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Amazon FBA
The video demonstrates how to use Amazon's Revenue Calculator tool—combined with Alibaba supplier data, Jungle Scout's browser extension, and third-party cost lookups—to estimate net profit on a specific FBA product (a dog knee brace), and argues that a healthy target is a 33% net margin (the "rule of thirds"), which can be used to reverse-engineer the maximum price you should ever pay a supplier.
There are two ways to use the Revenue Calculator: search Amazon's catalog for a similar existing product (fast but potentially inaccurate) or manually enter your own product's packaging dimensions and weight from the Alibaba listing (slower but more accurate).
Convert the Alibaba packaging dimensions from centimeters to inches before entering them, since it simplifies later steps.
Use the Jungle Scout extension on a keyword search results page to find average category pricing, then filter by a minimum of 300 monthly sales to isolate high-demand products and get a competitive average price.
Filter further by a maximum review count (e.g., 50 reviews) to find what other newly-launched, low-review sellers are pricing at, since a brand-new product starts with zero reviews and needs to undercut established competitors to win sales.
Set shipping charge to $0 in the calculator when using FBA, since Amazon handles fulfillment.
The Amazon referral fee (about 15% of the item price in this category) is identical whether you use FBA or FBM.
The main cost difference between FBA and FBM is the fulfillment cost: Amazon charges a flat fulfillment fee for FBA, while FBM sellers must estimate their own packaging and shipping costs.
For FBM, packaging material (boxes) cost can be estimated using Uline by entering package dimensions and comparing bulk pricing tiers, then rounding up to account for tape and shipping surcharges not included in the unit price.
For FBM, outbound shipping cost to customers can be estimated using a tool called LDR Prep.com by entering package dimensions, weight, an origin zip code, and a distant destination zip code, then choosing a service speed (two-day shipping is standard for Amazon customer expectations).
Storage costs fluctuate seasonally—Q4 storage is more expensive than the January–February period—so the video recommends calculating storage using Q4 (worst-case) figures for a conservative estimate.
The Alibaba listed unit price is not an accurate cost of goods; you must contact the supplier directly for a real quote covering manufacturing and shipping into your country.
A healthy net margin on Amazon is presented as being 33% (net profit relative to price) or, equivalently, a 100% return on the landed cost invested.
The "rule of thirds" framework: one third of the selling price should go to Amazon (fees), one third to landed cost (cost of goods), and one third should come back to you as profit.
You can reverse-engineer the maximum acceptable cost per unit by subtracting your target profit and known Amazon costs from your selling price; any supplier quote above that ceiling means you should move to a different supplier or product.
The average inventory/estimated monthly units sold inputs can be left at a 1:1 ratio for a per-unit profit estimate; changing both proportionally yields the same result.
Amazon Revenue Calculator Tool — Amazon's tool for estimating net profit on a product by entering category, price, dimensions/weight, shipping method, and cost of goods. Apply: Enter your product's packaging dimensions (in inches), category, and target price, then toggle between FBA and FBM to compare fees, fulfillment costs, and resulting net profit/margin.
Rule of Thirds (33% Net Margin / 100% ROI) — A profitability benchmark stating a selling price should be split roughly into thirds: Amazon fees, landed cost, and profit, targeting a 33% net margin equivalent to a 100% return on cost. Apply: Divide your target selling price by three to find your target profit per unit, then check whether your calculated fees plus a supplier quote leaves that much profit remaining before committing to a product.
Jungle Scout Extension Sales/Review Filtering — A method for finding a competitive launch price by using the Jungle Scout browser extension on a keyword search page and filtering by minimum monthly sales and maximum review count. Apply: Filter results to 300+ monthly sales to find the average price of high-demand products, then add a maximum review filter (e.g., 50) to find what other low-review, newly-launched competitors charge, and price slightly below that average to compensate for having zero reviews.
Uline Box-Cost Lookup — A method for estimating FBM packaging material cost by entering package dimensions into Uline's website and reading bulk box pricing tiers. Apply: Enter your package dimensions into Uline, note the per-unit box price at a chosen bulk quantity, and round the number up to account for tape and shipping surcharges not reflected in the listed price.
