You spot a product at Walmart for $18. It’s selling on Amazon for $39.99. The gap between those two prices, the $22 difference, is what sellers call the “spread” (or the “sticker spread,” since it’s the gap you can see right on the shelf sticker). A $22 spread staring back at you is tempting, and it’s easy to want to grab a dozen units right there in the aisle. But that $22 isn’t your Amazon FBA profit, and it’s nowhere close.
Your true Amazon FBA profit is what’s left after Amazon takes its cut, after fulfillment, after shipping, and after the costs that never make it onto the price tag. Learning to run that math before you spend a dollar is the single most important habit in arbitrage. It’s the difference between a business and an expensive hobby. Here’s how to do it properly, whether you’re sourcing your first unit or your five-thousandth.
Why the sticker spread lies to you
The gap between your buy cost and the Amazon selling price feels like profit because it looks like profit. It isn’t. It’s the pool that a whole stack of costs gets deducted from, and on thin arbitrage deals that stack can swallow most of it.
A deal that shows a $22 spread can leave you $9 after fees, or $2, or nothing at all. Sometimes it leaves you underwater once returns and storage catch up. The number on the shelf tells you almost nothing until you subtract everything Amazon and the supply chain are going to charge you. So before you fall in love with a spread, itemize what’s coming out of it.
The costs that actually come out of every sale
Amazon’s referral fee
This is Amazon’s commission for letting you sell on the platform, taken as a percentage of the sale price. For most categories it’s 15%, though some sit higher or lower. On our $39.99 listing, that’s about $6.00 gone before anything ships.
FBA fees
If you’re using Fulfillment by Amazon, Amazon picks, packs, and ships the unit for you, and charges a fulfillment fee based on the item’s size and weight rather than its price. For a standard-size product this is often somewhere around $5 to $6 per unit. Call it $5.50 for our example. Bigger or heavier items climb from there fast, which is why a great-looking spread on a bulky item can quietly die on the fulfillment fee alone.
Your landed cost
This is what the unit really costs you to get in front of a customer: the product itself, plus sales tax if you’re not buying with a resale certificate, plus any prep, plus the inbound shipping to send it into Amazon’s warehouse. Our $18 product might land at $18.70 once you add roughly $0.70 of inbound shipping, and more still if you paid sales tax at the register.
The easy-to-forget extras
Returns happen, and a returned unit isn’t always resellable. Long-term storage fees hit inventory that sits too long. Neither shows up on day one, but both are real, and both are good reasons to keep a margin cushion rather than sourcing deals that only just clear zero.
One important caveat before we add anything up: these percentages and fees are not fixed. Referral fees vary by category, and FBA fulfillment fees vary by the product’s size and weight, so always pull the real numbers for the specific item in front of you rather than trusting a flat rate.
Profit vs margin vs ROI, and why arbitrage sellers live by ROI
Three numbers describe the same deal, and you want all three.
Profit is the dollars you keep: sale price minus every cost above. Margin is that profit as a percentage of the sale price, which tells you how much cushion a listing has. ROI (return on investment) is your profit as a percentage of what you actually spent, so profit divided by landed cost.
Arbitrage sellers obsess over ROI for one reason: cash recycling. If you put $18.70 into a unit and pull $9.79 back out in profit, that’s a 52% ROI, and the faster that money comes back, the faster you can redeploy it into the next buy. A high-margin product that ties up your cash for three months can be worse for your business than a leaner one that turns over in two weeks. Margin tells you how safe a deal is. ROI tells you how hard your money is working.
A worked example: your true Amazon FBA profit on an $18 buy
Let’s run our product all the way through.
- Amazon sale price: $39.99
- Referral fee (15%): minus $6.00
- FBA fulfillment fee: minus $5.50
- That leaves an estimated Amazon payout of about $28.49
- Landed cost (product $18.00 plus inbound shipping $0.70): minus $18.70
- True profit: about $9.79
So the $22 “spread” is really about $9.79 in profit, which works out to a 24% margin and a 52% ROI on your $18.70. That’s a genuinely good arbitrage deal. But notice how far it fell from the number that first caught your eye, and how a slightly larger FBA fee or a little sales tax on the buy would move it.
This is exactly the kind of calculation SellerAmp SAS is built to do the instant you’re looking at the listing. You enter your buy cost and it returns profit, margin, ROI, and estimated Amazon payout with the full fee breakdown already applied, so you’re not doing referral-and-FBA arithmetic in your head in the middle of a store. The tool doesn’t replace understanding the math. It just means that once you do understand it, you shouldn’t have to grind it out by hand on every product.
Know your breakeven before you commit
There’s one more number worth knowing before you buy: your breakeven sale price, the point where profit hits zero. For our deal, with a 15% referral fee, a $5.50 FBA fee, and an $18.70 landed cost, breakeven lands around $28.50. If competition drags the price below that, you’re paying for the privilege of selling.
Knowing breakeven changes how you read a listing. A product currently at $39.99 with a breakeven of $28.50 has real room to absorb a price dip. One with a breakeven of $38 does not, because a single competitor undercutting you wipes it out.
Better still is to source against a target rather than just breakeven. If your rule is a minimum 30% ROI, you can work out that you’d need to sell our unit for roughly $35 or more to hit it, and instantly reject anything that doesn’t clear the bar. In SellerAmp SAS you set these buy goals once (your minimum ROI, profit, and BSR), and every product you check is judged pass or fail against your criteria automatically. It turns “does this feel worth it?” into a yes or no you can trust and repeat.
Profit-math mistakes that quietly cost beginners
Even sellers who run the numbers get burned by the same few slips:
- Ignoring inbound shipping and prep. They feel small per unit, but they come straight out of thin margins. Include them every time.
- Forgetting sales tax on the buy. If you’re not purchasing tax-exempt with a resale certificate, that 6 to 8% is a real cost. Leaving it out flatters a deal that doesn’t deserve it.
- Pricing off the wrong number. The current Buy Box price isn’t always the price you’ll realistically sell at. If the Buy Box is held by a merchant-fulfilled seller, an FBA offer can often support a higher price, so calculate against the number you’ll actually achieve rather than a lowball.
- Sourcing deals that only just break even. A product with no cushion has nowhere to go when a competitor undercuts you or a few units come back as returns. Leave room.
Final thoughts
The spread on the shelf is a headline, not a profit figure. Your real Amazon FBA profit only appears once you subtract the referral fee, the FBA fee, your full landed cost, and a little room for the extras. Your ROI then tells you whether that money is working hard enough to bother.
Build the habit of running those numbers before you buy, every single time. Set an ROI floor and hold to it. Let the boring math decide what goes in the cart, not the exciting spread. Do that consistently and you’ll skip the deals that quietly lose money and keep the ones that actually build the business. And if you’d rather not work the fees and ROI by hand on every product, that’s exactly what we built SellerAmp SAS to handle. You plug in the cost, it tells you the truth.
Want to know more? Check out this video from Amazon Pro Flips4Miles where he walks through everything FBA.
Ready to find more profitable deals?
Start your FREE 14-day SellerAmp SAS trial and see how quickly you can analyse products, estimate profits, and source with confidence.