This includes product costs, shipping fees, Amazon fees (e.g., referral fees, FBA fees), VAT, and any other expenses.
Additionally, how can we track and analyze these figures effectively to ensure we’re maximizing profitability?
You have to do it manually, since SC doesn’t record all you expenses.
You can use the transaction report and place a calculator in front of it. Filter the orders, and you will find what you are looking for.
It iinvolves tracking all relevant costs and revenues. Here’s detail example:
1. Track Product Costs
Wholesale Cost
The amount you pay to purchase the product from your supplier.
Shipping Costs
Include inbound shipping fees to your warehouse or Amazon’s fulfillment center.
Customs/Duties
If you’re importing goods, include any import taxes or duties.
Packaging Costs
Costs for packaging materials if you handle this yourself.
Formula
Total Product Cost = Wholesale Cost + Shipping Costs + Customs/Duties + Packaging Costs
- Calculate Amazon Fees
Amazon charges several fees that impact your profitability:
Referral Fee
A percentage of the sale price (typically 6-15%, depending on the category).
Fulfillment Fee
If using FBA (Fulfillment by Amazon), this covers storage, packing, and shipping.
Storage Fees
Monthly fees for storing inventory in Amazon’s warehouses.
Subscription Fee
If you’re on a Professional Selling Plan (£39/month).
Other Fees
Returns processing fees, advertising costs (if applicable), etc.
Formula
Total Amazon Fees = Referral Fee + Fulfillment Fee + Storage Fees + Subscription Fee + Other Fees
- Track Revenue
Gross Revenue
Total sales revenue from your products (before any deductions).
Refunds/Returns
Subtract the value of any refunds or returns.
Formula
Net Revenue = Gross Revenue - Refunds/Returns
- Calculate Monthly Expenses
Include all operational expenses related to your business:
Marketing Costs
Sponsored ads, promotions, etc.
Software Tools
Tools for inventory management, analytics, or accounting.
Shipping Supplies
Boxes, tape, labels, etc.
Miscellaneous Costs
Bank fees, travel, or other business-related expenses.
Formula
Total Monthly Expenses = Marketing Costs + Software Tools + Shipping Supplies + Miscellaneous Costs
- Calculate Profit
Subtract all costs from your net revenue to determine your profit.
Formula
Profit = Net Revenue - (Total Product Cost + Total Amazon Fees + Total Monthly Expenses)
- Use Tools to Simplify the Process
Amazon Seller Central
Use the Reports section to track sales, fees, and inventory.
Accounting Software
Tools like QuickBooks, Xero, or A2X can automate expense tracking and profit calculations.
Inventory Management Tools
Software like InventoryLab or SellerApp can help track costs and profitability.
- Monitor Key Metrics
Gross Margin
(Net Revenue - Total Product Cost) / Net Revenue * 100
Net Profit Margin
(Profit / Net Revenue) * 100
Break-Even Point
The price at which your revenue covers all costs.
Example Calculation
Let’s assume
Wholesale Cost£10/unit
Shipping/Duties £2/unit
Packaging £0.50/unit
Selling Price£25/unit
Referral Fee 15% of £25 = £3.75
Fulfillment Fee £3/unit
Storage Fees £10/month
Subscription Fee £39/month
Marketing Costs £50/month
Units Sold 100
Calculations
- Total Product Cost**: (£10 + £2 + £0.50) * 100 = £1,250
- Total Amazon Fees: (£3.75 + £3) * 100 + £10 + £39 = £724
- Net Revenue: £25 * 100 = £2,500 (assuming no refunds)
- Total Monthly Expenses: £50
- Profit: £2,500 - (£1,250 + £724 + £50) = £476
Note that I hve given above all numbers for ease of understanding
By consistently tracking these numbers and using tools to automate the process, you can accurately calculate your monthly product expenses and profit for your Amazon UK wholesale business.
Thanks,
Irfan Khan
Paralegal
Paramount Elance
2 Likes
Hey guys
can anyone who uses LMB and Xero that sells in the USA give me a message please i have a couple of queries.
I used Quickbooks online & klavena.
I’d keep all costs in one spreadsheet, including product price, shipping, marketplace fees, VAT, and other expenses, then calculate the true profit for each sale. Reviewing these numbers regularly makes it much easier to spot where margins are being lost. It’s similar to using a chipotle nutrition calculator to break down individual ingredients you get a clearer picture when everything is measured separately.
One thing I’d add: do the math per SKU before you look at the monthly total. Monthly P&L can hide the one item that is quietly leaking cash.
Example for an Amazon UK wholesale SKU:
- Sale price: £24.99
- COGS / landed product cost: £8.00
- Inbound freight/duty allocated per unit: £1.10
- Amazon referral fee at 15%: £3.75
- FBA fulfilment + storage/prep allowance: £3.80
- PPC allocation: £3.00 per unit sold
- Expected returns/refunds allowance: £1.25
True net profit = £24.99 - £8.00 - £1.10 - £3.75 - £3.80 - £3.00 - £1.25 = £4.09, or about 16% net before any fixed overhead. If you only looked at gross margin, it would look like £16.99 / 68%, which is wildly more optimistic.
The leak I see most often is treating PPC and returns as “monthly overhead” instead of allocating them back to the SKU. That makes reorder decisions risky because the product with the highest sales can be the one funding everyone else.
Disclosure: I work on MerchantHQ. We made a free no-signup calculator for this exact sanity check if you want to run the numbers quickly: Free True Profit per SKU Calculator — Shopify, Amazon, Etsy | MerchantHQ
Keeping every expense in one place makes it much easier to see where your profit is actually going. I’d track product costs, shipping, marketplace fees, VAT, and other monthly expenses separately, then compare the totals with your sales. Using a simple calculator can also help when you need to check different figures quickly. An infinite fusion calculator is another example of how having the right calculation tool can make working with numbers a little easier.
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