A $24.99 product with $4.50 product cost, $3.70 freight, a $3.75 referral fee, and a $5.10 FBA fee leaves $7.94 profit per unit — a 31.8% margin. The formula is simple: selling price minus product cost minus freight minus Amazon fees. The hard part is getting honest numbers for each line.
The formula
Profit per unit = selling price − product cost − freight per unit − referral fee − FBA fulfillment fee.
- Product cost: the factory price per unit, including packaging.
- Freight per unit: total shipping cost ÷ units. Sea freight, customs, and delivery to the Amazon warehouse all count.
- Referral fee: usually 15% of the selling price for most categories. Some categories are 8% or lower, a few are higher.
- FBA fulfillment fee: charged per unit by size and weight tier. Small standard-size items are the cheapest tier.
Worked example: 500 units at $24.99
Product cost $4.50 per unit; sea freight $1,850 total; referral fee 15%; FBA fee $5.10 per unit (example for a small standard-size item — check the current Amazon fee schedule for your size tier).
- Product cost: $4.50.
- Freight per unit: $1,850 ÷ 500 = $3.70.
- Referral fee: 15% × $24.99 = $3.75.
- FBA fulfillment fee: $5.10.
- Total cost per unit: 4.50 + 3.70 + 3.75 + 5.10 = $17.05.
- Profit per unit: 24.99 − 17.05 = $7.94.
- Margin: 7.94 ÷ 24.99 = 31.8%.
- Total profit on 500 units: 500 × $7.94 = $3,970.
Freight is the swing factor. At $3.70 per unit it is almost as large as the product cost itself. A freight quote $1,000 higher would cut profit per unit to $5.94 — a 25% drop.
What this calculation leaves out
The $7.94 is profit before advertising and overhead. Budget for these separately, or the margin is fiction:
- PPC advertising. New listings commonly spend $1–$3 per unit on ads in the first months. At $2 per unit, profit falls to $5.94.
- Prep and labeling. Poly-bagging, labeling, and bundling are often $0.30–$1.00 per unit if you do not do them yourself.
- Storage fees. Monthly storage is small for fast sellers, but slow stock in Q4 pays peak rates.
- Returns. A 5% return rate on a $24.99 item costs roughly $1.25 per unit sold, averaged out.
- Inbound placement fees. Amazon charges to ship your inventory between warehouses unless you use the placement service options.
Sensitivity: what moves the profit most
Freight moves it first. If sea freight doubles from $1,850 to $3,700, freight per unit goes from $3.70 to $7.40 and profit per unit falls from $7.94 to $4.24 — a 17.0% margin. If the product cost rises $1.00, profit falls by exactly $1.00 per unit.
Price moves it fastest. Raising the price from $24.99 to $27.99 adds $3.00 to profit per unit before fees — but the referral fee also rises by $0.45, so the net gain is $2.55 per unit. Test price changes in small steps and watch the conversion rate.
The break-even price
Your break-even selling price is $17.05 before ads. Any price above that makes money on the unit economics; any price below it loses money on every sale. Add your target ad spend per unit to the $17.05 to get the real break-even price for launch.