Amazon FBA can be very profitable for a UK brand, but only product by product, and you can find out which side of the line a product sits on before you buy any stock. Ask “is Amazon FBA profitable” about a whole business and you get an average. Ask it about one product and you get an answer.
On a £20 kitchen product, VAT and Amazon’s fees take about £9.38 before your stock or advertising costs come in. Whether what remains covers your product, your advertising, and a profit is a sum you can run this afternoon. This post walks through that sum with real UK fees, dated October 2026.
Amazon FBA (Fulfilment by Amazon) is the service where you send stock to Amazon’s warehouses and Amazon stores it, picks and packs each order, delivers it, and handles customer service and returns, in exchange for fees per unit. A product is profitable on FBA when the price the customer pays covers VAT, Amazon’s fees, your landed cost, and advertising, with money left over.
Is Amazon FBA profitable for most sellers?
Most sellers who answer industry surveys say they make a profit, but those surveys are run by software companies, the answers are self-reported, and most respondents sell in the US, where sales tax works nothing like UK VAT. They show that plenty of sellers make money on Amazon. They cannot show whether your product will.
The useful question is narrower: does this product, at this price, in this category, make money after everything Amazon and HMRC take? That one has a precise answer.
Where the money goes on a £20 sale on Amazon UK
Take a £20 kitchen product weighing under 400g, sold through FBA by a VAT-registered brand. A sixth of the price goes to HMRC, Amazon takes a 15% referral fee and a fulfilment fee, and advertising takes its share. Before your own product cost, about £11.38 of the £20 has gone.
| Line | Cost | What is left |
| Price the customer pays, including VAT | £20.00 | |
| VAT at 20% (one sixth of the price) | £3.33 | £16.67 |
| Referral fee, Kitchen category, 15% | £3.00 | £13.67 |
| FBA fulfilment fee, small parcel up to 400g | £3.05 | £10.62 |
| Advertising, assumed £2.00 per unit sold | £2.00 | £8.62 |
| Landed cost, assumed £4.00 per unit | £4.00 | £4.62 |
The referral fee comes from Amazon’s UK selling fees page, which sets Kitchen at 15% and calculates it on the total amount the buyer pays, as at October 2026. The fulfilment fee is £3.00 in Amazon’s FBA rate card effective 1 July 2026, plus the 1.5% fuel and logistics surcharge Amazon added on 17 April 2026. Between 15 October 2026 and 14 January 2027 the festive peak rate applies, and the same parcel costs £3.11 before the surcharge.
That £4.62 is contribution, not profit. Storage, returns, the £25 monthly selling plan, and your own time still come out of it. The landed cost and advertising lines are assumptions for illustration, so swap in your own numbers before drawing a conclusion.
The VAT question most profitability guides skip
UK VAT changes the answer on both sides of the £90,000 registration threshold. Below it, you keep the full price but pay 20% VAT on Amazon’s fees with no way to reclaim it, and above it, a sixth of every sale belongs to HMRC. A product priced to work in the first situation can stop working in the second.
Amazon has charged UK VAT on its seller fees to UK-established businesses since 1 August 2024, which you can read more about on the Seller Central help page. A brand that is not VAT registered pays those fees in full, so the same £20 product costs £3.60 in referral fee, £3.66 in fulfilment, and £2.40 in advertising. With the same £4.00 landed cost, it leaves £6.34 per unit, about 32% of the price.
GOV.UK says you must register for VAT once your taxable turnover over the previous 12 months goes over £90,000. Cross that line and the same product, at the same price, with the same sales, drops from £6.34 to £4.62 per unit. That £1.72 gap is why we tell founders to price new products on the VAT-registered numbers whenever they expect to pass the threshold within a year.
Revenue, profit, and cash are three different numbers on Amazon, and VAT is the reason the first one flatters you. Our guide to setting a realistic first-year income goal on Amazon shows how to keep the three apart.
Four costs that turn a profitable product unprofitable
Products that pass the sum above can still fail, usually for one of four reasons. Advertising costs more per sale than planned, stock sits in Amazon’s warehouses long enough to attract storage charges, returns eat into the margin, or the price is too low for Amazon’s fixed fees to make sense. Each one is visible before you launch.
Advertising. The £2.00 in the table is a planning figure. The real ceiling is your contribution before advertising, £6.62 in the example, and every pound of ad spend per sale above that loses money. Our post on working out an Amazon advertising budget from your own margin turns that ceiling into a daily spend.
Storage. Amazon charges monthly storage on every unit in its warehouses, with extra charges on stock held too long. Over-ordering for a launch is the usual cause, and the full breakdown of Amazon seller fees in the UK lists each charge and how it is calculated.
Returns. Some categories see far more returns than others, and a returned unit that cannot be resold costs you the stock as well as the sale. Check how often products like yours come back before you set a price, since the margin has to carry those units too.
Low prices. Fulfilment fees barely move with price, so they bite hardest on cheap products. At £12, the same kitchen item loses £2.00 to VAT, £1.80 in referral fee, and £3.05 in fulfilment, which is 57% of the price before stock or advertising. Amazon’s rate card offers lower Low-Price FBA rates for small, light products at £10 or less including VAT in Kitchen, and £20 or less in most other categories.
A 20-minute profitability test you can run today
Run this on any product before you order stock, and on your five best sellers if you already trade. It needs one price, one landed cost, Amazon’s free revenue calculator, and a decision about VAT. The output is a single number per product: the contribution left after Amazon and HMRC, before advertising.
- Start from the price the customer will pay, including VAT.
- Take off a sixth if you are VAT registered, or expect to cross £90,000 of taxable turnover in the next 12 months.
- Enter the product into Amazon’s FBA revenue calculator to get the referral and fulfilment fees, and add 20% to them if you are not VAT registered.
- Subtract your landed cost: the product, freight, duty, and delivery into Amazon’s warehouse.
- Divide what is left by the price. That percentage is the most you can spend on advertising per sale and break even, and it needs to clear at least 35%.
A product that falls short needs a higher price, a lower landed cost, a bigger pack size, or a different channel. More advertising will not fix it, since every extra sale loses more.
If you already sell, run the same test against what actually happened. Pull the last 90 days of fees and ad spend for each product from Seller Central, and compare it with the numbers the test predicted. The gap between the two is where your margin is going.
What to do first
Pick the one product you are most confident in and run the test with real supplier quotes rather than estimates. If it clears your threshold on the VAT-registered numbers, Amazon FBA can be profitable for your brand. If it does not, change the price, the pack, or the product before you change anything else.
If you would rather work through it with someone who runs these numbers every week, our one-to-one Amazon coaching sessions are built for founders who want to do the work themselves. Steve Herrington, who founded Reflex, shares breakdowns like this one regularly on LinkedIn, if you would like to follow along.