Profit/VAT calculation


#1

Hey guys,

Im just checking to see if im calculating my profits per product right. how does this look ?

Sale Price: £19.99
Vat £3.33 Minus vat paid on product purchase = 1.02 (3.33 - 2.31 = £1.02)
Purchase price £10
postage to FBA £0.10/pc
Amazon fee £4.58
Margin £4.29

Percentage net profit 42.90%


#2

Amazon storage fees?
Any packaging fees that you incur prepping goods to send to FBA?
Per item selling fee included in the Amazon fee? Or are you on a Pro account?


#3

Any idea how to figure out storage fees beforehand ? it sometimes tells me on the FBA calculator but not right now.

Packaging fees are included in the postage to FBA, ill change that.

and yes im a pro account ofcourse :slight_smile:


#4

You would need to do an calculation of the monthly sales expected, the quantities that you are sending in to FBA and the cost per month per item for storage to work out an estimate of the monthly storage fees.
But those fees and the space restriction that you have is why you need to try and send in the appropriate amount of stock in any one go to cover, say 30-60 days sales.


#5

Yeah, im fairly conservative in what i send in. But all in all, i feel that storage fees are so minimal that it dosent really matter, so long as your not sending in hundreds of items that dont sell.

My storage fees last month were around £5, and i sold £3500 of product.


#6

Are you advertising ?

If you are looking at your nett profit figure than you need to look at all your expenses , including your internet costs , your packaging fees [ you mention postage only ] , what is your percentage returns , you need to factor those costs in . Think of all your expenses that the business incurs .

Otherwise you are just looking at Gross Profit and not Nett Profit


#7

If your profit is £4.29 your margin is 4.29/16.66 = 25.7%


#8

I purchase the product for £10, and my profit is £4.29, therefore my Margin is 42.90%. Right ?

Also, the VAT will be £1.02 after i claim back the VAT on purchase of the product.


#9

NO. see my calculation.

£100k in Sales (net of VAT) = £25,700 profit as per your figures.

Give me your costs all net of vat.


#10

Im not really understanding, 16.66 figure is not needed as in the calculation i have already pulled back the purchase VAT. Making the i figure £18.97


#11

Give me all your costs net of vat


#12

Okay, lets keep it simple without amazon fees/shipping etc.

Purchase price £10 + £2 vat

Sale price £20

VAT £3.33 - 2 purchase vat = 1.33

Total: 18.67

Margin = 8.67 or 86%


#13

on this basis

£16.66 net of vat you receive
£10 net of VAT you pay for product

=6.66 profit
6.66/16.66 = 40% margin


#14

Right, but im also bringing back the origonal VAT i paid to lower the sale VAT. therefore my margin will be higher. is that not right ? Obviously id be paying the £3.33, but im purely looking at end profits here.

I wish there was some sort of guide on this, im not sure how other buyers calculate new products. Maybe some dont even include VAT. I dont know the industry standard.


#15

Give me the breakdown of this:- Amazon fee £4.58


#16

That cost is -

‘‘referal fee’’ - 2.99
‘‘fullfilment by amazon fees’’ - 1.59


#17

ok so that is net of VAT.

Its very simple if you just take VAT out of the equation and remove from all sales and costs.

plus £16.66 sale price
minus £10 product cost
minus £4.68 shipment + Amazon fees

= £1.98 Profit
= 1.98/16.66 = 12% margin

My advice is do not sell this product. That is far too low a margin and as others have stated there are other costs to factor in.


#18

Ah! But you are looking at profit from the wrong angle :rofl:
The OP bought his widget for £10 and ended up with £11.98, so he has £19.8% profit on his original investment [in this scenario]


#19

Your calculation is not making sense to me.

I purchased the item for £10, not £16.66

And if i make 1.98 + claim back 2 in VAT, im making a net return of 40% on the £10 i spent.


#20

I’ve already excluded VAT from all the figures!

:slight_smile: