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Information About My First Order + Calculating My Profit Margins – Part 5

I would like to welcome you all to the 5th update in my Amazon FBA case study! I am attempting to start selling my own private label product on Amazon without any courses, only using free information that I have gathered all over the web. If you want the full background on the case study you should read the introduction post to get all of the details.

If you have missed any of the previous updates then you can view them below:

If you are all caught up on the previous updates then how about we get right into this update, which will be discussing how to calculate profit margins for your product and some details about first order that I will be placing.

What I Will be Talking About in this Update

This update is going to consist of two parts, one part will be a how-to guide on the best way to properly calculate profit margins on a product before you order it and the other part will be me giving you all some details on the first order that I will be placing here in the near future.

Those two things will be the main parts of the post and will be what I am covering today! I think that being able to get a good estimate on your profit margin for your potential product is VERY important so that you know what types of costs and profits you could be dealing with. Also you want to make sure that it has a big enough profit margin to pursue a product to sell on Amazon.

I will also be breaking down the details for my first order and explaining everything behind each one of my decisions. The product costs, shipping costs, the amount of units, my profit margins and more will be talked about.

I am really excited to write this update, so let’s not waste anymore time and jump right in!

Information About my First Order

Just to let you all know, I have not actually placed my first order yet and I am basing all of this info off of the order that I am planning on making. I am VERY close to placing my order and all of the numbers talked about in this post are going to be the real costs.

I will be using the actual numbers that my supplier has given me so you will be seeing the exact costs for making my product and the shipping fees. They have already been confirmed and I am currently close to placing my first order like I said earlier.

As I go through each part of my order you will get a good idea of how to calculate the profit margins for a product by watching how I do it for mine.

The Number of Units Ordered

My first order will be for 1,000 units of my product. I explain the reasons behind my thinking below.


More Flexibility

One of the biggest reasons why I went with 1,000 units and not a smaller amount is because I want to have the flexibility to work with a lot of units without having to worry about running out too soon.

If I am able to gain momentum on Amazon and I get to the first page and then I ran out because I only ordered 250 units then my listing would drop off of the first page. Amazon does not keep products that are out of stock on the first page and you practically lose all of the momentum that you had worked so hard to get.

I want to be able to run giveaways or coupons to increase the sales and get some initial reviews without having to worry about running out of stock.

Overall, I want to have the freedom to try out different promotional methods and not have to worry about selling out of units.


Unknown Demand for the Product

Another reason why I chose to go with 1,000 units was because I am not sure the demand for the product. From my market research I know there will be a good amount of demand but I am unsure at the rate at which my items might sell.

I don’t want to be caught off guard and all of a sudden sell out. That would be bad news because then have to wait for a new shipment to arrive at Amazon, which would mean I would lose my place on the first page and have to practically start all over again.


Long Time to Ship Items

The time it takes for my order to be placed and arrive at the Amazon warehouse is around 30 days since it will be shipped by freight. 30 days is a long lead time and a long time to be without any inventory if I sell out.

Basically, I wanted to be safe and order 1,000 units so that I can gauge how many units it will sell per month and make my next order before my first one runs out.


I've Learned from Others Mistakes

While doing all of my research for selling on Amazon I repeatedly read how people wished they would have had went with a bigger initial order and that was one thing they wish they would have known. I am going to learn from them and not make that mistake.

Chris Guthrie, from, talked about that he had wished he would have started with an initial order of 1,000 units. You can read more about that here.



I go into more detail about the price right below this but let's just say that it was common sense to go with 1,000 units over 500. Read below for details.

Cost for 1,000 Units

It is going to cost me $2,520 for 1,000 units, which comes out to $2.52 per unit. Not too bad, considering I am going to be selling the item for around $20!

I was initially deciding between going with 500 units or 1,000 units but when I found out the price per unit for 500 units vs 1,000 units, going with the higher amount was a much better deal.

So for 500 units my supplier said it would cost me $3.75 per unit, which is almost $1.25 more than if I went with 1,000 units!

