would be Rs. 20.
Step 4: Pick And Pack Fees
Pick and Pack fees for FBA for small size is ₹10
Step 5: Purchase Cost + GST
Note down Your product cost as Cost + GST amount. Say your product cost is ₹200 and gst is 18% then your purchase cost will be ₹200 + ₹36 = ₹236
Many sellers makes the mistake of not including GST in their profit calculation.
Step 6: Break Amazon Selling Price
Break your amazon selling price into Actual selling price + GST. Say if we are selling this product for ₹300, then our actual cost will be ₹ 253.24 and GST would be ₹ 45.76.
To get your actual selling price without GST, divide your Amazon selling price by 1.18 for 18% GST, 1.12 for 12% GST, 1.28 for 28% GST.
Step 7: Calculate your Amazon Profit
Now lets put everything that we have learned so far into action.
Copy this google sheet into your google drive or download the same from here.
Google Sheet Profit Calculator: https://docs.google.com/spreadsheets/d/1JDA1XSOU0fZduPYiEeJHHYWdXwCAAFbEQ1AwnHGvyGY/edit?copy
Enter your fee and cost in the Yellow Columns in sheet, when you update your cost and expenses, sheet will calculate final profit or loss. It also includes GST ITC calcuation for Accurate profits.
Everything that we have calculated so far is already present inside the sheet. Enter your costs and other figure and check the profits.
Free FBA Profit Calculator Chrome Extension
Above method shared by us is a simple if you do want to calculate profits for a single product.
But it is very time consuming when you are doing product research or competition cost analysis.
We are working on a chrome extension which will help you calculate your profits in a single click, taking GST into consideration directly in your browser
If you want to get notified once we launch it. Subscribe to our blog.
We hope this article was helpful in your FBA Profit Calculation