Price profit Margins on Lower cost items - FBA
Hi Everyone
we are thinking about adding in some new products which are in the range of £8 - £20
i have calculated some examples to show you if this is the profit which should be expected
Item 1 - Wholesale price is £4 / Cheapest listing on Amazon £8.99 / Fees £3.44 = Profit £1.56
Item 2 - Wholesale price is £4.28 / Cheapest listing on Amazon £9.34 / Fees £3.49 = Profit £1.57
Item 3 - Wholesale price is £6.19 / Cheapest listing on Amazon £10.99 / Fees £3.89 = Profit £0.91
Plus will need to calculate in the shipping to the FBA and also tax to be paid
seems almost like there is no money to be made on these items…
32 replies
Seller_hC0hNVDuILaKO
You don’t seem to be taking any of your packaging or labeling costs into account either, unless you are going to send these items loose in a box to FBA,
Profit margins like that would need very high numbers to justify the time and effort involved.
Seller_lljyzgTxr5fgI
Hi Aura
There’s certainly not much in it there for you, TBH. Presumably you’ve included the FBA fee in your fees projection? If your items are small and you can get a lot in a box, then shipping to Amazon using their discounted service with UPS, for example, will only cost you £5.08 for up to 15kg, so it’s possible you could negate that cost with volume sales. However, if items are relatively large or heavy then you won’t get much in your box. For those sort of narrow margins, volume is the key. Hope this helps 
Seller_I3E6fQQqOFqlF
And if they don’t sell so well you’ll have your FBA storage fees to pay too, then all the hassle of stuff getting damaged and lost. I don’t bother with FBA at all. I’m lucky enough to have warehouse space to ship from.
Seller_IrrT3qqjFRDov
if you are selling something on amazon for £8.99 and you are vat registered, you only really are charging £7.50 plus £1.50 VAT.
Based on your first example you are making 6 pence per unit…
Seller_aiHsN0ckA3saz
Thanks for the replies
The items are small so could get a lot into a box - and will be loose so no labels needed
In fact these items which we are looking at have around 10-20 other shops also selling some of them
Is there a sweet spot selling price which will give a much better return or look for products with not so many other shops also selling…i guess the more shops selling a product the smaller the margin as they are all fighting for the sale…
we cannot get the wholesale prices down and the FBA fees are high for selling a cheaper priced item £8 - £15 range
Seller_xUKHc5xSYJmI4
Think you may have missed VAT on your figures? Also the delivery costs to Amazon fulfilment centre baring in mind not all the stock will be allocated to the same fulfilment centre therefore two or more postage costs. Also you may have missed daily storage costs.
Seller_idCSjD35wINVo
I find that cheapest price is £8.99 then someone goes to 8.98 to get more sales or someone joins the listing and undercuts other sellers and the next thing you know is a price war ensues and suddenly its £7.99 or £6.99. Then you have to sell at a loss to save paying storage fees or pay to have unsold shipped back. Its risky to assume those prices will hold at that level.
Seller_BeDCXFnol2weV
hi, dont go along with the lowest ie Cheapest listing on Amazon £8.99 on your 1st item
go around £10.49 and you should still win the buy box
Seller_x3BT9arv4ODzZ
Very small margin, and what you need to also take into account is that this is the current selling price, once you list your inventory, then other sellers will price match your offers, and potentially drive the cost down, you don’t state if these listings currently have an FBA offer, or if they are FBM, if there is currently no FBA offers then you may be able to price up to 15% higher, and still secure the buy box, in which case you could make a little profit, but realistically the figures do not look good.
Seller_HmpsAdC1oyXIC
“Item 1 - Wholesale price is £4 / Cheapest listing on Amazon £8.99 / Fees £3.44 = Profit £1.56”
Vat on this sale at £8.99 is £1.50, so that only leaves 6p profit.