For 500 units it would have cost me a total of $1,875, compare that to the $2,520 for 1,000 units you can see why I went with the larger first order.

Overall, you can see why I decided to go with the larger order of 1,000 units. It made most sense financially and for all of the reasons that I mentioned above. I might be taking more of a risk by ordering 1,000 units since it costs more but I think it will be a smart decision in the long run.

Shipping Information

In this next section I will be talking about all of the details surrounding the shipment of my first order. The first thing I want to cover are the different options I had in terms of how to ship my order.

I had two options when it came to how to get my items to Amazon’s warehouse, either I went and found a freight forwarding company myself or I used my suppliers freight forwarder. 

I explored both options but what I found was that my supplier’s freight forwarder was a tad more expensive but they handled every single aspect of the shipping process. To me, that was worth the extra money.

Not to mention that trying to find my own freight forwarder was very confusing and it was much easier to let my supplier handle all of that stuff.

The next thing I want to talk about is the cost to ship my products to Amazon’s warehouse. It is going to cost me $1,400 to have my first order shipped from my suppliers factory to Amazon’s warehouse, the price also includes customs fees and all of the other fees associated with shipping across the border.

That comes out to be $1.4 per unit to for shipping, which I am very pleased with!

If I would have went with 500 units it would have cost me $900 to ship, or $1.8 per unit. So it was a better deal for me to go with the 1,000 unit order in terms of shipping costs.

The last thing that I want to cover in terms of shipping is the type of shipping that I will be using. I had two options, either by air or by sea.

Like I said, it cost $1,400 to go by sea but it would have cost me around $3,400 to go by air! Huge difference, mainly because the shipment is fairly heavy.

The downside of going by sea is the time it takes to arrive to Amazon, which is around 30 days. Air would have been much quicker but the cost difference is too good to pass up.

With that being said, I will be going with freight shipping at the rate of $1,400 for 1,000 units.

My Landing Costs

Landing costs is the total cost that it takes to get your product to the Amazon warehouse. In my case, my landing costs is going to be $3,920($2,520 + $1,400).

That works out to be $3.92 per unit.

I can get my product made and shipped to Amazon’s warehouse for the cost of $3.92 per unit, which is very good.

With an estimated sale price of $20, my profit margin comes out to be $16.08 or 80.4%. Take into account that I haven’t factored in the Amazon fees yet but a profit margin over 80% after landing costs is really good.

My supplier gave me an awesome deal and I couldn’t be happier with how it has worked out so far. 

In the next section of the article I will go over how to calculate Amazon FBA fees so that you can get an idea of how much they will take from your profit margins. 

How to Calculate Amazon FBA Fees

So far I have walked you through all of my landing costs, which are the costs to make the product and the shipping fees, now it is time to find out how much Amazon is going to keep for themselves on each sale.

After I figure out this number, I will be able to calculate all of my costs and determine my profit margins. 

The step-by-step guide on how I calculated my Amazon fees is written out below, there is also a video that walks you through the whole process if you would rather watch me do it firsthand.

Tutorial on how to Estimate Amazon FBA Fees

Before you can estimate the fees that Amazon will take from each sale that you make, your first need to have a couple of things. Those things are listed below:

Once you have all of those things in order, we can now begin the process of finding the estimated fees. Follow the step by step guide below and it will walk you right through the whole process.

Step 1: Find a Similar Product on Amazon's Marketplace

The very first step is to head over to Amazon and find a similar product to the one that you are planning on selling. You want to find a product that is as close to the same as possible, this will give you the most accurate fee estimate.

The main characteristics that you want the same are the shipping weight and product dimensions. These two things are mainly what the fees are based upon so it is vital that you find a product with close to the same stats in this area.

Another really important thing to remember is to make sure that the product that you find is in the same category that your product will be in.​

Step 2: Get the ASIN Number from the Similar Product

Once you have found the product that is most similar to your product then what you want to do is get the ASIN number from the product page.

