Definition
COGS for FBA is more than just the factory invoice price. It includes every cost incurred to get a finished, labeled, sellable unit into Amazon’s warehouse. For private-label sellers sourcing overseas, COGS components include manufacturing cost, packaging and insert costs, FNSKU labeling, ocean or air freight, customs duties, customs broker fees, domestic freight to FBA, and any inspection or prep costs.
The common mistake is treating the factory price as the full COGS. A product with a $4.20 FOB price might have a true COGS of $6.20 after freight, duties, and prep are added. That $2.00 gap is the difference between a 57% margin projection and a 51% reality. On 10,000 units, that is $20,000 in phantom profit.
COGS is distinct from Amazon fees. The referral fee, fulfillment fee, and storage fees are separate operating expenses. Your net profit per unit equals selling price minus COGS minus the full fee stack minus advertising.
What goes into COGS for FBA
| Component | Typical range | Example ($34 product) |
|---|---|---|
| Manufacturing (FOB) | $2.00–$8.00 | $4.20 |
| Packaging & inserts | $0.20–$0.80 | $0.35 |
| FNSKU labels | $0.05–$0.15 | $0.08 |
| Ocean freight (per unit) | $0.40–$1.50 | $0.85 |
| Customs duty | 0–25% of value | $0.14 |
| Customs broker | $0.03–$0.10 | $0.05 |
| Domestic freight to FBA | $0.15–$0.50 | $0.30 |
| Inspection / QC | $0.05–$0.20 | $0.08 |
| Prep (poly bag + label) | $0.10–$0.30 | $0.15 |
| Total COGS | $6.20 |
Example: $34 Home & Kitchen product from China
Order: 2,000 units from a Shenzhen supplier. FOB price $4.20. Shipped LCL (3 CBM) to Los Angeles, then trucked to an FBA warehouse in California.
Manufacturing (FOB): $4.20
Packaging + inserts: $0.35
FNSKU labels: $0.08
Ocean freight ($1,700 ÷ 2,000): $0.85
Customs duty (3.4%): $0.14
Broker ($100 ÷ 2,000): $0.05
Domestic freight: $0.30
Inspection: $0.08
Prep (poly + label): $0.15
───────────────────────────
Total COGS: $6.20 per unit
COGS as % of ASP: 18.2%
vs. factory price only: 12.4%
Using just the $4.20 factory price understates COGS by $2.00 per unit. At 10,000 annual units, that is $20,000 in margin you thought you had but do not.
Why accurate COGS determines your real margin
Most margin calculation errors start with COGS. If you only count the $4.20 factory price and calculate margin as ($34 – $4.20 – $5.10 – $5.30) / $34 = 57%, you are overestimating margin by 6 points. The real figure with full COGS of $6.20 is 51%. Over 10,000 units, that 6-point gap represents $20,400 in profits that exist only in your spreadsheet.
COGS also fluctuates more than most sellers realize. Ocean freight rates swing 30-50% seasonally. Exchange rates shift. Tariff schedules change. A COGS you calculated in January may be $0.50 per unit higher by June. If your software is not updating COGS when inputs change, every downstream calculation (margin, reorder ROI, ad profitability) is based on stale numbers.
Common mistakes
- Only counting manufacturing cost as COGS. The factory price is 60-70% of true COGS. Freight, duties, and prep add 30-40% on top. Always calculate the fully loaded per-unit cost.
- Not updating COGS when freight rates or exchange rates change. Ocean freight can swing $500-$1,500 per container between peak and off-peak seasons. On a 2,000-unit shipment, that is $0.25-$0.75 per unit. If you set COGS once and never update it, your margin calculations drift further from reality each quarter.
- Averaging COGS across SKUs. Each product has different manufacturing costs, dimensions (affecting freight allocation), duty rates, and prep requirements. A blended average hides the SKUs that are actually losing money.