There are some sellers out there who pull in $20,000 revenue per month, but only make $1,000 in profit. I don’t want that kind of business. Those sellers put in a ton of time into their business and can make a ton of sales, but they don’t get to keep that money. They only move money.
I’d rather pull in $6,000 revenue per month and make $4,000 profit! That is worth my time and effort.
One of the many nuggets of wisdom we teach our Amazon FBA Mastery students is that you should aim for profit margins north of 40% before accounting for PPC.
Not only is a 40% profit margin possible, but Just One Dime actually sells products with profit margins above 40% for Done For You investors.
Today, I will show you ten simple steps on how to use this calculator so you can ensure your product can net a huge profit margin.
1. Copy and paste your top competitor’s ASIN into the Fulfillment by Amazon Revenue Calculator.
Find your top competitor’s listing. If you’re unsure of what listing to use, you can:
- Search your main keyword in Amazon Search.
- If your type of product is novel to the Amazon platform, find a product listing in the same Amazon category where the product has roughly the same dimensions and weight as the product you want to sell.
Go to the product listing’s URL in your web browser window. The ASIN is the set of characters that come after /dp/. The ASIN starts with “B0” and continues up until the next slash in the URL.
Copy and paste the ASIN into the Amazon revenue calculator. (You can also look up a product via keywords or the product barcode identifier.)
If necessary, select the product from the pop-up screen.
2. Choose whether you want to calculate FBM profit margins, FBA profit margins, or both.
“Your Fulfillment” means that you fulfill orders FBM or “fulfilled by merchant”. You do this when you store and ship units yourself or at a warehouse that is not run by Amazon.
“Amazon Fulfillment” is when you opt for FBA or “fulfillment by Amazon”. You do this when you store your units in Amazon’s fulfillment centers and have Amazon ship and provide customer service for you at a cost.
Now, if you do this all yourself, keep your items in your house and pack it up yourself, your costs will be much lower, but you won’t save time. If you want to build wealth, value your time more than your money.
Choose FBA to save time that you can instead use to work on your business. Additionally, products generally have to be FBA in order to come up as “Prime” for shoppers with 1-2 day shipping. Shoppers are more likely to trust a brand they haven’t heard of when the product is Prime and fulfilled by Amazon.
You don’t make money unless you have time. It’s better to pay a little more so that Amazon takes care of it for you. Yes, you make a little less per item, but think of the hours upon hours in the year that you save. You can go and find another product, get it to Amazon, scale your business.
You do not need to enter the information for both “Your Fulfillment” and “Amazon Fulfillment” if you know in advance which option you will choose.
3. Enter your item price.
Item price is the price charged to the customer. This is your source of revenue. I recommend that you sell products at the high end of the price range your niche market will accept.
4. Enter your shipping charge to the customers. (FBM only)
Shipping only applies to FBM when you charge the customer to ship products to their address. The seller collects this amount as revenue. For FBA orders, since shipping is already included, this amount is zero and doesn't affect FBA fulfillment fees.
5. Enter your cost of seller fulfillment. (FBM only)
Cost of seller fulfillment is your total cost per unit for you to fulfill a customer’s order.
6. Enter your cost to ship to Amazon. (FBA only)
Ship to Amazon is your cost of shipping the item to an Amazon fulfillment center.
7. Enter your storage cost per unit. (FBM only)
Monthly storage cost per unit is the amount it costs to store a single unit of this product per month. At Amazon, this is reflected in the monthly storage fee, which is calculated based on the volume of the product.
8. Enter your average inventory units stored.
Average inventory units stored is the average number of units you hold in inventory for this product. However, the revenue calculator will calculate your costs based on the inventory costs for your entire batch instead of per unit. Only type in the actual number of products you will keep stored at a time if you also know many units you can expect to sell per month (demand).
You can get product demand data via software research tools like Niche Hunter.
Otherwise, type “1” in this box to see your profit margin per unit. I will type in "1" in this example and then show you how to create a sales projection if you know your product's demand later.
9. Enter the cost of your product per unit.
Cost of product is the cost of acquiring the product from your supplier, or the cost required to manufacture or produce a single unit.
If you do not know how much your product would cost, get a general idea using Alibaba search. Make sure the product looks as close as possible to what you want to sell.
10. Calculate and interpret your data.
Your revenue, cost, seller proceeds, and net profit stats will appear to the right of the calculator text.
In the calculator, you will see Amazon autofill stats such as "Selling on Amazon fees" and the net profitability.
11. Optional: Create a sales projection.
If you know how many units you can expect to sell per month FBM and/or FBA and the number of units you will keep in storage (your warehouse or Amazon's fulfillment centers), then you can cast a sales projection.
For example, let's say you knew that products similar to the one you want to sell will sell 100 times a month when sold FBM and 50% more times a month when sold FBA. Next to Estimated monthly units sold with Seller Fulfillment, enter 100. Next to Estimated monthly sales increase with Fulfillment by Amazon, type in how many more sales you will make when selling FBA as a percentage.
Let's say you also knew that you would store 500 units at your warehouse or Amazon's fulfillment centers. Where you typed "1" before, now enter the real number.
Then, the revenue calculator will give you stats that follow your sales projection.
Use these stats to help you choose a product to sell with confidence.