Do you want to know if a product is worth your investment and time? You can use this calculator to evaluate the profitability of any product on Amazon.
Amazon charges various fees to its sellers. If you understand them you can calculate your profit and ROI. To make things easy for you, just know your item's FBA fee and referral fee% and input them in the above calculator and, it will show you all the data you need to know including, net profit and ROI.
The referral fee percentage on Amazon varies from product category to category. You can go to the following links to know your product category's referral fee percentage.
Amazon charges storage fees on each unit that you send to their warehouse. This fee increases after three months and is further increased after six months. You see Amazon does not encourage you to keep your inventory in their fulfilment center for long.
If your inventory is sold out before a month (30 days) passes, you will not pay any storage fee to Amazon.
Also, keep in mind that Amazon charges different rates from October to December on their storage fee. This is because of the high demand and workload in their warehouse.
In the above-attached video, I have explained its full working and how to use it for the UK market.
If you are selling in the USA market, then just ignore the Pound (£) symbol and only refer to the last line in the calculator for Account Proceeds, Net Profit, ROI, Break-even, and Profit Margin.
If you're not buying from inside of the UK but selling in the UK, then the Input VAT section in this calculator will not apply to you, and the HMRC value will be different for you. In such a case, the HMRC value will be equal to the Output VAT in this calculator. I have already explained it in detail in the above video .
If you are new to VAT and don't know how to calculate VAT on Amazon sales, you should watch this video from 0:51s for a VAT calculation complete guide with live examples.
Suppose you intend to sell a product on Amazon for £15, and you acquire it from UK suppliers at £5 each. How much VAT will you pay for this product in total?
The suppliers in the UK will charge you a 20% VAT on the source price, which amounts to £1. So, in total, you will pay £6 for each unit of this product.
On Amazon, all prices shown to customers include VAT. Amazon collects the 20% VAT from customers on your behalf, and it is your responsibility to report it to HMRC later. If you want to know the price without VAT included, simply divide the Amazon selling price by 120%. For example, if you list the product on Amazon at £15, which includes the 20% VAT (equivalent to £2.5), you will not report the full £2.5 to HMRC, as you have already paid £1 to the supplier as VAT. Therefore, the total amount you need to report to HMRC is £1.5.
In short, Amazon sellers will pay the VAT tax only once when they buy from a supplier in the UK and when they sell to their customers on Amazon.
Yes, since August 2024, Aamzon is charging VAT on FBA and referral fees to all of its sellers. If you are a VAT registered seller then you may be able to reclaim this VAT paid on seller fees.
But if you are a non-VAT registered seller then consider it like your expense.
If you are a tax-exempt seller then too, you will pay VAT on Amazon fees.
***You can reach out to me if you have any confusion with this calculator.