Marketplaces
Amazon unit economics: how to calculate profit per unit on FBA
Profit per unit on Amazon FBA is the price you keep minus landed cost, referral fee, FBA fee, storage, returns and ads. In our worked example a $34.99 item leaves $11.54 per order before ads and $8.32 after, a 25.8% margin. VITON13 models this per SKU from $53.
What is unit economics on Amazon, and what is the formula?
Unit economics is the profit arithmetic of one sellable unit. On Amazon FBA that unit carries the referral fee, fulfilment, storage, returns and the advertising needed to win the sale, not only the product.
Profit per unit = price you keep − landed cost − referral fee − FBA fulfilment fee − storage − inbound placement − returns cost − advertising per unit. The FBA Guys call the result contribution profit: what is left after the costs that move with each sale, before software, bookkeeping and your time.
Margin and markup are two ratios of the same profit: markup divides by cost, margin by price. With a $9.60 landed cost and a $34.99 price the markup is 264% and the gross margin 73%, yet only 35.8% of kept sales survives Amazon's fees and returns. A margin without its list of costs means nothing.
Which costs belong in profit per unit, and where does each number come from?
| Cost line | What it covers | Number used below | Source |
|---|---|---|---|
| Landed cost | Product, freight, duty and prep, per unit | $9.60 (assumed) | Your supplier and freight invoices |
| Referral fee | Percentage of the total price, $0.30 minimum | 15% (Home and Kitchen) | Amazon US pricing page, 2026-10-01 |
| FBA fulfilment fee | Pick, pack and ship, by size tier, weight and price band | $5.92 plus a 3.5% surcharge | Goat Consulting rate card; Nova lists $6.39 for 2–2.5 lb |
| Monthly storage | Per cubic foot of average daily volume | $0.78 January–September, $2.40 October–December | FBA Guys, 2026-08-20; Nova, checked 2026-09-16 |
| Inbound placement | Per unit if Amazon splits your shipment | $0.40, large standard size | Nova, checked 2026-09-16 |
| Returns | Refund fee, free-return processing, unsellable units | $1.05 per return, 25% written off | Nova; Amazon FBA page |
| Advertising | Spend per unit sold | 10% of kept sales (assumed) | Amazon Ads ACOS guide, accessed 2026-10-01 |
| Plan fee | $39.99 a month, or $0.99 per item | About $0.08 a unit at 500 units a month | Amazon US pricing page, 2026-10-01 |
Referral fees change with the category and sometimes with the price. On the same $34.99, Amazon's table gives $5.25 at 15% (Home and Kitchen), $2.80 at 8% (Consumer Electronics), $7.00 at 20% (Jewelry up to $250) and $5.95 at 17% (Clothing above $20). The fee category can differ from the one shoppers see.
How does one product work out, step by step?
Take an assumed glass food-storage set in Home and Kitchen: $34.99, landed cost $9.60, large standard size at 2.1 lb. Of 100 orders, 8 come back and 2 of those cannot be resold. Replace every input; the structure is what matters.
| Line | Calculation | Amount |
|---|---|---|
| Order value | 100 × $34.99 | $3,499.00 |
| Refunds | 8 returns × $34.99 | −$279.92 |
| Kept sales | 92 × $34.99 | $3,219.08 |
| Referral fee | 15% of kept sales | −$482.86 |
| Refund administration fee | 8 × $1.05 | −$8.40 |
| FBA fulfilment fee | 100 × ($5.92 + 3.5%) | −$612.72 |
| Storage | 100 × 0.12 cu ft × $0.78 × 2 months | −$18.72 |
| Inbound placement | 100 × $0.40 | −$40.00 |
| Landed cost used | (92 sold + 2 written off) × $9.60 | −$902.40 |
| Profit before ads | $11.54 per order, $12.54 per kept sale | $1,153.98 |
| Advertising | 10% of kept sales | −$321.91 |
| Profit after ads | $8.32 per order, 25.8% of kept sales | $832.07 |
The referral fee, refund fee, FBA fee, storage and placement together cost $1,162.70, 36.1% of kept sales. The $9.60 product is not where most of the money goes.
What is the break-even price, and how much can ads take?
