How much gross profit could I make on Amazon?

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Let’s take some time to have a high level view of the gross profit numbers and work through an example of how all the numbers actually work when you sell on Amazon.

Your product has a sale price of $30. Amazon will  take 15% for the privilege of selling on their platform and driving traffic to your listing. You pay that 15% on the sale of the product. Then, if you choose to use Fulfilled by Amazon you will be charged based on the weight and size of the product. The lowest would be $2.50, and that would be for a product  quite small and thin. 

Approx 1 pound weight would incur a freight fulfillment cost of around $3. Above 1 pound, you’re looking at a $4 price point and then $0.39 per pound above that. Amazon has other dimensions, like over 18 inches, which is about 45 centimeters. If your product exceeds that dimension then you go to oversize and pay a little bit more. 

Let’s continue with our $30 product sales worked up example. Your net Amazon fees of $8.50 leaves you with $21.50 from the original sale price. When a sale is made, and it’s been fulfilled, you’ll see order number, and it’ll have the sale price, ($30 minus the Amazon fees). The $21.50. is credited towards your account. Then every two weeks, Amazon will pay out to your bank account. 

You’ve got to pay for own stock and freight to get your product into the Amazon warehouse.. Then you’ve got your cost of the product and the freight. 

In a way, you can roughly use the 33% model. Amazon gets 1/3rd of the product sale price, you pay 1/3rd for freight and then you get 1/3rd back as gross profit, is not a bad back-of-the-envelope way of looking at it. 

But you do need to be aware of your product, is your price point going to work in America (and in Australia it is completely different again)? You need to make the price work!. So it’s not uncommon for New Zealand products that might be, say, $16NZD to sell in the States for $23USD and in a premium position and/or other products that might be $9NZD here to sell for $15USD on Amazon America. That does work, and the market will pay that premium price. 

How do the numbers work on Amazon?

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