How to Calculate Max Allowable Buy Cost (MABC) for Amazon FBA
When negotiating with wholesale distributors or scanning retail clearance shelves, you don't have time for trial-and-error math. Here is how the MABC formula instantly solves the exact maximum price you can pay while guaranteeing your target ROI.
Instead of solving for profit, the MABC formula treats your target ROI percentage as a fixed constant and works backwards from the Buy Box price, deducting all referral, FBA, and tax fees.
🔍 The Hidden Friction & How It Traps Sellers
Current Buy Box: £34.99 | Target ROI: 35.0% | Referral Fee: £5.25 | FBA Fee: £3.85 | 20% VAT on Fees: £1.82 | Calculated MABC: £17.83 Max Buy Price
Sellers often pick an arbitrary purchase price from a supplier, plug it into a calculator, and tweak numbers until they hit their desired margin.
Trial-and-error sourcing takes 2-3 minutes per ASIN, resulting in missed deals, wholesale order delays, and purchasing inventory that fails to clear required profit thresholds.
📊 Real-World Mathematical & Logic Model
// MarginScan MABC Reverse Sourcing Formula
function calculateMABC(buyBoxPrice, targetRoiDecimal, fbaFee, referralRate, vatRate = 0.20) {
const referralFee = buyBoxPrice * referralRate;
const feeVat = (referralFee + fbaFee) * vatRate;
const netPayoutFromAmazon = buyBoxPrice - referralFee - fbaFee - feeVat;
// MABC Formula: Net Payout / (1 + Target ROI)
const maxBuyCost = netPayoutFromAmazon / (1 + targetRoiDecimal);
return Number(maxBuyCost.toFixed(2));
}
// For Buy Box £34.99 with 35% ROI target -> MABC is £17.83❓ Frequently Asked Questions (FAQ)
What is Max Allowable Buy Cost (MABC)?
MABC is the absolute highest price you can pay a wholesale supplier or retail store for a unit while still achieving your desired Return on Investment (ROI) after all Amazon fees and taxes.
Why is MABC better than traditional profit calculators?
Traditional calculators require you to know your cost first. MABC lets you set your desired profit goal (e.g., 30% ROI) and tells you what to offer the supplier, saving hours of manual calculation.
How does MarginScan automate MABC?
MarginScan features 1-click ROI pills (20%, 30%, 40%, 50%) right on the Amazon product page. Click your target pill and MarginScan instantly reveals your MABC ceiling.
Never Waste Hours on This Problem Again
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