How do I calculate profit per unit on Amazon?
Profit per unit on Amazon equals sale price minus referral fee, FBA fulfilment fee, per-unit COGS, allocated ad spend, and a refund reserve. A quick formula: Profit/unit = Price - (Referral% x Price) - FBA fee - COGS - (Ad spend / units sold) - (Refund rate x Price).
Jul 26, 2026 · 3 min read
The per-unit formula in plain English
Start with the sale price. Subtract Amazon's referral fee (usually 8% to 15% depending on category). Subtract the FBA fulfilment fee for the item's size tier. Subtract the landed COGS: manufacturing cost, freight, duties, inbound shipping, and any pre-FBA prep. Then subtract two costs sellers often forget: allocated PPC spend and a refund reserve.
Worked example
A $24.99 kitchen tool with 15% referral fee, $4.90 FBA fee, $4.20 landed COGS, $2.10 of allocated PPC per unit, and a 4% refund rate:
- Referral: 0.15 x $24.99 = $3.75
- FBA fee: $4.90
- COGS: $4.20
- PPC per unit: $2.10
- Refund reserve: 0.04 x $24.99 = $1.00
- Profit per unit: $24.99 - $3.75 - $4.90 - $4.20 - $2.10 - $1.00 = $9.04 (36.2% margin)
Why sellers get this wrong
Most spreadsheets stop at referral and FBA fee, which flatters margin by 5 to 10 points. Long-term storage fees, aged inventory surcharges, low-inventory-level fees, and inbound placement fees also belong in per-unit cost when they apply. Nova pulls each of these lines from Seller Central and attributes them at the SKU level automatically.
Frequently asked questions
Should I include storage fees in profit per unit?
Yes, especially for slow movers. Divide the SKU's monthly storage fee by units shipped that month and add it as a per-unit cost.
How do I allocate PPC to a single unit?
Take the SKU's total ad spend for the period and divide by units sold in the same period. That gives an average cost of acquisition per unit sold.
Do I need to include returns in the formula?
Yes. Multiply the SKU's refund rate by the sale price and treat that as a reserve. Amazon returns often reach 4% to 8% of orders in apparel and electronics.
See this in Nova
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What is a good net profit margin on Amazon FBA?
A healthy Amazon FBA net profit margin sits between 15% and 25% after fees, COGS, PPC, and refunds. Under 10% usually signals hidden fees or overspending on ads. Established brands with private-label pricing power can hold 25% or more, while resellers and wholesalers typically operate closer to 10% to 15%.
What is contribution margin on Amazon and how is it calculated?
Contribution margin on Amazon is the money left from each sale after variable costs: COGS, referral fee, FBA fee, refunds, and ad spend. It excludes fixed costs like software subscriptions and salaries. Formula: Contribution margin = Revenue - COGS - Amazon fees - PPC - refunds. A 25% to 40% contribution margin per SKU is a healthy target.
What is a good refund rate on Amazon?
A good Amazon refund rate is under 5% overall. Category averages: 4% to 6% in home and kitchen, 8% to 12% in electronics, 15% to 25% in apparel and shoes. Anything above the category average signals a listing, product, or fulfilment problem. Refund rate above the category threshold also triggers Amazon's returns processing fee.