How to calculate net ROI on a wholesale product
Net ROI on an Amazon wholesale product is net profit divided by all cash spent per unit, which means freight and prep belong in the denominator, not just cost.
Last reviewed 5 min readSupplyForge LLC
Net ROI on an Amazon wholesale product is net profit per unit divided by landed cost, where net profit subtracts every Amazon fee and landed cost includes freight and prep.
The formula is trivial; the disagreement lives in what gets put into it. Two sellers can defend 81% and 7% on the same distributor line. This page carries one unit through twice — once with the Amazon fee stack a calculator can see, then with the freight, prep and post-sale costs it cannot — and shows where the other 74 points go.
The net ROI formula for an Amazon wholesale unit
Net ROI is stated in one line, and the discipline is entirely in what goes into each side.
Net ROI = (Net proceeds − Landed unit cost) ÷ Landed unit cost
- Net proceeds = sale price − referral fee − FBA fulfillment fee − allocated storage, placement and returns reserve.
- Landed unit cost = supplier unit price − volume discounts + inbound freight per unit + prep per unit + duty per unit.
Two rules keep the formula honest. Everything Amazon deducts belongs in net proceeds, including fees that arrive as a monthly invoice rather than on the order. Everything paid to get the unit into a fulfillment center belongs in landed cost, including the freight leg from distributor to prep location. A calculation that puts freight in neither place — the common failure — overstates the numerator and understates the denominator at once.
Step one: the Amazon order-level fee stack
Start with the numbers a sourcing screen can compute from an ASIN and a price. The example unit is a hand tool sold at $29.95, with a distributor price of $16.50 per unit on a 288-unit case pack. Every figure below is an assumption, not a published rate — pull your own fulfillment fee from Amazon's Product Fees API.
Referral fee at 15% of $29.95 is $4.49. The FBA fulfillment fee for this size tier is $5.60. Net proceeds are therefore $29.95 − $4.49 − $5.60 = $19.86. Against a $16.50 unit cost, net profit is $3.36 and ROI is $3.36 ÷ $16.50 = 20.4%.
A 20.4% ROI is where most tools stop, and the number is real as far as it goes — it clears a 10% ROI floor comfortably. The same number is also wrong by nearly a factor of three, because the unit did not cost $16.50 and Amazon did not stop charging at $10.09.
Step two: freight, prep and the costs Amazon charges later
Five more per-unit costs are knowable at purchase-order time, and adding them changes the answer more than any negotiation on unit price would. Inbound freight on the 288-unit order was $260, which allocates to $0.90 per unit. Prep — poly bag and FNSKU label — costs $0.45 per unit. Those two go into landed cost, taking it from $16.50 to $17.85.
Three further costs come off net proceeds. Amazon's inbound placement service fee on the shipment works out to $0.30 per unit. Storage allocated from last month's actuals is $0.18 per unit. A returns reserve of 3% at a $7.30 net loss per return is $0.22 per unit. Together those subtract $0.70, taking net proceeds from $19.86 to $19.16. Net profit is $19.16 − $17.85 = $1.31, and net ROI is $1.31 ÷ $17.85 = 7.3%. Net margin on the same unit is 4.4%.
The same unit, three ROI numbers
Three defensible ROI figures exist for this one unit, and the gap is entirely about which costs are in scope.
| Calculation | Costs included | Net profit per unit | Net ROI |
|---|---|---|---|
| Gross ROI | Supplier unit price only | $13.45 | 81.5% |
| Amazon-fee ROI | Referral and fulfillment fee | $3.36 | 20.4% |
| Net landed ROI | All Amazon fees, freight, prep, storage, returns reserve | $1.31 | 7.3% |
The $2.05 of costs added in step two consumed 61% of the order-level profit. On a thin wholesale line, freight and the non-order Amazon fees are the majority of the outcome, not a rounding adjustment. At 7.3% this unit sits below the 10% net ROI floor that Forge Command's sourcing engine enforces before an opportunity is surfaced at all. Closing the gap takes either a $0.56 higher sale price or a 2.6% supplier discount — and the discount is usually the easier conversation.
Which denominator belongs under the line
Landed cost belongs in the denominator, not supplier price, because ROI is a return on cash deployed and freight and prep are cash deployed. Dividing the same $1.31 of profit by the $16.50 supplier price instead of the $17.85 landed cost produces 7.9% rather than 7.3%.
The 0.6-point difference is worth knowing precisely because it is small: the denominator choice is a rounding argument, the numerator choice a factor-of-three argument. Sellers spend disproportionate energy on whether freight belongs on top or underneath while omitting placement, storage and returns entirely. Pick landed cost, apply it consistently, and spend the rest of the attention on completing the numerator. Component detail sits in how to calculate landed cost for Amazon wholesale and how to allocate freight across purchase order lines.
How Forge Command computes net ROI
Forge Command computes net ROI through one shared margin function rather than a per-screen formula, so the figure on a wholesale catalog row, a product record and a purchase order line is the same. Fee inputs come from Amazon's SP-API in batches of 20 identifiers per request across the catalog, pricing and fee endpoints, and purchase orders carry freight allocation and landed cost so the denominator reflects the shipment rather than the quoted unit price.
Two limits are worth stating. Forge Command needs your own Amazon SP-API credentials before the fee side is real — until then, the ROI shown is arithmetic on numbers you typed. And 10% net ROI is a floor, not a recommendation: what a business should accept depends on turns and category, covered in what minimum ROI an Amazon wholesale seller should accept.
Frequently asked questions
Should freight be added to cost or subtracted from revenue
Inbound freight belongs in landed cost, in the denominator, because it is cash spent to acquire the unit. Outbound Amazon fulfillment is a deduction from proceeds. Mixing conventions across SKUs makes ROI comparisons meaningless.
What ROI does a wholesale unit need to clear
Forge Command's sourcing engine filters at 10% net ROI after Amazon fees and $1,000 per month of ASIN revenue. That is a hard floor rather than a target, and the practical threshold depends on how often the SKU turns.
Why does my ROI drop after the first month of sales
Storage, aged inventory and low-inventory-level fees accrue after the sale, so a unit's true cost is not final the day it ships. Recalculating from settlement actuals is covered in Amazon settlement reports explained for sellers.
Is a 7.3% ROI product always a pass
A 7.3% unit turning eight times a year returns more on capital than a 20% unit turning twice, so velocity can rescue a thin number. The two lenses are compared in ROI vs margin for Amazon sellers.