Amazon is taking over the online marketplace. And deciding to sell on the site can be convenient and profitable. The Fulfillment By Amazon, or FBA, service makes selling, storing, and distributing your product easy. The storage, packing, shipping, and customer service are all handled by Amazon, leaving you to simply worry about selecting and marketing your product.
But this service comes at a cost. And it’s complicated to figure out how all of the costs will impact your bottom line. It’s important to take FBA fees into account when calculating profits and sales prices.
Fortunately, there are many FBA calculators at your fingertips like the one found at Synccentric. There is one on Amazon’s site, but many others have popped up all over the internet. And they are extremely helpful in figuring out your profit margins. Here are a few benefits you can reap from using an FBA calculator.
1. Research Products to Sell
Deciding which products to sell on Amazon can be tough. There are a lot of factors to look at, including market share and competition. But sales don’t matter unless you are making a profit. FBA calculators can help you determine which products are most likely to make you money.
Some FBA calculators include market tools. These can help you determine the popularity of certain products or categories. You will have access to sales data and price history. This can guide you in choosing a product that’s in demand.
You can also access keyword data. This lets you know what shoppers are searching for. It can help you decide on a desirable product. It can also guide you in creating a description that is more likely to be found in a keyword search.
2. Referral Fee
One of the most crucial FBA calculations to consider is the referral fee. This is the fee that Amazon is going to charge you just to make a sale on their site. And it’s charged to any seller whether they are using FBA or shipping independently. Fortunately, an FBA calculator can help you see how this affects your profit.
The referral fee is a percentage of your sale price. It’s usually around 15%, but that could increase or decrease depending on your product’s category. The steady percentage model is helpful to sellers, though. If you raise or lower your price, the fee adjusts with it, so it doesn’t severely affect your profit.
3. Fulfillment Costs
Calculating fulfillment costs is helpful as they are complex and consist of many various fees. An FBA calculator takes the guesswork out of figuring these fees out. And can also break them down so you can look for ways to save.
Fulfillment fees are based on your item’s size and weight. Items fit into several categories, with fees increasing significantly with each category. This is important to consider when determining which products to sell.
These fees also include a pick and pack fee. This is the labor cost for Amazon to pull the item and package it for shipping. It also covers the expense of the packing materials. The costs of providing customer service are also rolled into this fee.
One of the best benefits for Amazon customers is the ability to receive their items quickly. But that comes at a price to the seller. The actual shipping costs are another component to the fulfillment fees.
Storing your product at an Amazon location is included in your fulfillment fee as monthly storage. The more inventory you keep in the warehouse, the higher the fees. And keep in mind that these fees can fluctuate depending on the time of year.
The last component to fulfillment fees is your cost to ship to Amazon. You’ll need to pay the inbound shipping to get your inventory to the warehouse. Calculating these can be complicated. But an FBA calculator can help you determine the most economical amount of product to send to the warehouse at one time.
4. Consider Upfront Costs
Some calculators have a great feature to input your upfront costs. This is helpful in determining your investment in the product. And how much you need in sales to offset it.
Did you purchase samples of your product before purchasing? Ongoing quality control is another investment. These costs should be part of your calculations.
Marketing your product is an ongoing cost. If you have been advertising your product, those costs need to be factored into your profit margins. The costs associated with hiring someone to photograph and edit product images must be also be included.
An FBA calculator will help you set your price point, so you get the most return on your investment. It can also help you manage the amount of money you initially invest in a product. You are able to easily play with the numbers to find the perfect balance of investment and profit.
5. Set An Item Price To Ensure Profit
Ultimately, the goal of selling a product is to generate profit. An FBA calculator is a great tool to simulate price points. And it can estimate how changing the price of your product will impact your profit.
An FBA calculator can help you quickly figure out your rock bottom product price. This is the lowest price you can sell an item for, while still receiving a profit. You can also calculate the impact of increasing the price by large or small amounts. An FBA calculator is a helpful tool in developing a price range for your products.
6. Other Helpful Features
Different FBA calculators offer different tools. Compare the benefits of them and evaluate which needs are best for your situation. Are you willing to pay for a calculator to have access to a valuable feature?
Is being able to compare and track your costs is important to you? Then it would be helpful to be able to export your data to excel. Some calculators provide this capability.
Taxes are also a part of your business. And they are complicated because they vary by location. If you are interested in a great way to track how your taxes impact your profit, look for a calculator that has this accounting feature.
Selling goods on Amazon can be an easy and convenient way to make an income. Or even just to put a little extra cash in your pocket. Luckily, you don’t have to be a math genius to figure out how to make a profit.
FBA calculators take the guesswork out of setting your price range. They can even help you research and decide which products to sell. Just look for one with the best features for your business. And you’ll be on your way to maximizing your profit margins.
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