Is Your Private Label Product Actually Profitable?

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Selling private label products on Amazon is a great way to generate thousands of dollars in sales in a scalable and sustainable way. But is it a profitable way to sell online? What are your expenses associated with generating sales? And most importantly, does your topline revenue exceed your expenses, so that you are selling profitably?

 

If you have been following the launch of Jungle Stix, the private label bamboo marshmallow sticks that Greg has launched, there are various expenses encountered along each step of the way, whether getting sample products, importing your shipments, or advertising and promoting your products. It was easy to get a snapshot of the revenue that has been generated, but a bit more (sobering) work to account for the costs.

 

We have had many people ask for the spreadsheet calculations that we used in the blog post covering all of our expenses. So to help you get a snapshot of how much you have invested in your FBA business, or just plug in some numbers to run some estimates, we have uploaded a spreadsheet for you to use.

 

CLICK THIS HERE TO DOWNLOAD THE PROFIT MARGIN CALCULATIONS

 

This is intended to be a starter template to layout some of the general costs, but there are going to be other costs that you may incur that should be incorporated as well. This is a screenshot of what the spreadsheet looks like:

 

profit margin breakdown ss

 

This is a work in progress, and we will continue to refine and update. How have you done your accounting and inventory management before? Any software or helpful hacks that you’ve come across? Please share them in the comments to let us know!

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30 Comments on “Is Your Private Label Product Actually Profitable?”

  1. Thanks for posting this. A lot of newbies don’t realize the number of costs that need to be considered when trying to launch a product- all they see are awesome screen shots from seller central. Thanks for putting out this resource. I have something similar but love the explanations/descriptions so I could pass this off to a VA to use.
    I also have been talking to an accountant about having him not only help with the books, but help optimize products and profitability so I can determine where to trim the fat. The takeaway from all of this? Know your numbers, and pay others to do what they are strongest at.

    1. Hi Valerie,

      That is a very sound takeaway, and I do agree. There are various ways to optimize your P&L, and I agree that finding experts to help is a great way to make it happen!

  2. Hi Greg,

    So, I was plugging my #’s into your spreadsheet, and in the “Promotion and Giveaways” area, I think I found an error. I think the formula you used for “Total Cost per Promotional Giveaway” is incorrect.

    The formula you used is taking (Product giveaway Price – COGS – Azon Fees – Giveaway Fees). I don’t see why we are subtracting both Azon fees + giveaway fees…aren’t they both the same thing?

    My normal Azon fees, for instance, are $5.42 per unit. My Azon fees for my giveaways are $4.63 per unit…when I look at the breakdown for my promotional sales, Amazon only lists the one fee ($4.63) and that’s it. It doesn’t take away both their normal Azon fee + the giveaway fee.

    Not sure if you understand what I mean, but it makes a big difference because I thought my giveaways were costing me only $7, when your spreadsheet is showing that it is costing me almost $12.

    Let me know what you think. Great stuff as usual, and thanks!

    Kevin

    1. Hey Kevin,

      Sorry for any confusion, that is a good point. The “Giveaway Fees” refer to any fee that may be associated with your promotional giveaway service, like Review Kick (currently totally free), or similar offerings. It sounds like maybe you could just delete that row then? Hope this helps!

      Gen

  3. profitable….yes i am….and its all down to the JS pro software. Cant thank you guys enough…but please hurry with the web app for the uk, needed badly.

    I’ve mentioned in greg’s other post about my strategy, which is bundling, and wow i now have a no1 best seller after being available for 1 week, can submit proof to verify if needed.

    I spent around 8000 usd on 9 products to test the market as i wasnt sure what would sell and out of those 3 have been an instant hit and im running low on stock, waiting for china now.

    4 other products are selling but not like id have hoped. but maybe too early to tell.

    I also want to share my thoughts on reviews, my fastest selling product sold with no reviews…then i got a 5 star and a 1 star, i thought that would be the end of the product so early on but no it went on to be a best seller, i think a rival seller put the 1 star on to scare people, so all id say is if you have the right product at the right price then people will buy anyway, so keep the faith.

    Im now using JS as my inventory budget tool to forecast units required based on rank, cant tell you guys how valuable that little gem is…..awesome.

    Im working full time in the middle east with my brother doing logistics in the uk to sort and ship to amazon, in a few months i will be quitting my job and going full time. Cant wait.

    Webapp uk please…..please

    1. Hey Paul,

      That’s awesome, thanks for sharing your story! Interesting re: the competitor bringing your rating down. Have you tried getting some honest Amazon reviews on Review Kick? More reviews always helps, and sounds like they are great products.

      Gen

      1. Gen thanks, im addicted to JS hahaha….honestly its been a life saver.

        Another tip i would recommend is find a top 20 product which is not FBA or AMZ but Merch and start selling on that listing…these listings are normally from chinese supplier shipping to US/UK…then go find the product on alibaba and sell as FBA…works a treat and a lot less hassle….as long as its a generic listing, dont want to go infringing policies…..i found 3 products that sell 600-1000 month by merchant and at great profitable prices….and of course ratings and reviews already in place.

        1. Hey Paul,

          Glad that you’re finding value in JS! Great suggestion with filtering by Merchant. Are you using the JS Web App? Just want to make sure that you know that you can filter by Merchant in the Web App, so you can find even more products that way….