Go to the product page of the similar product and scroll down to the "product details" section. Copy down the ASIN number that is listed, we will be using this number in the next step.​

Step 3: Go to Amazon's Fee Calculator

Now that we have the similar product's ASIN number, we can now go to Amazon's FBA Fee Calculator. Once there, you should see a screen that looks the the image below.

If you are presented with a page that looks like that, we can then input the ASIN number of the similar product into the search bar.

Search for the ASIN number, a screen such as the one below may pop up. If the screen does pop up then choose the item in which you initially wanted.

After all of that, you should see screen like the one below. If you see that screen then you are ready to start calculating!

Step 4: Calculate Fees Based Upon Sale Price

​The next step is to input the price at which you are planning on selling your product for. 

Input the price into the right column named "Amazon Fulfillment"​. See below for reference.

After you have placed the sale price into the box, press the yellow calculate button in the middle of the screen and watch your profit margin shrink 🙁

Step 5: Interpreting the Data

After you have pressed the "calculate" button you will see a bunch of data popup, similar to the screen shown below.

The most important info is located in the right column, which is highlighted in yellow. Here is where you will be able to see the estimated fees that Amazon will be taking on your product.

You can see how much they are taking and for what reasons. In this example, the sale price was $14.99 and Amazon took $4.94 in fees. Which means they are taking almost 33% of the profits just in fees.

It can be confusing looking at all of this data for the first time so to make it easy, just look at the data in the last 3 rows. I will highlight the info below.

To make it simple, just look at the data in the yellow box above. The "cost subtotal" is the amount of fees that Amazon will take, which in this case $4.94. The "margin impact" is how much profit you will have leftover after the fees have been applied.

For this example, I would have $10.05 left in profit after Amazon takes their cut.​

Step 6: Keep Track of this Information

Now that we know how much Amazon will take in fees we need to keep track of this number. I would write it down in a notebook or keep it in a spreadsheet somewhere.

This number will not be 100% accurate and the amount in fees that Amazon will take on your product may differ slightly. Nonetheless this is still a great way to get a close estimate.

Video Guide

If you want to watch me walk through the process then you can watch the video below. Enjoy!

My Amazon Fees

Now that I have walked you through how to calculate Amazon fees, I can now talk about how much Amazon is going to take from each one of my sales.

I have already told you that I am planning on selling my item for around $20 so that will be the price I will be using to calculate the fees.

Check out what my fees look like below:


Amazon takes around $9.50 in fees!

That is almost 50% of the profits, that is really going to kill me. The “Pick & Pack” fee of $4.05 is really high and I am not too sure as of why.

This is how Amazon explains the Pick & Pack fee:

“This is the cost to physically retrieve the item, pack it and the packaging material used for the shipment. You may estimate this by considering the cost of labor and the number of orders a person can process/hour, divided by their hourly cost.”

I am not too sure if there is anything I can do to minimize this fee, bummer.

However, it is important to mention that the similar product that I used to calculate the fees is a bit heavier(+.3 pounds) and a little bigger as well. I am hoping that my fees will be a little bit less than $9.50.

Even though it sucks to give away that much of my profits to Amazon we have to remember what they are doing to earn that fee.

Amazon will hold all of your inventory, handle all of the customers, the checkout the process, the shipping costs to the customer and not to mention it puts your product in front of millions of buyers each day.

When all of that is considered the fees don’t seem so bad. So try and remember that when you start to get pissed off at the amount of fees that Amazon charges. We are using Amazon to our advantage so we have to play by their rules.

My Total Costs and Profit Margin Calculated

Alrighty, we have covered how much it will cost to make my product, how much it will cost to ship it and we just figured out how much Amazon will take in fees. With all of that information we can now estimate the profit margin that I will get on my product.

Just to recap, all of my costs are listed below:

 – Product Cost per unit: $2.52

 – Shipping Cost per unit: $1.40

 – Amazon Fee per unit(estimate): $9.48

Sale Price: $20


TOTAL PROFIT per unit: $6.60

Profit Margin: 33%

Well there you go!

I can expect to make $6.60 on each unit that I sell which comes out to be a 33% profit margin.

