Calculate the minimum export sale price before buying a batch and launching ads. Include cost of goods, packaging, shipping, fees, payment processing, advertising, returns, and currency costs in the table. Separately set the amount you want to receive after covering the costs included.
Decide whether to test a product after checking two changes: a higher shipping cost and a lower price. Set the quantity, maximum costs, duration, and stop conditions for the test in advance. The result of this calculation is not net profit: to determine that, you need to account for all costs and taxes for the relevant period.
Gather costs for one product and shipping method
Start with one SKU, a specific marketplace, and a destination country. Record the weight and dimensions of the packaged product. Obtain actual rates, contract terms, and services available to the seller from the relevant account or through an official request. Leave any unknown amount blank and find it out before funding the test.
| Calculation item | What to enter per order |
|---|---|
| Cost of goods | The cost of the product with purchasing costs already included. Note which costs it covers. |
| Packaging | Materials and order preparation, if they are not already included under another item. |
| Shipping | The shipping cost for the chosen route. For a batch, allocate it across the units. |
| Marketplace fees | The percentage rate, its calculation base, the minimum fee, and any separate fixed charges. |
| Payment processing | The fee under the applicable agreement. Check whether it is already included in another fee. |
| Advertising | The planned amount per order and a separate spending limit for the entire test. |
| Returns | An estimated reserve with the cost assumptions recorded. |
| Currency | The conversion rate and conversion costs for the chosen settlement method. |
| Desired result | The amount that should remain after the listed costs. |
Convert all amounts to one currency. If a payment applies to a month or an entire batch, record how you will allocate it. Do not count inbound shipping twice if it is already included in the cost of goods.
Check the fee basis and order fulfillment method
On Amazon, the referral fee per unit sold is a percentage of the total price or a minimum amount, whichever is greater. The total price includes the product price, shipping, and gift-wrapping fees. The fee category may differ from the category shoppers see. Therefore, choose the rate for your calculation based on the fee category for the specific product.
With FBM, the seller can store, pack, and ship products themselves. Under the FBA model, Amazon receives and stores inventory, packs and ships orders, provides customer service, and processes returns on the seller’s behalf. Prepare a separate cost estimate for each option.
Amazon offers a comparison of costs and proceeds for FBA and seller-fulfilled orders. However, long-term storage, inventory removal, and returns processing costs are not built into the FBA Revenue Calculator. Add these items separately if they apply to your option.
Record the advertising budget separately as well. Sponsored Products are paid for per click: a charge occurs when someone clicks an ad. Set your own acceptable advertising cost per order in the plan, and during the test compare total ad spend with the orders received.
Calculate the price with a percentage fee
If the fee is a share of the total sale amount, use this formula:
Minimum sale amount = (included costs + desired result) / (1 − fee share).
Do not include the percentage fee a second time in the numerator. Include fixed charges in the costs. If other fees also depend on the sale amount, adapt the formula to their calculation base. For a rate with a minimum fee, check which amount applies to the calculated price.
Illustrative order and two changes in conditions
All numbers below are illustrative assumptions, not rates charged by Amazon or other services. Suppose an order contains one unit, the buyer pays 35 US dollars including shipping, and the only percentage fee is 15% of that amount. The minimum fee does not apply in this example.
- Product — 8 dollars.
- Packaging — 1 dollar.
- Shipping — 10 dollars.
- Payment processing — 0.80 dollars.
- Advertising — 2 dollars.
- Returns reserve — 1.50 dollars.
- Currency costs — 0.70 dollars.
- Share of the marketplace fixed charge — 0.50 dollars.
Included costs total 24.50 dollars. The desired result is 3 dollars. Minimum sale amount: (24.50 + 3) / (1 − 0.15) = 32.3529… dollars. Rounded up to the nearest cent: 32.36 dollars.
| Condition | Result after included costs | Decision against the 3-dollar target |
|---|---|---|
| Base price 35, shipping 10 | 35 − 5.25 − 24.50 = 5.25 dollars | You can move to a limited test after filling in actual costs. |
| Shipping rises to 13, price remains 35 | 35 − 5.25 − 27.50 = 2.25 dollars | Review shipping or raise the total price to at least 35.89 dollars. |
| Price falls to 32, shipping remains 10 | 32 − 4.80 − 24.50 = 2.70 dollars | Do not start the test at this price without reviewing costs or the target result. |
Taxes and costs not included in the calculation are not modeled here. These numbers show the result only under the stated conditions and do not determine whether sales ultimately recoup their costs.
Set the limits of the economic test
Before the first shipment, prepare a short plan:
- Set the number of units and the test end date.
- Set a maximum spending amount, including advertising and the returns reserve.
- Record the minimum acceptable result per order.
- Track the actual sale amount, deductions, shipping, advertising costs, returns, and currency costs.
- Stop new spending when the limit is used up or when the recalculated price under available conditions no longer delivers the chosen result.
After the test, replace assumptions with actual amounts. Keep pending returns and invoices not yet received as separate open items. Recalculate before deciding on the next batch.
How to account for purchasing costs in Torgsoft
Prepare the product cost for your initial calculation. In Torgsoft, an expense with the option «Включати в собівартість товару» (Include in product cost) is recorded in the «Додаткова собівартість» (Additional cost) column and increases the cost basis of inventory held in the warehouse. This lets you account for additional purchasing costs, including shipping and commission.
Transfer this cost into the export order table. Mark the costs already included so you do not add them again. Calculate sales fees, advertising, shipping to the buyer, and currency costs on separate lines. The accounting procedure is described in the article about additional purchasing costs.
Before preparing a test batch, you can select the «Тільки з нульовою кількістю» (Only with zero quantity) filter in the «Стан складу» (Stock status) form. Check the selected SKU using this filter, and verify the quantity to ship against the actual stock. The review procedure is given in the article about stock quantity. Cost of goods and stock quantity are input data; decide whether to test based on the full order estimate.
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