Amazon FBA is one of the most popular business models for ecommerce sellers. It allows you to sell products on Amazon while Amazon handles storage, shipping, and customer service.

But the real question most sellers have is simple:

How do you actually make money on Amazon FBA — and how much profit is realistic?

In this guide, we’ll break down exactly how Amazon FBA profit works, what costs you need to account for, and the real formula for calculating net profit per sale.

Can You Really Make Money on Amazon FBA?

Yes, it’s absolutely possible to make money on Amazon FBA.

But profitability depends on several factors, including:

product margins
competition level
Amazon fees
advertising cost (PPC)
return rate
inventory management
supplier and shipping costs

Some sellers generate high sales volume but low net profit because they underestimate fees or over-invest in advertising.

The most successful FBA sellers treat the business as a financial model, not just a sales channel.

How Amazon FBA Works (Quick Explanation)

Amazon FBA stands for Fulfillment by Amazon.

With FBA, sellers:

source products
send inventory to Amazon fulfillment centers
create a product listing on Amazon
market the product using PPC and listing optimization
Amazon ships orders to customers and manages returns

In exchange, Amazon charges fulfillment and storage fees.

FBA makes operations easier, but it also adds additional costs that sellers need to track carefully.

How to Make Money on Amazon FBA (The Simple Answer)

You make money on Amazon FBA when the profit from each sale is greater than your total costs.

That sounds obvious, but many sellers calculate profit incorrectly.

A realistic Amazon FBA strategy requires tracking:

Amazon referral fees
FBA fulfillment fees
product cost (COGS)
shipping and prep
advertising costs
refunds and returns
storage fees

If you don’t include all of these, your profit estimate may be inaccurate.

Amazon FBA Profit Formula (Real Net Profit Calculation)

Here is the most accurate simplified formula to calculate Amazon FBA profit:

Net Profit Per Unit =

Selling Price
– Amazon Referral Fee
– FBA Fulfillment Fee
– Product Cost (COGS)
– Shipping / Prep Costs
– Storage Fees (estimated per unit)
– Advertising Cost per Sale
– Return / Refund Cost Impact
= Net Profit

This is the formula that matters, because it reflects what sellers actually keep after Amazon takes its share.

Amazon FBA Costs Explained (Full Breakdown)

To understand how to make money on Amazon FBA, you need to understand where money is spent.

Below are the major cost categories.

1. Product Cost (COGS)

COGS (Cost of Goods Sold) includes:

the cost of manufacturing or purchasing the product
packaging
labeling
inserts (if used)

COGS is often the largest cost per unit, especially for private label products.

For wholesale or arbitrage sellers, COGS is simply the purchase cost of the item.

2. Shipping and Prep Costs

Shipping costs include:

freight from supplier to prep center or warehouse
prep costs (polybagging, labeling, bundling)
shipping from prep center to Amazon

For private label sellers, shipping costs may also include import duties and customs fees.

Many sellers underestimate these costs, which can reduce profit margins significantly.

3. Amazon Referral Fee

Amazon charges a referral fee on almost every sale.

This is usually a percentage of the sale price and varies by category.

In many categories, referral fees are around 8% to 15%, but the exact rate depends on the product type.

Referral fees are charged regardless of whether you use FBA or FBM.

4. FBA Fulfillment Fee

The FBA fulfillment fee covers:

picking and packing
shipping to the customer
customer service
returns processing (in some cases)

FBA fees depend on:

product size tier
product weight
category
time of year (peak season costs)

Small changes in size or weight can significantly impact profitability.

5. Amazon Storage Fees

Amazon charges monthly storage fees based on:

how much space your inventory uses
the time of year (higher in Q4)
inventory age (aged inventory surcharges may apply)

Storage fees matter most for:

oversized products
slow-moving inventory
seasonal products

Storage costs can reduce margin over time if inventory turnover is slow.

6. Advertising Costs (Amazon PPC)

In most competitive categories, PPC is required to generate consistent sales.

PPC costs depend on:

cost per click (CPC)
conversion rate
keyword competition
listing quality

Sellers often track ACOS, but the more important metric is whether advertising is profitable after all fees and product costs.

7. Returns and Refunds

Returns reduce profit in multiple ways:

refunded revenue
damaged or unsellable inventory
lost fees (depending on category and circumstances)
removal or disposal costs

High return rates can make a product unprofitable even if sales volume is strong.

Example: Amazon FBA Profit Calculation (Realistic Scenario)

Let’s calculate profit for a typical product.

