How do you calculate profit margin on Amazon?

The profit margin formula

There are two margins worth tracking. Gross margin shows how profitable the product is before marketplace costs; net margin shows what you actually keep after Amazon takes its cut and you spend on ads. Net margin is the number that tells you whether the business works.

Calculate gross margin first, then layer in Amazon's fees and advertising to reach net margin.

• •Gross profit = Revenue - COGS
• •Gross margin = (Revenue - COGS) / Revenue x 100
• •Net profit = Revenue - COGS - Amazon fees - FBA fees - storage - ads - returns
• •Net margin = Net profit / Revenue x 100

A worked example

Take one unit selling for $30. These numbers are illustrative, and the Amazon fee figures below are placeholders, not current rates, because referral and FBA fees vary by category, size, and weight and change over time, so always verify them against Amazon's current fee schedule.

Sale price $30. Subtract landed product cost (COGS) of $9, an illustrative referral fee of $4.50, an illustrative FBA fulfillment fee of $5, and $3 of advertising allocated to that unit. Net profit = $30 - $9 - $4.50 - $5 - $3 = $8.50. Net margin = $8.50 / $30 = 28.3%. Notice gross margin looked healthy at ($30 - $9) / $30 = 70%, but Amazon's fees and ads cut the real margin to under 30%. That gap is why net margin is the number that matters.

• •Revenue: $30.00
• •Less COGS: $9.00 (gross margin 70%)
• •Less referral fee: $4.50 (illustrative)
• •Less FBA fulfillment: $5.00 (illustrative)
• •Less advertising: $3.00
• •= Net profit $8.50 -> net margin 28.3%

Don't forget the hidden costs

The example above is still optimistic because it leaves out costs that quietly eat margin: long-term storage fees, returns and refunds, removal and disposal fees, inbound placement fees, and the carrying cost of unsold stock. Across a full catalog these can move a 28% line-item margin down to a low double-digit business margin.

Because so many of those costs are Amazon fees that shift over time, model them per unit before you launch a product. A free FBA profit calculator lets you plug in your landed cost and current fees to see net margin per unit, and a free FBA reimbursement audit recovers margin you've already lost to units Amazon lost or damaged but never credited back.

Calculate margin at the SKU level

A blended account-wide margin hides which products make money and which bleed. The unit above looks fine, but the same catalog often contains SKUs at negative net margin once you load in returns and storage. You only see this by calculating margin per SKU.

BeanHawk computes per-SKU profitability using your real landed cost and the actual fees Amazon charged on each settlement, so margin is based on what happened, not on estimates. That lets you cut the losers and scale the winners with confidence.

Check any product's margin instantly with the FBA profit calculator — enter price and costs to see margin and ROI after fees.

Frequently asked questions

What is a good profit margin on Amazon?

Many established Amazon sellers target a net margin in the 15-25% range after all fees, ads, and returns, though it varies widely by category and price point. Gross margins often look much higher (50%+), but it's the net figure that determines whether the business is healthy. Margins below roughly 10% leave little cushion for fee increases or a bad ad month.

Is a 30% profit margin good?

A 30% net margin on Amazon is strong, above what most sellers achieve after Amazon fees, fulfillment, and advertising. Just confirm it's a net figure, not gross. A 30% gross margin would be thin once Amazon's cut comes out, while a 30% net margin means a genuinely profitable product.

What is the difference between gross and net profit margin?

Gross margin is (revenue - COGS) / revenue and shows product profitability before marketplace costs. Net margin subtracts everything else (referral and FBA fees, storage, ads, and returns) before dividing by revenue. Net margin is the truer measure of what you keep, because Amazon's fees often consume a large share of gross profit.

Is selling on Amazon profitable?

It can be, but profitability hinges on net margin, not top-line sales. Sellers who track per-SKU costs (landed cost plus every Amazon fee) and recover reimbursements tend to stay profitable; those who watch only revenue often find fees and returns have eaten the margin. Profit lives in the details, not the sales number.

How do Amazon fees affect your profit margin?

Amazon's referral fee, FBA fulfillment, and storage fees come directly out of each sale before you reach net profit, and they often consume a meaningful share of gross margin. Because these fees vary by category and size and change over time, model them per unit against Amazon's current schedule rather than assuming a fixed percentage.

Keep learning

• How do you find cost of goods sold (COGS)?
• Is selling on Amazon profitable?
• What is a good ACoS on Amazon?