The three numbers
- Net profit per unit: sale price minus every Amazon fee and every cost of yours. Example below: $7.11.
- Margin: net profit ÷ sale price. How much of each sales dollar you keep: 28.5%. Useful for comparing products and for knowing how much a price cut or ad budget you can absorb.
- ROI: net profit ÷ the cash you put in per unit (product, freight to Amazon, prep). How hard your money works: 100.1%. Useful for deciding what to buy next with limited cash.
- Break-even price: the lowest price at which net profit is zero: $15.50. Your floor in a price war.
The example
A 12 oz large standard kitchen product at $24.99, costing $6.00 plus $0.80 freight and $0.30 prep, with 10% of sales spent on ads, 3% returns and two months in storage. Open it in the calculator.
| Line | Per unit |
|---|---|
| Price | $24.99 |
| Amazon fees | −$8.17 |
| Your costs | −$9.71 |
| Net profit | $7.11 |
| Margin | 28.5% |
| ROI | 100.1% |
Common mistakes
- Leaving out ads. If 10% of sales goes on advertising, that is 10 points of margin.
- Using the pre-surcharge rate card. The 3.5% surcharge is not on the published card. Details.
- Ignoring dimensional weight. A roomy box can move you up a fee row.
- Forgetting Q4. Peak fees and triple storage rates shrink holiday margins; plan with the Q4 planner.
- Treating ROI as yearly. ROI here is per unit sold. Fast-selling stock turns the same cash over several times a year.
How much can you pay the supplier?
Work backwards from the ROI you need. In this example, holding everything else equal, the most you could pay is $9.78 per unit for a 30% ROI or $6.00 for 100%. The calculator shows this line for any target. There is no universal “good” margin; sellers commonly look for room to absorb a price cut, a higher ad spend and the Q4 fee increase while staying profitable.