I am confused…
Just listed first product on amazon…
I can see in revenue calculaor all the breakdown.
Our product is listed as £9.95…
Our net profit is calculated at £4.06…
So amazon is taking 60%???
Our product costs £3 to make… so we make £1.06 for every sale???
That’s not even adding in PPC!
What;s going on here? Must be a mistake?
The costs of shipping 300 items to amazon would literally wipe out future profist for some time… add in PPC - forget about it…
Hello, the idea of achieving a 40% net margin on Amazon FBA sounds attractive, but in reality it is very difficult to sustain at scale, and in most cases it is either misunderstood or calculated incorrectly. Many sellers confuse gross margin with net margin, and once you include all real costs such as Amazon fees, PPC, returns, storage, and operational expenses, the true net margin is usually much lower.
In practice, most established Amazon sellers operate somewhere around 10–25% net margin, with many falling closer to 15–20% once everything is fully accounted for. Amazon itself takes a significant portion of revenue through referral and FBA fees, and then advertising can take another large percentage, which quickly compresses margins. This is why even a product that looks profitable on paper can end up much tighter in reality.
That said, hitting 40% net margin is not impossible, but it usually only happens in very specific situations such as highly differentiated private label products, strong branding with low PPC dependency, or repeat-purchase products where customer acquisition cost is spread over multiple orders. Even then, it is typically achieved temporarily or on a small scale rather than consistently across an entire business.
A more realistic approach is to aim for strong gross margins and then optimize operations to protect net margin over time by reducing costs, improving conversion rates, and building a brand that is less dependent on aggressive advertising.
