Many sellers think they have a 50% margin until the first payout arrives. The difference is almost always the same few costs: VAT, duty, Amazon's fees and advertising. This guide walks through the calculation line by line and shows worked examples for the US, the UK and Germany.
The fee figures in the examples are assumptions for illustration. Amazon's referral and fulfilment fees change and depend on category, size and weight. Always check the current rate card in Seller Central for your product.
The formula
Profit per unit = selling price − VAT − product cost − shipping to the warehouse − import duty − referral fee − FBA fulfilment fee − other costs − ad cost per sale
Then:
- Net margin = profit ÷ revenue excluding VAT
- ROI = profit ÷ landed cost (product + shipping + duty)
Each line explained
Selling price and VAT
- UK: prices on Amazon.co.uk include VAT. The standard rate is 20%, so a £24.99 price contains about £4.16 of VAT that isn't yours.
- Germany: prices on Amazon.de include VAT. The standard rate is 19%, so €24.99 contains about €3.99 of VAT.
- US: there is no VAT. Sales tax is added at checkout and, in states with marketplace facilitator rules, collected and remitted by Amazon, so it doesn't come out of your price.
If you sell into the UK or Germany from abroad, you will usually need a VAT registration there. Get advice from an accountant who knows marketplace sellers.
Product cost and shipping
Your supplier's unit price plus the cost of getting each unit to Amazon's warehouse (freight, customs clearance, delivery to the fulfilment centre), divided by the number of units.
Import duty
Duty depends on the product's customs code (HS code), its origin and the destination. Rates range from zero to well above 10% for some goods, and US duties on goods from China have changed several times recently. Look up the current rate for your exact code before ordering; in the UK and EU, duty is usually charged on the goods plus freight.
Referral fee
Amazon's commission on each sale, a percentage of the total sales price that depends on the category (many categories are around 15%). Some categories also have a minimum fee per item.
FBA fulfilment fee
A fee per unit for picking, packing and delivering, based on the size tier and shipping weight. This is where bulky or heavy products lose their margin. Add monthly storage fees too, especially for slow sellers and in the fourth quarter.
Advertising cost per sale
Your total ad spend divided by the number of units sold. New products often need more advertising to get started, so plan for a higher cost at launch.
Worked examples
All three examples use the same product: a bamboo drawer organizer bought for the equivalent of 4–5 in local currency, with assumed fees.
| US | UK | Germany | |
|---|---|---|---|
| Selling price | $24.99 | £24.99 | €24.99 |
| VAT | – | £4.16 (20%) | €3.99 (19%) |
| Revenue excl. VAT | $24.99 | £20.83 | €21.00 |
| Product cost | $4.00 | £4.00 | €4.00 |
| Shipping to warehouse | $1.20 | £0.90 | €1.00 |
| Import duty (assumed 4%) | $0.21 | £0.20 | €0.20 |
| Referral fee (assumed 15%) | $3.75 | £3.75 | €3.75 |
| FBA fee (assumed) | $4.00 | £3.50 | €3.60 |
| Ad cost per sale (assumed) | $2.00 | £2.00 | €2.00 |
| Profit per unit | $9.83 | £6.48 | €6.45 |
| Net margin | 39% | 31% | 31% |
Notice how the same price gives a much lower profit in the UK and Germany: VAT alone takes a sixth of the price.
Common mistakes
- Forgetting VAT in the UK and EU, or calculating margin on the VAT-inclusive price.
- Using the highest competitor price instead of the price you can win sales at.
- Ignoring storage, returns and long-term storage fees on slow-moving stock.
- Leaving advertising out. On Amazon, most new products need sponsored ads to get their first sales.
- Guessing duty. A wrong customs code can change the duty rate completely.
What a healthy result looks like
There is no universal target, but the margin has to pay for advertising and mistakes. Calculate your break-even ROAS: if you'd need unusually efficient ads just to break even, the product is fragile.
Calculate it in seconds
Ecomtoro calculates FBA, Shopify and TikTok Shop margins for the US, UK and Germany with VAT, duty, channel and fulfilment fees, and shows which fee tables it used and when they were checked. If a cost is unknown, it shows the gap instead of guessing.
Frequently asked questions
Is Amazon's referral fee charged on the price including VAT?
Amazon calculates referral fees on the total sales price. In the UK and EU that price includes VAT, which is why the fee can be larger than you expect if you calculate it on the net price.
What is a good profit margin for Amazon FBA?
One that still leaves profit after advertising, returns and storage. Rather than a fixed number, check your break-even return on ad spend and how much room you have for price drops.
Do I need a VAT number to sell on Amazon UK or Amazon Germany?
Sellers based outside the UK or Germany usually need to register for VAT there before selling, and domestic sellers must register above the local threshold. Confirm your situation with an accountant.
How do I find the import duty rate for my product?
Find the product's HS code, then look it up in the destination's tariff: the US Harmonized Tariff Schedule, the UK Integrated Online Tariff, or the EU's TARIC database. Your freight forwarder or customs broker can confirm the code.