Remember, that this is the absolute minimum profit because the Amazon fees are probably a littler higher than they will actually be.

With that being said, I am still happy overall with making $6.60 on each sale. 33% is not the highest profit margin but I am sure it will increase after a couple of orders and I am able to figure out how to minimize costs. 

Estimated Earnings

Estimating the earnings per month for my product is very hard and probably not something I can do accurately. Luckily, there is an awesome tool called Jungle Scout which will estimate the number of monthly sales that a certain product will have.

Since I know my profit per unit on each sale, all I need is the number of sales per month to calculate the monthly profit.

Let’s see what Jungle Scout estimates the monthly sales are for the top 3 items on the first page for my product.

The top 3 products are selling around 1,000 units each month. I am confident that I will be able to get my product within the top 3 on Amazon so that is what I am going to be basing the sales off of.

With 1,000 sales each month at $6.60 profit on each item that comes out to $6,600 in profit each month! That is some nice money right there!

So even with the profit margin only being at 33%, it is still very possible for me to make over $6k each month in PROFIT.

Typing this out is making me excited and I can’t wait to actually start selling on Amazon!

Closing Thoughts

That is going to do it for the 5th update in my Amazon FBA case study. I covered a lot of stuff that dealt with actual numbers and started to get into the potential profits that my product could be making. Exciting stuff!

I also showed you all how to properly calculate the fees that Amazon will take from each sale. You can see that they take a pretty big chunk but they do a lot of things to deserve those fees. 

I hope that you all enjoyed this update and the next one will be coming out within the next week. I am going to start pumping these updates at a more rapid pace and try to catch you all up the point where I am at currently. 

Thank you for reading and if you haven’t joined our Facebook group already make sure to do so, a lot of awesome people and content being shared in there. You can click here to join!

Also, if you want to make sure that you don’t miss any updates then you can put sign up to get notified of each new post below. Thank you all again so much for reading!

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King Epic

I wanted to take a similar route but ended up buying a small quantity of the item I am going to sell from Aliexpress. As I understand, the calculator just shows an estimate, not the exact cost, right? Because there might be additional costs such as stickers they put on.


Hey there,

Yes, it is just an estimate but if done correctly it will give you a pretty accurate estimation. You are right though, there could some additional costs such as labels. You might be able to have your supplier slap on the labels for you for free, just ask!



Hey Josh!

Something else maybe to point out, unless it’s coming in the next report; how did you help set up Amazon to decide where they want to receive your first shipment? Did you actually talk to Amazon or did you just ship through a typical FBA order or what? I know when I palletize big orders I have to still go through Amazon and their shipping process, but how does it differ for your own product being shipped in internationally?

Keep it up bud


Hi kyle,

Good to hear from you!

I am planning on doing a update on the whole shipping process here in the near future. I know how confusing it can be do handle all of that stuff and I will be doing a write up on it. I am actually going through the process right now with my shipment so I am learning on the fly right now.



Hey Josh,

I am keeping a close eye on your fantastic case study while I start on my Amazon FBA journey as well. Keep up the good work man!


Hi Zen,

Good to hear that my friend and good luck on your journey! Thanks for commenting



Hey Zenn,

Thanks for commenting and good luck on your Amazon journey!




Thank you so much for the time and effort to share this with all of us. It is truly appreciated and you are helping to create a lot of entrepreneurs.

I don’t know if this has been covered and I somehow missed it, but who are you using to create your logo/packaging/labels? I can’t seem to find any companies that offer this outside of the few that exist in the candle or cosmetics fields.

If you could give some advice as to where to go to get this aspect handled it would be greatly appreciated.

Thanks again.


Hi Joe,

You’re welcome and I am so happy that you are liking the case study!

As for your question, I have not gone into detail about how to do this yet. I might do an update on it later down the road. But I would suggest going to elance and finding someone that is willing to do it. Just ask for someone to design a logo for you and packaging. You will need to give them specific dimensions but other than that it shouldn’t be too hard for them to whip you up something.

