How do you calculate net profit on Amazon?
Net profit on Amazon is the sale price minus referral fees, FBA and shipping, storage, advertising, returns and the cost of the product itself. Marketplace-collected sales tax is excluded, because it passes through your account without affecting you. The calculation has to be done per order: two products with identical revenue can land on opposite sides of break-even because their fee tiers, dimensions and ad spend differ.
Revenue is not profit, and the gap is itemised
Amazon deducts several different charges from a single sale and they do not all appear in the same report. The referral fee is in one place, FBA fees in another, the Digital Services Fee and closing fees somewhere else. A seller adding these up by hand either misses a charge or counts one twice.
The honest way to build the number is to take the raw financial events Amazon publishes and file each one into a category: net sales, returns, referral fees, FBA fees, other Amazon fees, promotions, ad spend, reimbursements and reimbursement reversals. Then the question “why did this order leave so little” has an answer you can point at.
A worked example
These are example numbers, not a fee schedule — Amazon publishes the current rates and they change.
| Line | Amount |
|---|---|
| Sale price | $29.99 |
| Referral fee | −$4.50 |
| FBA fulfilment | −$5.20 |
| Storage (allocated) | −$0.35 |
| Advertising (allocated) | −$3.10 |
| Returns (allocated) | −$1.40 |
| Cost of goods | −$9.80 |
| Net profit | $5.64 |
Margin is 18.8%. Change one thing — a size tier that pushes fulfilment up by a dollar — and it is 15.5%. That is why the calculation belongs at order level rather than at month level.
What does not belong in the calculation
Sales tax the marketplace collected. In marketplace facilitator jurisdictions Amazon collects and remits it. The money enters and leaves your account with no effect on you. Counting it inflates both revenue and cost and makes margin look smaller than it is.
Reimbursements you have not received. A claim you intend to make is not income until it is paid. Track it, but do not add it to profit.
Checklist
- Are referral, FBA, storage and other Amazon fees each in their own category?
- Is advertising attributed to the product it advertised, not to the account?
- Is the cost of goods on the product record, and current?
- Are returns costing you the shipping and handling, not just the refund?
- Is marketplace-collected sales tax excluded?
- Are reimbursement reversals deducted again?
Frequently asked questions
How do you calculate net profit on Amazon?
Start from the sale amount and subtract the referral fee, FBA and shipping fees, storage, advertising attributed to that product, the cost of returns and your own cost of goods. Add FBA reimbursements, and subtract reimbursements Amazon later reverses. What remains is net profit.
Why don’t my figures match Amazon’s reports?
Two usual reasons. Amazon’s summary reports include sales tax it collected on your behalf; that is not yours and should not count. And Amazon does not know your cost of goods, so its “profit” is revenue after its own fees, not profit.
Is monthly profit enough?
For a tax return, yes. For deciding what to advertise or discontinue, no — a month averages a losing product and a winning one into a number that describes neither.