How to calculate landed cost for Amazon wholesale
Landed cost per unit is the supplier price plus inbound freight, prep, shipping to Amazon, duties and payment fees, divided by the units actually received.
Last reviewed 6 min readSupplyForge LLC
Landed cost for Amazon wholesale is the supplier's unit price plus every dollar spent getting that unit into an Amazon fulfillment center, divided by the units actually received. Six components make it up: unit price, inbound freight, prep, inbound shipping to Amazon, duties, and the cost of paying the supplier.
The reason landed cost matters more in wholesale than in private label is the margin band. Wholesale buys at a discount off a price someone else set, so the add-ons sit on a thin spread. An add-on worth 15% of the unit price does not remove 15 points of ROI — it removes closer to 16, and on a 15% ROI product it removes all of it.
The six components of landed cost
Landed cost has six components, and five of them arrive after the invoice you approved the buy on. Each one is a separate document from a separate party, which is why landed cost is almost always calculated late and almost always underestimated when it is calculated early.
| Component | Where the number comes from | Typical timing |
|---|---|---|
| Unit price | Supplier invoice, after price break tier and account discount | With the goods |
| Inbound freight | Carrier or supplier freight invoice, often separate | Days to weeks later |
| Prep | Poly bag, FNSKU label, bundling, your own labor or a prep center invoice | At prep |
| Inbound shipping to Amazon | Amazon partnered carrier charge or your own carrier | At shipment creation |
| Duties and customs | Broker entry summary, if the goods are imported | Weeks later |
| Payment cost | Card surcharge, wire fee, or an early-payment discount running the other way | At payment |
A worked landed cost example on one SKU
A worked example makes the size of the gap concrete. Take a case of 12 units invoiced at $170.40, so $14.20 per unit, sold at $24.99.
- Unit price: $14.20
- Inbound freight: a $640 pallet charge allocated across the shipment, $0.78 on this line
- Prep: poly bag and FNSKU label, $0.40
- Inbound shipping to Amazon: $0.55
- Duties: $0.00 — a domestic distributor. If the same goods were imported and dutiable at 4.2%, add $0.60
- Payment cost: the supplier's 2.9% card surcharge, $0.41
Landed cost is $16.34. On the revenue side, a 15% referral fee is $3.75 and the FBA fulfillment fee for this size tier is $4.25, so Amazon takes $8.00 and net proceeds are $16.99. True net ROI is ($16.99 − $16.34) ÷ $16.34 = 4.0%. Priced on the invoice alone, the same SKU reports ($16.99 − $14.20) ÷ $14.20 = 19.6%.
Why leaving freight out overstates ROI
Leaving landed-cost components out inflates ROI by a predictable amount, and there is a closed form for it. Let a be the omitted add-ons as a fraction of unit price and R the ROI you reported using unit price alone. True ROI is (R − a) ÷ (1 + a). In the worked example, add-ons were $2.14 on a $14.20 base, so a = 0.151, and (0.196 − 0.151) ÷ 1.151 = 0.040.
The formula has an unpleasant property: the correction is subtractive on the numerator and multiplicative on the denominator, so it bites hardest exactly where wholesale lives — thin ROI on low-priced units.
| Omitted add-ons as % of unit price | Reported 15% | Reported 25% | Reported 40% |
|---|---|---|---|
| 5% | 9.5% | 19.0% | 33.3% |
| 10% | 4.5% | 13.6% | 27.3% |
| 15% | 0.0% | 8.7% | 21.7% |
| 20% | −4.2% | 4.2% | 16.7% |
Read the 15% row against a 10% ROI floor. Anything reporting under about 27% on invoice price alone is not safely above the floor once freight, prep and inbound shipping are counted.
Costs that belong in landed cost and costs that do not
Landed cost stops at the fulfillment center door. Everything spent moving a unit to Amazon belongs in it; everything spent after Amazon takes custody is a selling cost and belongs against revenue instead. Mixing the two produces a cost basis that changes every month and a cost of goods sold figure that will not tie to a tax return.
In: unit price, inbound freight and accessorials, fuel surcharges, prep labor and materials, prep center per-unit fees, pallet and carton costs, duties, customs brokerage, and the payment cost of the supplier invoice. Out: referral fees, FBA fulfillment fees, monthly storage, long-term storage, removal orders, returns processing, PPC, and the $39.99 monthly Professional selling plan (Amazon selling plan pricing, checked 2026-08-03). Storage in particular tempts people because it feels like a cost of holding inventory, but storage is billed monthly on what is sitting there, not on what you bought, so it cannot attach to a unit cost basis.
Where each landed cost number actually comes from
Each landed cost component has one authoritative source, and using a second source for convenience is how two tools end up reporting different profit. Unit price comes from the supplier invoice line, not the catalog file — tracking wholesale supplier price changes covers why those two drift apart. Freight comes from the carrier invoice and has to be spread across lines using a chosen driver, which allocating freight across purchase order lines works through in detail.
Amazon-side fees come from the Product Fees API rather than a calculator, because Amazon does not publish FBA fulfillment fee tables on its public pricing page and routes sellers to Seller Central instead (checked 2026-08-03). Referral fees run 5% to 45% by category with a typical $0.30 per-item minimum (sell.amazon.com/pricing, checked 2026-08-03), so a category assumption is not good enough on a catalog of thousands of rows.
How Forge Command computes landed cost
Forge Command calculates landed cost on the purchase order, where the received quantity lives, and feeds it through a single shared margin function so the ROI on the Wholesale tab, the Products tab and the purchase order itself cannot disagree. Purchase orders carry freight allocation, per-SKU cost seeding, SP-API enrichment of purchase order lines, and a derived "most recent cost" field, and Amazon fee data comes from the tenant's own SP-API credentials in batches of 20 identifiers per request.
Forge Command's sourcing filters will not surface an opportunity below 10% net ROI, which is the floor the table above is written against. What Forge Command does not do is replace a full accounting system: profit and loss is built from Amazon settlement files and a QuickBooks integration, not from a general ledger of its own. See how to calculate net ROI on a wholesale product for the revenue side of the same equation.
Frequently asked questions
Does landed cost include Amazon FBA fees
No. Landed cost is what it costs to own a unit sitting in an Amazon warehouse. FBA fulfillment fees, referral fees and storage are deducted from revenue when the unit sells, so including them in landed cost double-counts them and produces a cost basis that will not reconcile to purchase records.
How do I handle freight that arrives after the goods
Receive the goods at an estimated freight rate, then correct the cost basis when the carrier invoice lands. Keep the estimate and the actual as separate values on the purchase order rather than overwriting, because the variance between them is the number that tells you whether the freight estimate is any good.
Should prep labor I do myself be counted
Yes. Count your own prep at what it would cost to buy from a prep center, per unit. Costing your own labor at zero makes low-value, high-touch SKUs look profitable and quietly rewards buying more of them, which is the opposite of what the number is for.
What is a good ROI target after landed cost
Ten percent net ROI after Amazon fees is a workable floor for wholesale, and it is the hard filter Forge Command applies before surfacing an opportunity. Anything below that leaves no room for a price move, a fee change, or a return, all of which happen on a normal SKU within a year.