How to Calculate Your True Profit per Unit on Amazon India
Many Amazon sellers know their revenue to the rupee but can't say how much they make on each unit. The settlement report shows a deposit, the ads console shows ACoS, and the gap between them is where profit quietly disappears.
Every cost to include
| Cost | What it is |
|---|---|
| Product cost (landed) | Manufacturing or purchase cost plus inbound freight and packaging |
| GST on the sale | The GST you collect and pay to the government. It's not your revenue |
| Referral fee | A percentage of the selling price, which varies by category |
| Closing fee | A fixed fee per order, based on price band and fulfilment type |
| Shipping / fulfilment fees | Weight-handling fees for Easy Ship, or pick, pack and storage fees for FBA |
| GST on Amazon fees | 18% on Amazon's fees; claimable as input tax credit if you're GST-registered |
| TCS | 0.5% of net taxable sales collected by Amazon under GST, adjustable against your GST liability |
| TDS | 0.1% deducted by Amazon under income tax, adjustable against your income-tax liability |
| Returns and damages | Return shipping, unsellable returns and refunds |
| Advertising | Ad spend per unit sold. Use total ad spend ÷ total units |
A worked example (illustrative numbers)
A product sells at ₹999 including 18% GST. The fee figures below are illustrative. Use your category's actual fee schedule from Seller Central.
| Line | Amount (₹) |
|---|---|
| Selling price (incl. GST) | 999.00 |
| Less GST on sale (18%) | – 152.39 |
| Net sales value | 846.61 |
| Less Amazon fees (referral + closing + shipping), illustrative | – 220.00 |
| Less product landed cost | – 300.00 |
| Less returns and damages allowance (5%) | – 42.33 |
| Contribution before ads | 284.28 |
| Less ad spend per unit | – 120.00 |
| Profit per unit | 164.28 |
Here the contribution before ads is about 34% of net sales, so your break-even ACoS on this product is roughly 34%. Spend more than that on ads per unit and every extra sale loses money. See ACoS vs TACoS for how to use this number.
Common profit leaks
- Ignoring returns: in categories like fashion, returns can wipe out margins.
- Long-term FBA storage on slow-moving stock.
- Wrong weight or dimensions on file, leading to higher fees than necessary.
- Unclaimed reimbursements for lost or damaged FBA inventory.
- Unreconciled TCS and TDS, leaving money unclaimed.
- Ad spend on unprofitable ASINs that never had the margin to advertise.
Make it a monthly habit
- Download the settlement and fee reports for the month.
- Calculate contribution per unit for each ASIN or product family.
- Compare each ASIN's ACoS against its own break-even, not an account-wide target.
- Cut or fix products with negative profit after ads, and invest more in the ones that carry margin.
Frequently asked questions
What is the TCS rate for Amazon sellers in India?+
Under GST, e-commerce operators collect TCS at 0.5% of net taxable supplies, reduced from 1% with effect from 10 July 2024. Sellers can claim it against their GST liability.
What TDS does Amazon deduct from sellers?+
Amazon deducts income-tax TDS of 0.1% on sales (reduced from 1% in October 2024), which sellers can adjust against their income-tax liability. Confirm current rules with your CA.
Is GST on Amazon fees a cost?+
Amazon charges 18% GST on its fees. If you're GST-registered, you can usually claim it as input tax credit, so it isn't a final cost.
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