Running an Amazon store involves various fees, and understanding them is crucial for your business’s success. Today’s post focuses on the costs associated with Amazon’s FBA service. I’ll guide you through the different types of expenses involved in FBA, show you how to calculate each based on your product category, and share tips and tricks to minimize unnecessary costs, helping new sellers lighten their initial financial load.
1. What are FBA fees in Amazon?
FBA, Fulfillment by Amazon, means once customers place an order in your store, a series of services will be provided by Amazon including picking, packing, delivery to your customer, and providing customer support. With FBA, customers enjoy fast delivery within two days, often more efficient than self-managed logistics.
The main costs associated with Amazon FBA include seller account fees + referral fees + fulfillment fees + inventory storage fees + additional service fees like removal order fees, returns processing fees, etc.
2. Amazon seller account cost
Individual accounts
There is no monthly fee, but for each item sold, Amazon charges a fixed closing fee of $0.99 plus a referral fee. The specific percentage of the referral fee depends on your product category.
Professional accounts
There is a monthly subscription fee of $39.99, with no fixed closing fee of $0.99 per item sold, but you still need to pay the referral fee.
If you sell more than 40 items per month, a professional account is more cost-effective. Additionally, professional seller accounts offer some extra benefits, such as more flexible shipping rate settings and the ability to bulk upload products.
3. Amazon fulfillment fee
The fulfillment service includes order handling, shipment, pick and pack, and customer support. So, the fulfillment fee is calculated as follows.
Total Fulfillment fees = order handling fees + picking and packing fees + weigh handling fees.
Charges are based on the size and weight of the item, there are several fixed-size standards. You need to find a standard based on the size of the product, and use this standard as the basis for your calculation. Note that when you choose the criteria, you need to make your product meet all the criteria. Whether it’s weight or any dimension that exceeds, you will need to choose a larger standard.
First, determine the product category (apparel or non-apparel) and product size tier (standard or oversize). If your products can weigh fewer than 20 pounds after packaging and their dimension doesn’t beyond the size 18 x 14x 8 inches, then these products are standard size. Otherwise, your products would be oversize tier.
Then use the tables below to determine which fee will apply.
| FBA fees for non-apparel items (standard-size) | |||||||
|---|---|---|---|---|---|---|---|
| Small standard-size (10 oz or less) | Small standard-size (10+ to 16 oz) | Large standard-size (10 oz or less) | Large standard-size (10+ to 16 oz) | Large standard-size (1+ to 2 lb) | Large standard-size (2+ to 3 lb) | Large standard-size (3+ lb to 21 lb) | |
| Fulfillment fee | $2.5 | $2.63 | $3.31 | $3.48 | $4.9 | $5.42 | $5.42 + $0.38/lb above first 3 lb |
| FBA fees for apparel items (standard-size) | |||||||
|---|---|---|---|---|---|---|---|
| Small standard-size (10 oz or less) | Small standard-size (10+ to 16 oz) | Large standard-size (10 oz or less) | Large standard-size (10+ to 16 oz) | Large standard-size (1+ to 2 lb) | Large standard-size (2+ to 3 lb) | Large standard-size (3+ lb to 21 lb) | |
| Fulfillment fee | $2.92 | $3.11 | $3.7 | $3.81 | $5.35 | $5.95 | $5.95 + $0.38/lb above first 3 lb |
| FBA fulfillment fees (oversize, both apparel and non-apparel) | ||||
|---|---|---|---|---|
| Small oversize 71 lb or less | Medium oversize 151 lb or less | Large oversize 151 lb or less | Special oversize | |
| Fulfillment fee | $8.26 + $0.38/lb above first 2 lb | $11.37 + $0.39/lb above first 2 lb | $75.78 + $0.79/lb above first 90 lb | $137.32 + $0.91/lb above first 90 lb |
You can see that there are finer criteria under both levels, such as Standard-size products also can be divided into two kinds small standard-size and five kinds of large standard-size for both non-apparel items and apparel items.
To calculate how much you should pay for your products’ fulfillment fees, you should choose the most desirable criteria. Remember, the weight is calculated according to the shipping weight.
Such as if I have a T-shirt whose dimensions are 8.5 x 4.8 x 1inches, its unit weight is 6.08oz and shipping weight is 11oz, then I should choose the fourth level under apparel items (standard-size).
