Have you ever wondered how to calculate your Amazon costs? If you are venturing into e-commerce, knowing your costs is essential to ensuring the profitability of your business. Here is a simple breakdown to help you understand and calculate your costs when selling on Amazon.

1. Product costs

The first step is to calculate the product costs. This includes:

• Purchase price: This is the cost you pay for each unit of product.
• Shipping: Consider both the cost of shipping from the supplier to your storage location and the cost of shipping to Amazon if you decide to use their logistics services.
• Storage: If you use the FBA (Fulfillment by Amazon) program, you should also take into account the storage fees charged by Amazon.

2. Amazon commissions

Then, we have Amazon commissions. Each sale you make through the platform incurs certain commissions, which are divided into:

• Variable commissions: These are a percentage of the sale price and vary depending on the product category.
• Flat fees: Amazon charges a minimum fee for each transaction, which may vary depending on the type of account you have.

It is vital that you include these commissions in your total cost to truly understand how much it costs you to sell a product.

3. Advertising

A crucial part of any Amazon sales strategy is advertising. Investing in ads can significantly increase the visibility of your products, but it also represents an additional cost. Be sure to calculate what you invest in advertising campaigns and incorporate it into your cost structure.

4. Operating expenses

Don't forget to include operating expenses that may arise in the day-to-day running of your business. This may include:

• Administrative costs: Salaries, utilities, and other overhead expenses necessary to operate your business.
• Customer service: If you offer support to your customers, consider the associated costs as well.

Why is it important to calculate your costs?

Calculating your costs correctly will not only allow you to set competitive prices, but also maximize your profit margins. A common mistake is to underestimate costs, which can result in significant losses.

If you need help with this process or would like personalized advice, don't hesitate to contact us! We are here to support you and ensure that you leave nothing to chance on your path to success on Amazon.

And you, tell us: How have you managed costs in your business?