Why VAT has to come out first
On European marketplaces you list a price that already includes VAT. That tax was never revenue — you collect it and pass it on. Every margin figure has to be calculated on what is left after it is removed.
net revenue = price / (1 + VAT rate)
referral = fee base × referral rate
profit = net revenue − referral − FBA fee − storage
− product cost − inbound shipping − advertisingA €49.99 listing in Germany is €42.01 of revenue, not €49.99. Sellers who calculate margin against the gross price consistently overstate it by roughly the VAT rate — and then wonder why the bank balance disagrees with the spreadsheet.
Worked example
A product listed on Amazon.de at €49.99, standard 15% referral category:
- Net revenue = 49.99 / 1.19 = €42.01 (VAT €7.98)
- Referral fee 15% of €49.99 = €7.50
- FBA fulfilment €4.19 · storage €0.30 → Amazon takes €11.99
- Product €12.00 · inbound €0.80 · ads €3.00 → your costs €15.80
- Profit = 42.01 − 11.99 − 15.80 = €14.22
- Net margin 33.9% · return on inventory cost 111.1%
- Break-even price = €29.39 including VAT
That break-even figure is the number worth writing down. It tells you how far a competitor can push you in a price war before the listing starts costing you money — and it moves every time your advertising cost per unit changes.
Is the referral fee charged on the gross or net price?
European fee schedules quote the referral fee against the total amount the customer pays, which is the VAT-inclusive price. On a €49.99 listing at 15% that is €7.50 rather than the €6.30 you would get by applying the rate to the net figure — a difference of nearly 20% on the fee itself.
The switch is there because arrangements vary and schedules change. Take one settlement report, divide the referral fee charged by the item price, and you will see immediately which base applies to your account. Set the switch to match and every result on this page becomes yours rather than a generic estimate.
Margin and ROI answer different questions
Net margin is profit as a share of net revenue. It tells you how much cushion a sale carries — how far costs can rise before it stops working.
Return on cost here is profit divided by what you have tied up in the unit: product cost plus inbound shipping. It tells you how hard your cash is working. Advertising and Amazon’s fees are excluded from that denominator because you do not fund them months in advance the way you fund inventory.
A cheap item can have a thin margin and superb ROI; a premium item often has the reverse. Neither number is the right one on its own, which is why both are shown.
What this calculator does not include
- Returns. The single biggest gap between calculated and actual profit. In apparel a 30% return rate is normal, and a returned unit costs you the fulfilment fee, the return processing and often the resale value.
- The monthly Professional selling plan and any subscription costs — these are fixed, not per unit.
- Long-term storage surcharges on stock that ages past the threshold, and removal or disposal orders.
- VAT registration and filing costs in each country you store stock in. Pan-European FBA moves your inventory across borders and creates registration obligations wherever it lands.
- EPR and packaging fees, which are mandatory in Germany, France and several other markets and are charged per tonne of packaging placed on the market.
A useful habit: run the calculator once with your real numbers, then again with the advertising cost doubled and the price cut 10%. If it still clears zero, the listing can survive a bad quarter.
Frequently asked questions
Usually because the revenue figure includes VAT, or because advertising is left out. Amazon’s tool is built to compare fulfilment options, not to give you a net margin after tax and ads. Strip VAT first and add your real cost per unit for advertising.
For goods stored and delivered within one country, that country’s rate. Once you ship cross-border to consumers above the €10,000 EU threshold, the destination country’s rate applies and most sellers declare it through the One Stop Shop.
It comes from the size and weight tier of the packed unit, listed in the fee schedule in Seller Central. It is worth checking after any packaging change — crossing a tier boundary by a millimetre or a few grams can move the fee by more than the packaging saved.
Yes, if you want a number you can trust. Divide your total ad spend for the product by all units sold in the period, not just the ones attributed to ads. That figure is your true cost per unit and it is usually higher than sellers expect.
The lowest price, VAT included, at which the sale still covers every cost you entered. Below it each additional order loses money. It is the floor for promotions and the line you defend in a price war.