Getting the labels is a process entirely different from the logo/packaging. I am going to do a write up in the next update or two on everything you need to know UPC/FNSKU labels. It should be out soon!




Thanks so much for all the helpful information! How did you determine the landing fees?




Hi Steve,

Landing Fees = manufacturing costs + shipping costs

Hope this helped,



What about sales tax / VAT?


Yep, I don’t know what it’s like in the US, but here in Europe Sales tax in 19%, which means I have to knock off 19% from my sales price before subtracting all the fees for amazon and landing fees. So in my case, if I sell the product for 20€, the actual sales price will be 16.76€ after taxes. Makes it harder to find a profitable profuct. What’s the VAT in the US? Depends from state to state I guess?


vat and GST are taken off, but can be claimed back in your business tax


Hi Josh

Very well written and informative articles.

I am currently negotiating with a supplier, but they have told me that the shipping costs they have quoted do not include customs and taxes associated with importing from China to the US.

This is frustrating as I can’t work out my exact unit cost – I am afraid these customs and taxes could be significant.

How did you get an-all inclusive shipping quote?



i m having the same problem


Hi Josh,

Great Article!
But I noticed you didn’t take into account two major costs: 1. Marketing costs, PPC 2. Value of giveaways.

Or am I wrong and this shouldn’t be calculated on the per item cost?



Hi Tal,

Good point but, I don’t think that these costs should be calculated in the price per unit. The reason being that the PPC, marketing costs or the giveaway costs don’t have to be involved with each sale. On the other hand, shipping costs, manufacturing costs and FBA fees are all apart of each sale that is made. Does that make sense? Thanks



Hi, If you find a product that sell for appox US$ 36 online store and on at what avg. rebate rate you can find the same product from the manufacturer.



Hi Richi,

The answer to your question will depend on a lot of factors. However, I like to be able to manufacture a product at 25% of the price that I plan to sell it at. So if I was going to sell a product at $36 then I would want to be able to manufacture it for $9.



My product is flexible, similar to the baking mat but 1/3 the size. I was thinking $10, but now a little worried that Amazon will want $10 as their cut 🙁


Amazon probably won’t take all of your profits, however, the higher the price the higher the profit margins(usually). I would run the numbers and see what kind of estimated profit margin you would have



Cheers Josh,
Have 3 questions; when calculating the profit margin using the top 3 products. How did your product compare in price; I imagine yours would have been at least comparable to the top 3?
With your estimate profit (33%) it would be eroded further buy personal or company tax
With your chosen product. Is it likely that yours is or could be the exact product, and from the same manufacturer as one of the top 3?

Abraar Arique

Hey Josh,

Did you pay your supplier through Alibaba or by manual bank transfer? Alibaba has a complete online payment and ordering process on their site, which also offers payment protection. So did you use Alibaba’s interface for payment or did you just assign a manual wire transfer from your bank account to your supplier’s bank and confirmed the order through email? Which is better?



Hi Josh!

First of all, I am loving these articles. Also thankful for the time you are taking to include us on your journey. I have a question. You said you bought 1,000 units, but said that the top three sellers were selling 1,000 units every month. If you were one of the top sellers, wouldn’t you run out of inventory by the first month?
I want to make sure that I understand the numbers correctly.



Hi Ashley,

Good question!

The reason why I ordered 1000 units and not more was because I didn’t expect to reach the top 3 after my first shipment. Also, I didn’t know if the product was going to be successful or not so I didn’t want to sink thousands of dollars into more inventory before I knew it would sell. Hope that kinda makes sense

Thanks for the comment,


rony golan

hi josh,
how should i calculate a product i am sending from my home?


Hi Rony,

You will need to do your own calculations in terms of shipping costs but once it arrives at Amazon the same calculations that I did apply to you



Hi, Josh,

thank you for such detailed information. I was wondering whether your shipping costs ($1,400) included US import taxes? Would you mind telling the exact taxes amount?




It cost around $150 for the import taxes and duties



Thank you for providing us your experience across this kind of business of Amazon FBA.

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