Exploring the FBA Revenue Calculator
There are many great tools out there to help people sell products online. The FBA Revenue Calculator is one such tool. With the FBA calculator, selling products on Amazon is a breeze. Not only does it allow merchants to calculate shipping costs, fees, and other expenses to determine what kind of profit they can expect from a transaction, but using the calculator also comes with an array of convenient benefits, tools, and features, something we’re going to examine in this article.
But first, what does FBA even stand for? What is the FBA calculator? Let’s find out.
What Does FBA Stand for? What Is the FBA Revenue Calculator?
For starters, FBA stands for “Fulfillment by Amazon.” It’s a tool that essentially makes it easy for merchants to sell their products online. To break it down a bit, it works by allowing merchants to send products to one of Amazon’s many warehouses to be stored until a buyer purchases one of the products. From there, Amazon takes care of shipping the purchases to customers. Additionally, in what Amazon calls multichannel fulfillment, FBA can also operate as a fulfillment center by storing products and shipping them to a buyer.
The actual FBA calculator is designed to help merchants calculate any profit from products sold on Amazon. Some FBA merchants also use the tool to determine things like costs per unit or their profit margins. Other costs, like inbound shipping, can also be calculated. In terms of how merchants can tell if selling their products via Amazon will be profitable, there are certain things to consider, such as fees for storage, inbound shipping, order handling, pick and pack, weight handling, outbound shipping, and an Amazon referral fee. Depending on how high these fees end up being, a merchant may want to consider other avenues to sell products.
- Pick and Pack: This is simply a fee Amazon charges to retrieve a product from the warehouse, package it, and prepare it for shipping. The fee also includes the cost of labor.
- Order Handling: Amazon charges this fee when a merchant chooses to have products stored in an Amazon warehouse. For example, the fee to store a standard sized product is $1.
- Outbound Shipping: This is a fee to cover the carrier or postal cost to ship your products to customers.
- Weight Handling: With Amazon, a product’s weight is used to determine shipping costs. That being said, while customers think a product might be free to ship, it actually does cost something; it’s just primarily paid for by the merchant.
- Storage Costs: This monthly fee is to cover the cost of storing products in Amazon’s warehouses. The total cost is calculated based on the amount of space your products take up in the warehouse.
- Amazon Referral Fee: In short, Amazon charges this fee simply for listing a product on its website. Typically, it ends up being a percentage of a sale or the retail price and tends to average around 15 percent, depending on the category.
Benefits of Using the FBA
There are a number of reasons why merchants like using FBA, such as the fact that it often results in higher rankings on Amazon search pages. While this isn’t exactly a verifiable benefit, many sellers feel that Amazon tends to rank FBA products higher than others because the company tends to make more via FBA. As a seller, higher rankings matter because more potential buyers are seeing your products.
FBA also pairs well with Amazon Prime because the program ensures that FBA products get in on the popular Prime two-day shipping option. Considering the fact that many buyers only shop products that have the “Prime” label and two-day shipping option available, FBA products are more likely to be purchased than others, making this a great benefit of using FBA.
Another reason why merchants are especially fond of using FBA is that the shipping speed is so fast. Because Amazon has robots and employees working 24/7 in its warehouses, the turnaround time from the time an order is placed to the time a customer receives a product is very fast.
As if these aren’t reason enough to use FBA, another benefit is that you will have access to the customer service and returns team at Amazon for the entire duration of an order fulfillment process. This means that your customers will be able to contact Amazon’s customer support any day and time by either email or phone whenever they have a question or concern about an order. Additionally, customers will enjoy the hassle-free convenience of processing returns through the Online Returns Center offered by Amazon. Essentially, Amazon will take care of every aspect of customer service, allowing you to focus more time and energy on operating your business. However, it’s important to note that you will be on the hook for any processing fees for customer returns.
The Profit Dashboard, a Sophisticated FBA Tool
The FBA Revenue Calculator comes with a few nifty features that can really come in handy. For example, the Profit Dashboard is a sophisticated tool that allows merchants to track and manage transactions, including profits and losses, in real-time. From there, it calculates profit margins for individual products once expenses and fees are taken out. It’s also sophisticated enough to calculate live data based on sales for ASINs. This allows merchants to make important business decisions in the moment without having to wait.
Disadvantages of Using the FBA Revenue Calculator
Every product or tool has its disadvantages, and the FBA Revenue Calculator is no different. From costs and lack of accuracy to various restrictions, companies and individual merchants would be wise to consider the pros and cons when deciding when and if to use the FBA calculator.
- Restrictions: It’s important to note that not every product can be calculated using FBA. Some restrictions include limits of inventory space depending on total monthly sales. Additionally, Amazon will not store products for longer than a year. In fact, any longer than a year, and you’ll be charged for the cost to ship your products back to you. Sometimes Amazon will even destroy products after a year.
- Costs: There is no denying the fact that the FBA calculator comes with a fair share of costs and fees. Because costs vary depending on the size, weight, and category of a product, it’s a bit hard to plan a set budget. For example, products that weigh more will cost more. A large, bulky product is going to cost more to ship than a small padded envelope.
- Accuracy: Another disadvantage to the FBA Revenue Calculator is that it isn’t 100 percent accurate. In fact, Amazon even has a disclaimer regarding the calculator, claiming it is meant to be a guide when evaluating FBA. This means any fees the calculator quotes might not be the same when all is said and done.
So, is the FBA Revenue Calculator worth it? Well, it depends on a number of factors. Like many business-related tools, individual merchants and businesses should consider the fees, benefits, and disadvantages when determining whether to use the calculator. After all, what works for one business or individual might not work for another. It boils down to personal preference.