Break-even price is where profit per order shipped reaches zero: the fixed cost per order (FBA fee, storage, placement and landed cost of the units used) divided by the share of each dollar left after the referral fee and returns. Here that is $15.74 divided by 0.7796 before ads.
| Target | Minimum price | Profit per order shipped |
|---|---|---|
| Break-even before ads | $20.19 | $0.00 |
| Break-even with ads at 10% of kept sales | $22.89 | $0.00 |
| 15% of kept sales after ads at 10% | $28.64 | $3.95 |
The ad ceiling is profit before ads divided by kept sales: 35.8% here. Amazon's ACOS guide says ACOS must stay below your profit margin, or you spend more on ads than you earn. A launch may run above the line on purpose; write down the loss and the date it ends. Click prices and ACoS targets are in our guide to marketplace advertising cost.
How do you model returns?
- Treat a return as a lost sale first. The order still paid the FBA fee, storage and placement: a kept order earns $13.43 before ads, a returned one loses $10.16, and the $23.59 swing erases the profit of about 1.8 sales.
- Add the refund administration fee. Nova gives it as the lesser of $5.00 or 20% of the referral fee, $1.05 here; Amazon's help page was not readable.
- Add processing where it applies. Amazon's FBA page says returns processing is charged on orders where Amazon provides free return shipping.
- Write off the share that cannot be resold at landed cost: 25% here, or 2 units in 100 orders. Use the return rate of the SKU, not of the category.
| Returns per 100 orders | Profit, 100 orders | Per order shipped | Share of kept sales |
|---|---|---|---|
| 4 | $1,248.35 | $12.48 | 37.2% |
| 8 | $1,153.98 | $11.54 | 35.8% |
| 12 | $1,059.62 | $10.60 | 34.4% |
| 16 | $965.25 | $9.65 | 32.8% |
How do the published examples compare with this one?
| Source | Item | Lines it counts | Result |
|---|---|---|---|
| Nova Analytics, updated 2026-04-08 | Kitchen gadget, $29.99 | Referral $4.50, FBA $3.86, storage $0.42, returns $0.32 (8% × $4.00), ads $2.40, cost $7.50 | $10.99, 36.6% of price |
| The FBA Guys, updated 2026-08-20 | Product, $39.99 | Cost $10.40, referral $6.00, FBA $4.55, inbound $0.85, storage $0.30, returns $0.70, PPC $5.25 | $11.94, 29.9% of price |
| This guide | Glass set, $34.99 | Referral, refund fee, FBA plus surcharge, storage, placement, landed cost, ads at 10% | $8.32 per order, 25.8% of kept sales |
Most of the gap comes from returns and ads. Nova counts returns as 8% of a $4.00 average cost, a fair shortcut; we count a return as a lost sale, which costs more. The FBA Guys put ads at $5.25 a unit, 13.1% of the price; Nova at 8.0%. Published margins are not benchmarks for your product.
Which mistakes quietly kill profit per unit?
- Using last year's fee table. FBA fulfilment fees changed on 15 January 2026, the 3.5% surcharge applies from 17 April, and peak fulfilment fees run from 15 October 2026 to 14 January 2027, according to Nova.
- Averaging storage over the year. In the example, October to December storage cuts profit before ads from $11.54 to $11.15 per order.
- Pricing across a fee break. Clothing pays 10% from $15.01 to $20.00 and 17% above $20, on the whole price, so a $20.01 item pays $3.40 where a $20.00 item pays $2.00.
- Spreading ad spend evenly. Nova warns that products with different ROAS need product-level allocation.
- Counting the order but not the cash. The FBA Guys note that a unit earning $12 on paper is not a $12 unit if it needs nine months of stock.
When should you not launch a product, or not reorder it?
- The break-even price with ads sits close to the price you can actually win. Here $22.89 leaves room at $34.99 but almost none at $24.
- The product only sells with ads and your expected ACOS is above the pre-ad margin of 35.8%.
- At double the return rate you hoped for, the margin falls below your target. Re-run the table at 16 returns per 100.
- Peak-season storage, the surcharge or a heavier size tier turns a thin margin negative. Check the dimensions in Fee Preview before a full order.
