Amazon Profit Margin: Every Detail You Should Know [2025]
![Amazon Profit Margin: Every Detail You Should Know [2025]](https://be.trueprofit.io/uploads/Amazon-Profit-Margin-2.svg)
- Gross Profit Margin: It is the profit that remains after your cost of goods sold (COGS) has been subtracted from your overall net sales. It shows how effectively the seller is making money and controlling related expenses.
- Net Profit Margin: It is the remaining profit after ALL costs, including COGS, platform fees, taxes, debts, and overhead costs, have been taken into account. This typically establishes the true profitability of your company, showing how much you can invest back into it or even take home.
- Seller account fee: You will give Amazon this amount each month in order to have a seller account. While the Professional version costs $39.99 for limitless sales, the basic plan charges $0.99 for each item sold.
- Referral fee: Regardless of the category in which you offer, Amazon will take a cut of each sale's price as a commission.
- FBA-related fee: If you've decided to use Amazon FBA instead of Amazon FBM, you will have to pay costs like monthly inventory storage fee and fulfillment fee per unit, etc. to Amazon for storing, packing, and shipping your products to your customers.
- Variable closing fee: This amount is deducted from the overall cost of the transaction as the shipping charge for the item.
- Projecting profitability more accurately when sourcing products for your store. By calculating your profit margin, sellers can make wise strategic decisions in order to develop a profitable inventory
- Avoiding deliberately pricing goods too low, which can make you sell at a loss, or too high, makes you less competitive compared to others
- Revealing the real cause for high revenues but low profits. Although seeing high sales is encouraging, these figures might conceal underlying management problems or cost overruns
- Keeping track of the revenues and the fees closely to make sure that your Amazon profit margin is at an acceptable level
- Net Sales: The gross revenue after coupons, discounts, returns, refunds, and other fees.
- Cost of Goods Sold (COGS): refers to the direct costs of producing the goods sold by a company.
- Price: $450
- Dimensions: 16″ x 10″
- Weight: 40lbs
- Storage cost: $4.5
- Category cost: $1,125
- Fulfillment cost: $137.5
- Amazon Gross Profit Margin = ((11,250 - 4,750)/11,250) x 100% = 57.8%
- Amazon Net Profit Margin = ((11,250 - 4,750 - 4.5 - 1,125 - 137.5)/11,250) x 100% = 46.5%
- Focus on products with high-profit margins: Concentrating your PPC efforts on goods with a high markup or profit margin so that you can increase your profits while still connecting with prospective customers who are looking to purchase these goods.
- Conduct the A/B testing: You should test various ad text and artistic components like images or videos. When developing new campaigns or improving current ones, you can add the elements that perform the best to make your campaigns work more effectively.
- Track and monitor your PPC performance: Pay attention to the TACoS (Total Advertising Cost of Sales), a marketing KPI that might affect the long-term expansion of your business. You can better understand how an advertisement or Amazon PPC campaign impacts your profits and product sales by monitoring this measure.
Tracy Ng
Senior Content Executive at TrueProfit & SEO/Content Specialist
Tracy is a senior content executive at TrueProfit – specializing in helping eCommerce businesses scale profitably through content. She has over 4 years of experience in eCommerce and digital marketing editorial writing. She develops high-impact content that helps thousands of Shopify merchants make data-driven, profit-focused decisions.
Tracy is a senior content executive at TrueProfit – specializing in helping eCommerce businesses scale profitably through content. She has over 4 years of experience in eCommerce and digital marketing editorial writing. She develops high-impact content that helps thousands of Shopify merchants make data-driven, profit-focused decisions.
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