          Gen

          1. Hi Gen. I’m trying to reach you for some help on js. I wonder if it has a way other than messages here or in FB?

        2. Paul – would you mind chatting for a few minutes, I think I’m tyring to do what you are referring to above, where you said,

          “… listings are normally from chinese supplier shipping to US/UK…then go find the product on alibaba and sell as FBA…works a treat and a lot less hassle….as long as its a generic listing, dont want to go infringing policies…..i found 3 products that sell 600-1000 month by merchant and at great profitable prices”

          I think I have found something promising, but am just confused on how to do this in Seller Central. I’ve been focused on PL, but wonder if this is a way to go on a very un-sexy product sold by a merchant.

          Let me know if I can give you a call to discuss. Thanks

        3. Hello Paul, this is a great idea…is this according to TOS? Can you piggyback sell on a Merch listing and how is that possible? Thanks

  4. Hi There
    We are just at the beginning of our FBA journey and have been inspired by your blog posts detailing the Bamboo sticks.
    I have built a spreadsheet that comes before the stage you are at i.e. Whilst doing the research I plug all the numbers in and see if the product will actually work from a margin point of view looking at the average prices on the first page of the results in Amazon.
    This is after having done some product research and getting the first phase of quotes from Alibaba.
    The spreadsheet takes into account
    1) FOB price per unit
    2) Shipping costs
    3) Import duty and VAT – I am in the UK
    4) FBA prep fees (we will be using an FBA prep company)
    5) All FBA selling fees as calculated on the Amazon FBA fee calculator
    6) VAT in and out to get a true margin calculation (nett profit)
    &) Margin calculation and ROI calculation

    I use this to asses whether its worth moving forward. We have found a product that seems to make sense and we are now negotiating with suppliers

    I was thinking that If I send you this spreadsheet could you have a look at and see if I have everything correct and if so I would be willing to share with other members so they could use.
    Let me know
    Cheers
    Mark

    1. Hi Mark,

      Sounds like you have all the key high level expenses included. Sure, you can send it in and we can have a look, it sounds like a resource that may help others as well, so thanks for that offer.

      Gen

    2. Hey Mark, that sounds like a speadsheet that would be very helpful to me. Do you mind sharing it with me?

  5. Greg or Gen,
    I have the JS tools and love them! Thanks!
    I have found a good product and going thru all the steps I have learned from you two.
    My Chaka GE is that it is the restricted category of Beauty. Do you ha e some direction on how to satisfy the requirements? Do my receipts just be from retail stores or have to be from my wholesale supplier? Any help I. How to overcome this opstie would be great. I remember Greg’s advise that o stubble will come almost all the time and I have to just plunge thru!
    Thanks
    Steve
    [email protected]

  6. Hey Gen, this is awesome. Thank you for sharing this – you obviously put a lot a time into making this easy to read/understand for anybody. Very impressive that you shared it openly.

  7. Hi Gen,
    Thanks for all your great support. I tried to review some products on Review Kick and they ask me for my Amazon URL. Even though I sell on Amazon, I don’t have that. Where can I set up my URL.
    Thanking you in advance for your great help.
    Great Weekend
    Pierre

  8. This is great information.

    For those of you who have accountant contacts or friends and want help setting it up, you want to ask them about ‘Job Cost Accounting’. This is how like with these spreadsheets you associate specific costs to a specific job (or in this case product).

    I use something similar and intend to join them into one spreadsheet at the end of the year with each job/product in a column with each expense (like shipping or COGS) in a row and add them all together at the end of the year for P&L. I also only have a couple small scale products selling and research into a bigger product in the works.

  9. Hi Gen, I have a couple of questions I hope you can help me with. The $1.60 PPC per item that was used for the Jungle Stix example, was that an ongoing charge per item or was that just to get the product going?
    I am more concerned with the “profit margin” after I get it going. I guess the big question is what profit margin works well?
    What profit margin are the Jungle Stix running at now that they are $19.99?
    Like so many, I am just trying to get a feel for my numbers to see If I have a good product or if I should look for another.

    Thanks for all the help you guys provide for us!

  10. Amazing stuff!! I too am interested in info on how to fulfill requirements for Beauty. For example, it requires full product specification. Is there a template for this? What info should it include?

    Where can I find information on import restrictions or conditions. For example, if I want to import products from South America to the US.

    Thank-you for your help.

    1. Hi Claudia, glad that you like it.

      I don’t know off hand what the answer to your question is, but you could ask in the Amazon FBA Competitive Edge Facebook group, or maybe Reddit’s /FulfillmentByAmazon subreddit? And of course, Google! hope that helps!

      Gen

  11. Hello.

    I love the JS toolset. and use it extensively so far.

    We are working on our first listing and will be getting samples soon.

    I just had a question regarding this rev calculator spreadsheet. When I plug in my numbers, it shows my net profit to be substantially higher than what the Amazon rev calculator shows. Of course this is great… but is it accurate? Why is there such a difference? I would hate to think I’m going to be getting one amount, only to find out it was much lower.

    1. Hey Richard,

      The calculator spreadsheet gives kind of a raw estimate, and as much as we like the spreadsheet, sometimes it can be off a little, as do most spreadsheets. In fact, I used spreadsheets for a couple years before switching over to our Amazon accounting product Fetcher which pulls data directly from Amazon. It was kinda eye opening how off my own numbers were lol.

      But typically, as long as you know your fee costs and cost of goods sold, you should be able to calculate your profit easily. Don’t forget storage and subscription fees, too!

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