Cost-Basis Automatic FBA Pricing

Overview

The Cost-Basis Automatic FBA (Fulfillment by Amazon) Pricing feature in ShipmentBot dynamically calculates and suggests optimal selling prices for products listed on Amazon FBA. This system is designed to ensure profitability by taking into account various cost factors, including the base cost of the item, inbound shipping expenses, and Amazon’s FBA fulfillment fees. The pricing model aims to maximize margins while remaining competitive within the Amazon marketplace.

This document outlines the technical specifications and methodology behind the automated FBA pricing model. It details the data sources, pricing components, calculation logic, and configuration options that constitute the system.

Data Sources

The FBA pricing model leverages several key data sources to ensure accurate and dynamic price calculations:

1. Supplier Catalog Items: Base costs, dimensions, weight, and prep requirements are sourced directly from the SupplierCatalogItem records in the ShipmentBot database. This ensures that the starting point for pricing is always the most up-to-date cost from the supplier.
2. Inbound Shipment Data: Costs associated with shipping goods to Amazon fulfillment centers are crucial. These costs are calculated and tracked within the Inbound Shipment modules of ShipmentBot and are dynamically factored into the pricing calculations.
3. Amazon SP-API: Real-time data from Amazon’s Selling Partner API (SP-API) is used to fetch:
   • FBA Fulfillment Fees: Amazon’s current fees for fulfillment services, which vary based on product dimensions, weight, and category.
   • Referral Fees: Amazon’s referral fees, which are a percentage of the selling price and vary by product category.
4. Pricing Rules: Configurable pricing rules at the supplier level allow for customization of margin targets and handling of defectives or other cost adjustments. These rules are stored in the supplier settings within ShipmentBot.

Pricing Components

The FBA pricing model considers the following components to determine the suggested retail price:

1. Cost Basis (cost_cents): This is the base cost of the product as procured from the supplier, stored in SupplierCatalogItem.cost_cents.
2. Inbound Freight (fba_inbound_freight_cents): Calculated and tracked inbound freight costs associated with shipping items to Amazon FBA warehouses. This value is dynamically recalculated based on actual shipment data and stored in SupplierCatalogItem.fba_inbound_freight_cents.
3. FBA Fulfillment Fees (amazon_fba_seller_fee_cents): Amazon’s fees for picking, packing, and shipping the product to customers, as well as storage fees. These are fetched via the SP-API and estimated/stored in SupplierCatalogItem.amazon_fba_seller_fee_cents.
4. Referral Fees (amazon_fba_referral_fee): Amazon’s referral fee, a percentage of the selling price. This is also estimated and calculated based on the current FBA price and referral fee percentage, stored in SupplierCatalogItem.amazon_fba_referral_fee.
5. Target Margin (fba_margin_percent): The desired profit margin percentage, configurable at the supplier level via supplier_fba_pricing_rules and stored/calculated in SupplierCatalogItem.fba_margin_percent.
6. Defective Allowance (fba_defective_percent): A percentage to account for potential defective units, also configurable at the supplier level via supplier_fba_pricing_rules and stored/calculated in SupplierCatalogItem.fba_defective_percent.

Calculation Logic

The FBA suggested retail price is calculated using a cost-plus pricing strategy, incorporating the components listed above. The core logic is implemented within the SupplierCatalogItem model, specifically in methods like get_suggested_fba_retail_price_cents and related helper methods.

The general formula to derive the suggested FBA retail price is as follows:

Suggested FBA Retail Price = (Total Costs) / (1 - Target Margin Percentage)

Where Total Costs is the sum of:

• Cost Basis
• Inbound Freight Costs
• Estimated FBA Fulfillment Fees
• Estimated Referral Fees
• Defective Allowance (calculated as a percentage of the cost basis)

Detailed Breakdown of Calculation Steps:

1. Fetch Base Costs: Retrieve the cost_cents from SupplierCatalogItem.
2. Calculate Inbound Freight: The system recalculates inbound freight costs using recalculate_fba_inbound_freight! which considers associated inbound plans and shipments to derive an average freight cost per unit.
3. Estimate FBA Fees: update_fba_fees_estimate! uses the SP-API to get real-time FBA fee estimates based on the item’s fba_sku. This populates amazon_fba_seller_fee_cents.
4. Calculate Referral Fee: amazon_fba_seller_fee_cents is calculated as a percentage of the fba_sku_price_cents using the amazon_referral_fee_percent.
5. Apply Margin and Defective Rules: The fba_margin_percent and fba_defective_percent from the supplier’s FBA pricing rules are applied to adjust the price for desired profitability and anticipated losses.
6. Determine Suggested Retail Price: The get_suggested_fba_retail_price_cents method aggregates all cost components and applies the target margin to arrive at the final suggested price. This price is then potentially “prettified” using the NearestNinetyNine.round_to_99_cents method if the supplier settings dictate, resulting in prices ending in .99 for psychological pricing benefits.
7. Consider MAP Price: The system also checks for Minimum Advertised Price (MAP) constraints (map_price_cents and business_map_price_cents) and ensures the suggested price is not below the MAP, taking the higher value between the calculated price and the MAP.

Configuration Options

The FBA pricing model is configurable primarily at the Supplier level, allowing for tailored pricing strategies for different suppliers. Key configuration options include:

• Target FBA Margin: Set the desired profit margin percentage for FBA sales.
• Defective Percentage: Define the anticipated percentage of defective units to factor into pricing.
• “Pretty” Pricing: Enable or disable rounding suggested prices to end in .99.
• MAP Price Enforcement: System automatically respects and enforces Minimum Advertised Price rules if set.

These settings are managed within the Supplier settings in ShipmentBot, under the Catalog Item Pricing configurations. s

Related Features

• Cost-Basis Automatic FBM Pricing
• Pricing Change Management
• Supplier Catalog Management

This document provides a comprehensive technical overview of the Cost-Basis Automatic FBA Pricing feature. It serves as a reference for understanding the underlying logic, data flow, and configuration options that drive automated FBA pricing within ShipmentBot.