BQool will explain what is the ROI% and how you can use this calculation to set perfect Min and Max prices using a repricer. We will go through some real products and calculate the best ROI in order to prevent selling for a loss. Lastly, Marco will show how to successfully set the same ROI for multiple listings by using Bulk Action: Profits, ROI and Profit Margin feature.

There are two common methods to estimate profitability in the business world:

1. Profit Margin (%): This is calculated by breaking down the item price into cost and profit, providing a percentage that reflects the profitability of each sale.
2. Return on Investment (ROI): ROI measures the investment value of a product, focusing on the return generated relative to the cost of the investment."

Est. Profit Margin % is calculated based on Min/Max/Your Price

▸Formula:

Est. Profit Margin % = Profit (Min/Max/Your Price – total cost) / List Price

▸Example 1:

You purchased an item for $45, and sold it for $100. After accounting for:

• Product Cost: $45
• FBA Fee: $10
• Amazon Referral Fee (15%): $15
• The total cost is $70, and the profit is $30 ($100 - $70).

The Est. Profit Margin is calculated as:

▸Example 2:

If you sell the product for $500, your profit % will NOT be 150% (30% x 5) because the Amazon commission is based on the selling price. As the price increases, the Amazon fee also rises.

In this scenario:

• Product Cost: $45
• FBA Fee: $10
• Amazon Commission (15% of $500): $75
• Total Cost: $130

The Est. Profit Margin is calculated as:

Thus, your new cost is now $130 (product cost $45 + FBA fee of $10 + commission $75). The new Profit % is now 74% (($500 – 130) / $500).

Return on cost of investment (ROI) 

If you want to set your Min or Max price based on a percentage of your actual cost, you are essentially calculating ROI (Return on Investment), also referred to as Markup % or Returns on the Cost of Goods Sold (COGS).

▸Formula:

Markup % = (Est. Profit  / Product Cost＋Additional Cost) X 100

▸Example:

You bought a product at $45 and you decided to price the item at $100. If you do not consider all other cost, the Return on the $45 is 122.2% { ($55 / $45 ) X 100 }.

You purchased a product for $45 and priced it at $100. Ignoring other costs, the return on your $45 investment is 122.2% { ($55 / $45 ) X 100 }.

In summary

In both examples the product was sold at $100 and purchased at $45.

• Est. Profit Margin % = Est. Profit (offer price – total cost) / Sale Price
  = (Min Price $100 - Product Cost $45 - Amazon Referral Fee $15 - FBA Fulfillment Fees $5.40 ) / Min Price $100 = $34.60 / $100 = 34.6%= 35%

• ROI = (Est. Profit  / Product Cost+ Additional Cost) X 100 = ($34.60 / Product Cost $45 ) X 100= 76.88% = 77%