The formula
Amazon FBA profit margin is calculated as: (Selling Price − Total Costs) ÷ Selling Price × 100. Total costs include your landed product cost, Amazon's referral fee, FBA fulfillment fees, storage fees, and advertising cost per unit. The result is a percentage — the share of each sale you keep after all costs are paid. This is your net margin. Gross margin uses the same formula but excludes advertising, giving you a pre-ads baseline.
Most sellers calculate a simplified version of this that only includes product cost and Amazon's FBA fee, leading to inflated margin estimates. The difference between a back-of-envelope calculation and a complete one can easily be 15–20 percentage points — the gap between thinking you have a healthy business and discovering you don't. Use the complete formula every time.
The cost categories
Landed product cost per unit is manufacturer cost plus all freight (ocean or air), import duties, customs brokerage fees, and any inspection or prep center costs before the product enters Amazon's fulfillment network. This is frequently underestimated by new sellers who calculate product cost in isolation and forget that getting it from factory to Amazon FBA adds 20–40% on top, depending on size, weight, and shipping method.
Amazon's referral fee is a percentage of the selling price deducted before you receive payment, ranging from 6% (electronics) to 17% (jewelry) with most categories at 15%. FBA fulfillment fees are charged per unit shipped and are based on the product's size tier and weight — check the current fee schedule in Seller Central's FBA Revenue Calculator. Monthly storage fees apply to all inventory at Amazon warehouses and spike significantly in Q4. Finally, your average advertising cost per unit sold (total monthly PPC spend ÷ total units sold that month) completes the picture.
Worked example
Product: stainless steel travel mug, selling price $27.99. Landed cost per unit: $6.20 (manufacturer $4.50 + freight and duty $1.70). Referral fee at 15%: $4.20. FBA fulfillment fee: $4.75 (standard-size, 12 oz). Monthly storage allocation: $0.25 per unit. Gross profit: $27.99 − $6.20 − $4.20 − $4.75 − $0.25 = $12.59. Gross margin: $12.59 ÷ $27.99 = 45.0%.
Now add advertising. At a TACOS (total ad cost of sales as a percentage of total revenue) of 11%: $27.99 × 0.11 = $3.08 per unit in ad spend. Net profit: $12.59 − $3.08 = $9.51. Net margin: $9.51 ÷ $27.99 = 34.0%. That's a genuinely healthy margin — but only because this product has a reasonable selling price and controlled landed cost. Shave $3 off the selling price or add $1 to landed cost and watch the margin compress significantly. Run this calculation for your own products at Corvyo's free profit calculator.
Fast version and its limitation
Amazon's built-in Revenue Calculator in Seller Central gives you a quick estimate of referral fees and FBA fees for any ASIN. It's useful for a fast sanity check during product research — enter your expected selling price and product dimensions, and it returns the fee total. But it doesn't include your landed cost, advertising spend, storage, or returns, so the margin figure it implies is always optimistic.
Use the Revenue Calculator to confirm fee estimates for input into your full calculation, not as a standalone margin tool. Sellers who make product decisions based on the Revenue Calculator's implied margin without adding the remaining cost categories regularly launch products that appear profitable in the calculator but lose money in practice. The calculation takes five extra minutes to complete fully — those five minutes are worth the effort every time.