Hong Life CalculatorsUnderstanding the lowest profitable price (Buy Box) calculator — concept and principle
On marketplaces where several sellers offer the same product, such as Amazon's Buy Box (Featured Offer), price is one of the factors that decides who wins the sale, and repricing tools can drive prices down quickly. This calculator finds your floor price, the lowest price that still leaves your minimum profit after marketplace fees, and your break-even price, below which every sale loses money.
How it is calculated
- Floor price = (landed cost + fulfilment + minimum profit) ÷ (1 − marketplace fee %).
- Break-even price = (landed cost + fulfilment) ÷ (1 − marketplace fee %).
Landed cost is the product cost including shipping to you and import duties. Fulfilment is the per-unit cost of storing, packing and delivering. Marketplace fees are entered as a percentage of the selling price. The calculator works with any currency.
The principle
Marketplace fees are a share of the selling price, so raising the price also raises the fee. You therefore cannot simply add costs together; you need the price at which what remains after fees covers costs and profit. Solving P × (1 − fee) = costs + profit gives P = (costs + profit) ÷ (1 − fee). Setting the profit to zero gives the break-even price.
Worked example
- Inputs: landed cost $14, fulfilment $5, fees 15%, minimum profit $2.
- Share of price kept after fees = 1 − 0.15 = 0.85.
- Floor price = ($14 + $5 + $2) ÷ 0.85 = $21 ÷ 0.85 = $24.71.
- Break-even price = ($14 + $5) ÷ 0.85 = $19 ÷ 0.85 = $22.35.
- Check: at $24.71, fees are about $3.71, leaving $21.00 for costs and profit.
How to read the result
Set the floor price as the minimum in your repricing rules. If competitors sell below it, matching them means accepting less than your minimum profit; below the break-even price you lose money on every unit. In that case it is usually better to compete on delivery speed or seller rating, lower your costs, or let the sale go. The gap between floor and break-even shows how much room you have for temporary promotions.
Common mistakes
- Adding the fee percentage to costs instead of dividing by (1 − fee).
- Forgetting fixed per-item fees, storage fees or advertising costs.
- Using the supplier price instead of the full landed cost.
- Ignoring returns and refunds, which reduce real profit per unit sold.
Frequently asked questions
Is the lowest price guaranteed to win the Buy Box?
No. Amazon says Featured Offer eligibility and selection also consider factors such as seller performance and delivery, so price is only one part.
How do I include a fixed per-item fee?
Add it to the fulfilment cost, since it does not change with the price.
Can I set my minimum profit as a percentage?
This calculator uses a fixed amount. For a percentage margin m, use price = costs ÷ (1 − fee − m).
Sources: Amazon Seller Central Help, "Featured Offer eligibility" (sellercentral.amazon.com) · Thomas T. Nagle and Georg Müller, The Strategy and Tactics of Pricing (Routledge)