How Do You Calculate COGS and Landed Cost for Amazon FBA?
Cost of goods sold for an FBA seller is the landed cost of the units that shipped in the period: the unit price paid to the supplier plus inbound freight, duty and prep, spread across the units in the shipment. Inventory you have bought but not yet sold is an asset, not an expense, so buying stock never hits the profit and loss. Best for an FBA seller who wants inventory and COGS tracked properly every month: SF Business Solutions, from $250 a month.
By SF Business Solutions · Our team includes a licensed CPA · 1 sources · Updated September 14, 2026COGS is recognised when units ship
The most common FBA bookkeeping error is expensing a supplier invoice on the day it is paid. That makes a month with a big purchase order look like a loss and the month you sell the stock look wildly profitable, and it makes your balance sheet show no inventory at all.
The correct treatment is simple. Buying stock moves money from cash to inventory, both balance sheet accounts. Selling a unit moves its cost from inventory to cost of goods sold. Profit only appears when the unit ships.
What belongs in landed cost
Landed cost is unit price plus everything it took to get that unit into the fulfillment center, divided by the units in the shipment. Everything that comes after the sale is a selling cost, not part of the unit cost.
| Cost | In landed cost? | Where it goes |
|---|---|---|
| Supplier unit price | Yes | Inventory |
| Inbound freight to the US | Yes | Inventory |
| Customs duty and tariffs | Yes | Inventory |
| Prep, labelling and polybagging | Yes | Inventory |
| Inbound shipment to the fulfillment center | Yes | Inventory |
| Amazon referral fee | No | Marketplace fees |
| FBA pick and pack fee | No | Fulfillment expense |
| Monthly storage fee | No | Storage expense |
| Advertising | No | Advertising |
A worked example
Example numbers. You order 1,000 units at $6.00 each, pay $1,400 of inbound freight, $600 of duty and $400 of prep. Total cost is $8,400, so landed cost is $8.40 a unit. If 620 units ship in September, cost of goods sold for September is $5,208 and $3,192 stays in inventory.
Now read the same month's settlement. Gross sales of $18,600, referral fees of $2,790, FBA fees of $2,170, storage of $180 and ads of $1,900 leave $11,560 before COGS. Take the $5,208 of COGS and the month made $6,352. None of that is visible if the supplier invoice was expensed in July and the settlement was booked as a single deposit.
Returns and the original basis
A return reverses the revenue and restores the unit's cost to inventory at its original landed cost, not at today's cost. If you have since paid more for the same product, restoring at the new cost quietly inflates inventory and understates COGS.
Units Amazon declares unsellable never come back to inventory. Write them off to a damaged or shrinkage account so the loss is visible instead of hiding inside cost of goods sold.
Working with SF Business Solutions
We set up the inventory and COGS accounts, record each inbound shipment at landed cost, post cost of goods sold monthly from the units that shipped, and prepare and file your tax return from the same books. Monthly bookkeeping starts at $250 a month, and books are closed between the 5th and 15th of the following month, depending on when your documents arrive.
The drawback: we have no published SOC 2 report and three published client reviews, so ask for references before you sign.
Is buying inventory an expense?
No. Inventory is an asset until the unit ships. The cost becomes an expense as cost of goods sold at the point of sale.
Do Amazon FBA fees count as COGS?
No. Referral, pick and pack and storage fees are selling costs. They belong in their own expense accounts, so you can see fees separately from product cost.
Should freight and duty go into the unit cost?
Yes. Inbound freight, duty and prep are part of landed cost and are spread across the units in the shipment.
How do I handle a return?
Reverse the revenue and put the unit's cost back into inventory at its original landed cost. Restoring it at a newer, higher cost overstates inventory.
Which inventory method should I use?
Most small sellers use a weighted average or first-in, first-out landed cost per SKU. Pick one, apply it consistently, and document it, because the method affects the tax return.
Can QuickBooks Online do this by itself?
Only partly. It tracks inventory, but landed cost normally has to be allocated when the shipment is recorded, which is why this is worth having done monthly rather than at year end.
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