Example product:

Selling price: $39.99
COGS: $10.00
Shipping/prep: $2.00
Amazon referral fee (15%): $6.00
FBA fulfillment fee: $5.50
Storage fee estimate: $0.50
Advertising cost per sale: $6.00

Net profit calculation:

$39.99
– $6.00 referral fee
– $5.50 fulfillment fee
– $10.00 product cost
– $2.00 shipping/prep
– $0.50 storage
– $6.00 PPC
= $9.99 net profit per unit

Net margin:

$9.99 ÷ $39.99 = 25% net margin

That’s a healthy margin, but only if returns and additional overhead costs stay low.

What Is a Good Profit Margin on Amazon FBA?

There is no single correct profit margin, but many sellers aim for:

20%–30% net margin for private label
10%–20% net margin for wholesale
higher ROI targets for arbitrage (depending on product turnover)

However, the right margin depends on how competitive the niche is and how stable advertising costs are.

How to Increase Profit on Amazon FBA

Making money on Amazon FBA is not only about picking the right product. Profit usually improves through optimization over time.

Here are the best ways to increase profit.

1. Improve Listing Conversion Rate

Better conversion rate means fewer clicks needed per sale, which reduces PPC cost per order.

Conversion improvements often include:

better main image
clearer bullet points
improved product differentiation
A+ Content (if available)

2. Calculate Break-Even ACOS Before Scaling Ads

Break-even ACOS is the highest ACOS you can afford without reducing profit.

Break-even ACOS formula:

Profit before ads ÷ Selling price

Example:

If your profit before ads is $10 and your price is $40:

Break-even ACOS = 10 ÷ 40 = 25%

If your ACOS is higher than 25%, your ads reduce profit.

3. Reduce Amazon PPC Waste

Many sellers pay for clicks that never convert.

To reduce wasted ad spend:

review search term reports weekly
add negative keywords
reduce bids on poor-performing placements
focus budget on proven keywords

4. Reduce Storage Fees by Improving Inventory Turnover

Inventory that sits too long reduces profitability.

Sellers should track:

sell-through rate
days of inventory
aged inventory surcharges risk

Better inventory forecasting reduces both storage fees and cash flow pressure.

5. Increase Prices Carefully When Demand Is Stable

Small price increases can improve net margin significantly, especially when the product has:

strong reviews
stable conversion rate
limited direct competition

The key is to test pricing gradually and track results.

6. Reduce Return Rates

Reducing returns increases profit without increasing sales volume.

Return rate improvements often come from:

clearer listing images
better product instructions
improved packaging
accurate sizing information

7. Track Amazon Fees and Refunds Accurately

Amazon fees and refunds are often the difference between profitable and unprofitable products.

Many sellers don’t notice margin decline until months later.

Tracking fee changes and refund impact at ASIN level makes it easier to adjust pricing and advertising strategy quickly.

How Much Money Can You Make on Amazon FBA?

Income varies widely depending on product strategy, category, and operational scale.

Some sellers earn:

a few hundred dollars per month
a few thousand dollars per month
full-time income from a small catalog
significant profit from multiple product lines

The biggest difference is usually not product sourcing — it’s financial discipline and consistent optimization.

Key Metrics to Track for Amazon FBA Profitability

If you want to make money consistently, track the right metrics.

Profitability metrics

net profit per ASIN
net margin percentage
contribution margin
refund and return impact

Advertising metrics

ACOS
TACoS
break-even ACOS
cost per sale

Inventory and fee metrics

storage fees
inventory age
reimbursement activity
fee changes over time

Tools like sellerboard help sellers monitor these metrics automatically, especially net profit per product.

Frequently Asked Questions (FAQ)

Is Amazon FBA still profitable in 2026?

Amazon FBA can still be profitable, but costs have increased in many categories. Profitability depends on product margins, advertising efficiency, inventory turnover, and accurate fee tracking.

How much does Amazon take per sale?

Amazon typically takes a referral fee (often 8%–15%) plus FBA fulfillment fees and storage fees if you use FBA. The exact amount depends on category, size, and weight.

Do you need Amazon PPC to make money with FBA?

In many categories, PPC is necessary to generate consistent sales. However, the goal should be to reduce reliance on ads over time by improving conversion rate and organic ranking.

What is the biggest expense in Amazon FBA?

The biggest expenses are usually product cost (COGS), Amazon fees, and advertising spend. Storage fees and returns can also reduce profitability significantly.

Final Thoughts: Making Money on Amazon FBA Requires Accurate Profit Tracking

Amazon FBA can be a strong business model, but profit depends on understanding your true costs.

The most important step is using a realistic profit formula that includes:

Amazon fees
product costs
shipping and prep
PPC
storage
refunds and returns

Once you track these costs accurately, you can make smarter decisions about pricing, advertising, and inventory.

If you want to monitor real net profit per product automatically, sellerboard helps Amazon sellers track profitability, fees, refunds, reimbursements, and advertising impact — so you can grow your business based on real numbers, not assumptions.