Before starting to make sales on Amazon, having a meagre idea about your profitability can help you take better steps. Choosing a suitable plan, deciding whether or not to avail FBA, etc. are all dependent on your profit.
Suppose you invest a lot of money in availing various Amazon services. At the end of the month, you get a little profit which is almost equal to the amount you have already paid Amazon. Will there be a benefit of your transactions to you? Of course Not.
This the issue many beginners face on Amazon because they don’t calculate their profits prior to making investments money every month. If you want to save yourself from such an issue in the future, then this is the perfect place you have landed on.
Here are some of the most useful ways to measure your profitability on Amazon. Once you get a clear picture of how much you will earn, then you can wisely invest in Amazon’s services.
Consider the Charges You Pay
Having a very clear idea of each and every penny you pay to Amazon is very essential for your business. The most successful sellers on Amazon are always the ones who calculate their costs carefully. Start calculating your costs by stating the direct monthly fees and then go into the details of overhead costs. In case of availing FBA, make a flexible estimate of its fee too. Keep in mind that FBA fee is always dependent on the product sold. Therefore, one must be very flexible when it comes to calculating the FBA fee. Consider the nature of your business and the nature of the items you vend. If you are into the business already, try tracing the regions where most of your customers live. This can effectively help you in calculating the shipment fees Amazon charges per product. Although not always, but returns are the part of every business on Amazon. Professional sellers also stay awake towards the possibility of offering returns to the buyers. Therefore, keeping some part of return prices in cost calculation is essential in case they have to be made.
Consider your Own Costs
Pay attention to what amount of money you are investing every month in your brand. Whether you keep the items at your home or have a proper warehouse for your business, you have to invest. Your hoards might include warehouse rent, maintenance fees, and electricity and water bills. Other than that, you must be ready to embrace any loss that has come in your way and tackle your finances intelligently. Your expenses are also increased because of the insurances and payments to the staff. Make sure you cross check each and every expenditure you make before subscribing to Amazon’s services.
Once you have a clear cut idea of all these expenditures, now compare them to your Amazon sales you expect. If you feel like you will still be saving considerable money, then investing in Amazon services is worth it.