In 2026, being an Amazon seller in India presents numerous opportunities that can significantly boost your profitability. But many sellers still struggle with their Amazon seller profit calculation. The assumption that high sales equal high profit is not always true. Although high sales numbers may look promising and impressive, your cash flow can still feel unpredictable, the common reason being that many seller focus on their revenue instead of calculating actual profit. Between GST, Amazon fees, returns, hidden costs, etc., your profits can be way lower than the set expectation.
Whether you work individually or with an Amazon marketing agency, knowing your real profit is very important to make certain decisions related to your expenses. In this blog, we are going to learn about every cost involved and break them down to explain how to calculate profit on Amazon India.
Why is Profit Calculation Important?
Amazon is a very competitive marketplace. To survive on this platform, it is essential to be well aware of your numbers. Not knowing your profits can lead to many wrong decisions about important business aspects, which can hurt your business, such as:
- Overspending on Amazon advertisement
- Sell products with low or negative margins
- Discounts or coupons can lead to loss
- Lose money on returns and storage
With a proper knowledge of your net profits, you can understand the Amazon seller profit margins in India and can confidently scale your business by making well-informed decisions.
Common Profit Calculation Mistakes
- Ignoring Discounts and Coupon Offers
- Using MRP instead of the selling price
- Not excluding GST from the profit
- Forgetting about returns and refunds
- Not accounting for advertising expenses
- Including Amazon FBA reimbursement
- Not accounting for storage costs
Steps to Calculate Accurate Net Profit –
Step 1: Start with the product’s Selling Price
To calculate the profit correctly, it is necessary to use the actual selling price of the product. Many people make the mistake of using MRP. If you run discounts, coupons, or promotions, adjust your selling price accordingly. Many sellers miscalculate profit by using the listed price instead of the final value at which the product is sold.
Step 2: Deduct Amazon Selling Fees
Sellers selling on Amazon know that it charges many fees from them; subtracting those fees from the selling price is an essential step in calculating net profit. Listed below are the fees that should not be accounted for during profit calculation:
Referral Fee
A percentage of the selling price based on the category of the product.
For example, 10 per cent of ₹1000 = 100
Closing Fee
This is a fixed price that is paid on every unit sold, depending on the price slab.
Fulfillment Fee
This fee is for the seller who uses Fulfilled by Amazon. Amazon FBA profit calculation must include:
- Pick and pack fee
- Weight handling fee
- Last-mile delivery
Step 3: Calculate COGS
Calculating COGS helps in understanding the cost of goods sold.
It includes:
- Cost of manufacturing the product
- Amount spent on packaging and labelling
- Quality check cost
- Transportation to the Amazon warehouse expense
Not accounting for these costs can lead to inaccurate net profit calculations.
Step 4: Subtract GST and TCS
Many sellers misunderstand GST as profit and don’t subtract it while calculating profit. GST collected from customers goes to the government and thus is not a profit. Also take into account TCS, which Amazon deducts at 1 percent.
Step 5: Add Advertising Costs
Considering the competitive nature of Amazon, spending on advertising is not an option anymore. It is important to exclude the ad cost from the selling price.
Exclude the cost of all types of ads you ran:
- Sponsored Products
- Sponsored Brands
- Sponsored Display
Step 6: Include Returns and Refunds
The return of a product sold directly impacts profitability. Excluding the return impact per unit makes the net profit more accurate.
It includes:
- Refund amount
- Reverse shipping charges
- Damaged inventory
Step 7: Storage and Long-term Fees
For sellers availing the fulfilled by Amazon service, storage cost cannot be avoided.
It includes:
- Monthly storage expense
- Long-term storage penalties for slow-moving inventory.
Step 8: Account for Amazon FBA Reimbursement]
Amazon has an FBA reimbursement policy, which pays the seller for any:
- Lost inventory
- Damaged Products
- Shipment Issues
Although this policy compensates for your loss, it is not necessarily a profit, but should be tracked separately.
Step 9: Add Operation Costs
Including expenses beyond fees charged by Amazon is essential to calculating Amazon Seller ROI in India.
It includes:
- Software and analytics tools
- Amazon marketing agency fees
- Salaries of employees
Step 10: Calculate the Net Profit
Taking all the above-mentioned costs into account and following the steps correctly, calculate your net profit by subtracting them from the selling price of the product.
Conclusion
Sellers who are succeeding on Amazon are not only good marketers, but also have a good hold on their business numbers. Being aware of your profits, expenses and costs allows you to price your products correctly, reduce unnecessary costs and grow the business with the practices that suit it the best.
Assuming good sales mean good profits can prove to be a costly mistake in future, which is why it is important to have profit clarity. Accounting for all the costs helps you gain a fresh perspective and clear visibility into your business health, which enables you to fight your competitors and grow your Amazon business with full control. Reach out to HRL Infotech for proper guidance and cal