LDR Prep.com Shipping Estimator — A third-party website for estimating the cost of shipping an FBM order to a customer by entering package dimensions, weight, and origin/destination zip codes. Apply: Enter your package's dimensions and weight along with your zip code and a distant zip code (e.g., a far-away city), then select two-day shipping (the Amazon customer standard) to get an estimated per-shipment cost to plug into the Revenue Calculator's FBM shipping field.
FBA vs. FBM Cost Comparison — A side-by-side comparison in the Revenue Calculator's graph view showing how referral fees stay the same but fulfillment costs and resulting net profit differ between Fulfilled by Amazon and Fulfilled by Merchant. Apply: Open the comparison graph after entering both FBA and manually-estimated FBM costs to see which fulfillment method yields higher net profit before deciding whether it's worth pursuing further FBM cost research (e.g., third-party storage quotes).
Reverse-Engineered COGS Ceiling — A negotiating technique that calculates the maximum acceptable cost of goods per unit by working backward from your target selling price, target profit (per the rule of thirds), and known Amazon fees. Apply: Subtract your target profit and calculated Amazon fees/fulfillment costs from your selling price to get a maximum cost-per-unit ceiling, then reject any supplier quote that exceeds that number and move on to the next supplier or product.
Q4 Worst-Case Storage Costing — A conservative estimating practice of calculating storage fees using the more expensive Q4 (holiday season) rate rather than the cheaper January–February rate. Apply: Switch the storage time frame setting in the Revenue Calculator to Q4 before finalizing your net margin estimate, so your profit projection reflects the higher end of seasonal storage costs.
Matching to an existing Amazon listing that looks identical to your Alibaba product is described as convenient but less accurate than entering your own supplier's packaging data directly, because the manufacturer or packaging could differ even when the product images are identical.
The strategy for pricing a brand-new product isn't just matching the category average price—it's specifically filtering for other low-review sellers to find the price point needed to compete without any reviews yet.
Choosing Q4 storage costs deliberately front-loads the worst-case scenario into the profit estimate rather than using the cheaper January–February rate, functioning as a built-in margin of safety.
The 'rule of thirds' is used less as a general benchmark and more as an active negotiating tool: the ceiling price for a supplier quote ($11.38 in this example) is calculated before ever contacting the supplier, turning the profitability target into a hard cutoff for supplier selection.
In this specific product example, the cost gap between FBA and FBM fulfillment ($10.45 vs. $15.20) is large enough that the video treats further FBM cost analysis (e.g., third-party storage quotes) as not worth pursuing, illustrating how a quick comparison can eliminate a fulfillment option early.
The video repeatedly emphasizes that cost estimates (box price, shipping cost) don't need to be precise—only a 'ballpark number'—suggesting the overall workflow is designed for fast go/no-go product screening rather than final financial accounting.
«You don't need to be 100% right.»
— 04:18
«Remember, you're going to have zero reviews when you first launched.»
— 02:21
«That's insane.»
— 07:08
«What is a healthy net margin on Amazon?»
— 09:21
«A really good net margin is anything above 3% or in other words, a 100%.»
— 09:23
«For every $1 you spend, you want to get $2 back.»
— 09:30
«Also, consider the rule of thirds.»
— 09:34
«One third goes to Amazon, one third goes towards»
— 09:36
«if they hit us with a number that's anything more than $11.38, then»
— 10:20
Reception
Viewers express strong appreciation and gratitude for the clear, helpful explanation of Amazon FBA fees and profit calculations, though several remain confused about correctly calculating cost of goods and shipping.
The video presents a concrete, tool-driven workflow (Revenue Calculator plus Alibaba, Jungle Scout extension, Uline, and LDR Prep.com) for screening a single product's FBA profitability, framed around a reusable heuristic—the rule of thirds/33% net margin—for deciding the maximum price to pay a supplier.
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