How VITON13 does it
We start from the costs you supply: landed cost, price, size and weight, return history and ad spend per SKU. We check them against the platform terms current on the day of the work, then build the contribution per SKU, the return sensitivity, the break-even price and an ad ceiling for each product. In the AI-assisted mode AI assembles the cost register and the first model and a marketplace specialist checks every figure and writes the decision memo; in the human-led mode the specialist builds the model and AI supports. The result answers one question: which SKU can absorb platform costs, and what price or operating assumption has to change.
Marketplace unit economics
- Price
- $53 AI-assisted or $73 human-led
- Timeline
- 3–5 working days
Marketplace advertising
- Price
- $53 AI-assisted or $73 human-led
- Timeline
- 3–5 working days
Marketplace analytics
- Price
- $53 AI-assisted or $73 human-led
- Timeline
- 3–5 working days
AI-assisted: AI drafts inside defined steps, a person directs and checks every result. Human-led: a specialist does the work and AI assists.
What is included
- A cost-input register for each SKU
- A SKU contribution model with fees, fulfilment, returns and promotion
- Return sensitivity
- Promotion guardrails
- Break-even scenarios
- A commercial decision memo
- Delivery: 3–5 working days after the brief is approved
Not included
- Marketplace fees, ad budget and any other money paid to third parties
- Tax, accounting or financial advice: the model uses your costs and current platform terms and is planning support
- Running the account, campaigns or listings after hand-over
- Any assurance that a SKU will sell or earn a given profit
Revisions: 1 revision round on the deliverables
Get an estimate in 1 working dayWritten estimate within 1 working day
Example
PILOTPilot in progress
No published unit economics case yet
VITON13 has no published case with a seller's own cost data for this service, so the guide invents no client results. The worked example is arithmetic on assumed round numbers, and every fee is quoted from a source below or marked as an assumption. A client example will appear here with the numbers the seller approves.
What this does not prove
- The 100-order example does not show what any real product earns; your category, size tier, return rate and ad dependence move every line.
Questions and answers
What is a good profit margin on Amazon FBA?
There is no single figure. Nova's category table suggests targets from 8–15% for grocery to 25–35% for beauty, but it is aggregated vendor data, and the FBA Guys say a 30% contribution margin is healthy in one business and thin in another. Judge it after returns and ads, against your fixed costs and how much of your volume depends on advertising.
How much of each sale does Amazon keep?
In the worked example the referral, refund, FBA, storage and placement lines come to $1,162.70 on $3,219.08 of kept sales, 36.1%. The referral fee ranges from 8% to 20% by category on the US pricing page, and the FBA fee does not shrink when the price falls, so low-priced items lose the largest share.
Is Amazon's Revenue Calculator enough on its own?
It is free and covers referral fees, fulfilment, monthly storage and variable closing fees. Amazon says long-term storage, removal and returns processing are not built in; you add them in the miscellaneous field. Ad spend is not among its listed inputs, so add advertising per unit yourself and reconcile against settlement reports.
What is the difference between margin and ROI?
Margin divides profit by the price; ROI divides it by the money tied up in the unit. In the example, $11.54 before ads on a $9.60 landed cost is a 120% ROI and $8.32 after ads is 87%. Neither says how long the stock waits: months of inventory turn a good ROI into slow cash.
Can VITON13 build this for my catalogue, and what does it cost?
Yes. The unit economics service starts from $53 and delivers a cost register, a contribution model per SKU, return sensitivity, break-even scenarios and a decision memo in 3–5 working days. You supply the costs; marketplace fees and ad budgets stay with the platforms, and the model is planning support, not financial advice.
Sources
- Amazon, How much does it cost to sell on Amazon? (US referral fees and selling plans) —
- Amazon, Fulfillment by Amazon (FBA) costs and returns processing —
- Amazon, How to estimate profits with the FBA Revenue Calculator —
- Amazon Ads, What is advertising cost of sales (ACOS)? —
- Goat Consulting, 2026 Amazon FBA Fee Changes: Full Rate Card —
- Nova Analytics, Amazon FBA Fee Changes 2026 —
- Nova Analytics, Amazon Unit Economics —
- The FBA Guys, Amazon FBA Unit Economics Explained —