The other thing to say is if your product is a dangerous product, you need to adopt a new standard. Dangerous goods require special handling and hazardous materials storage. The following tables will give you some reference.
| FBA fulfillment fees for dangerous goods (standard-size, non-apparel) | |||||||
|---|---|---|---|---|---|---|---|
| Small standard-size (10 oz or less) | Small standard-size (10+ to 16 oz) | Large standard-size (10 oz or less) | Large standard-size (10+ to 16 oz) | Large standard-size (1 to 2 lb) | Large standard-size (2 to 3 lb) | Large standard-size (3 lb to 21 lb) | |
| Fulfillment fee | $3.43 | $3.64 | $4.06 | $4.23 | $5.47 | $5.86 | $5.86 + $0.38/lb above first 3 lb |
| FBA fulfillment fees for dangerous goods (standard-size, apparel) | |||||||
|---|---|---|---|---|---|---|---|
| Small standard-size (10 oz or less) | Small standard-size (10+ to 16 oz) | Large standard-size (10 oz or less) | Large standard-size (10+ to 16 oz) | Large standard-size (1+ to 2 lb) | Large standard-size (2+ to 3 lb) | Large standard-size (3+ to 21 lb) | |
| Fulfillment fee | $3.85 | $4.12 | $4.45 | $4.56 | $5.92 | $6.39 | $6.39 + $0.38/lb above first 3 lb |
| FBA fulfillment fees for dangerous goods (oversize, both apparel and non-apparel) | ||||
|---|---|---|---|---|
| Small oversize 71 lb or less | Medium oversize 151 lb or less | Large oversize 151 lb or less | Special oversize | |
| Fulfillment fee | $8.98 + $0.38/lb above first 2 lb | $11.22 + $0.39/lb above first 2 lb | $87.14 + $0.79/lb above first 90 lb | $157.12 + $0.91/lb above first 90 lb |
4. Amazon referral fee
Every time you sell a product Amazon charges you an Amazon referral fee, it also is known as a selling fee. It’s kind of like a marketing fee because if you set up a website to sell products you still need to pay a lot of money on marketing.
Typically, this fee is calculated as a percentage of the price of the product you sell, but Amazon also has a minimum cost. Generally speaking, the recommendation fee is 15% of the selling price, and it will be adjusted according to the type of products you sell. The maximum is 45%, and the minimum is 8%. Refer to the Selling on Amazon Fee Schedule for the specific referral fees applicable to your product types.
Note that no matter whether you use FBM or FBA, the referral fee must be paid. However, if you use FBM, your referral fee should be calculated based on the selling price plus the shipping cost. I will illustrate with the following formula:
Amazon referral fee (FBA)= product sale price x 15%
Amazon referral fee (FBM)= (product sale price + shipping cost) x 15%
Another thing I need to mention is that the referral fee is related to your actual selling price. For example, if you sell a cup for $20, but you design a 20% discount to attract more people to place orders, then the referral fee is calculated based on the actual price of $16 you sold. So don’t worry about losing money because of referral fees when designing discounts or discounts.
Amazon also has a minimum $1 referral fee for almost all categories. Take an example, if you sold an item for $2 and you need to pay 15% referral fees, but it is lower than $1, you have to pay $1 for per this item.
But the minimum referral fee does not apply to all categories. Game console and video games, in these two categories, Amazon will only charge you for a percentage of the sale price.
Some of you may find it puzzling, or even unworthy, that Amazon charges such a high percentage. But in fact, Amazon provides you a selling platform that doesn’t need to pay too much construction cost.
5. How much are FBA inventory fees?
Monthly inventory storage fee
As the name suggests, you pay Amazon monthly for your product storage and using Amazon warehouses.
Two things decide your Amazon storage fees. The first is the size category of the product, as well as the fulfillment fee, the storage fee differs from standard-size products and oversize products. Fees are charged by cubic foot, so oversize items may charge more than standard-size items. The second is the season, during the holiday months of October to December Amazon charges more.
| Month | Standard-size | Oversize |
|---|---|---|
| January – September | $0.75 per cubic foot | $0.48 per cubic foot |
| October – December | $2.40 per cubic foot | $1.20 per cubic foot |
Monthly inventory storage fees will be charged between the 7th and 15th day of the month following the month for which the fee applies. You can check your inventory storage fees in next month’s payment report.
Storage charges for dangerous goods and other special goods will also be higher. You can use the look up an ASIN tool to check the classification status of your ASIN and whether you need to be in the FBA Dangerous Goods program to sell it. More details can be confirmed through the Dangerous Goods identification guide.
| Month | Standard-size | Oversize |
|---|---|---|
| January – September | $0.99 per cubic foot | $0.78 per cubic foot |
| October – December | $3.63 per cubic foot | $2.43 per cubic foot |
Long-term storage fee
For products stored in the Amazon logistics center for more than one year, a long-term storage fee will be charged in addition to the monthly storage fee.
A long-term storage fee of $6.90 per cubic foot or $0.15 per unit (whichever is the greater) will be charged by month for inventory stored at the distribution center for more than 365 days. It will be calculated on the 15th day of each month. The charging policies examples are shown in the table below.
| Toy: 11 x 8 x 2 inches | Storage duration | Applicable cubic-foot LTSF | Applicable per-unit LTSF | Billed long-term storage fee (the greater of the two) |
|---|---|---|---|---|
| 1 unit | More than 365 days | $0.7 | $0.15 | $0.7 |
| 2 units | More than 365 days | $1.41 | $0.3 | $1.41 |
| 10 units | More than 365 days | $7.03 | $1.5 | $7.03 |
| Book: 8 x 6 x 0.5 inches | Storage duration | Applicable cubic-foot LTSF | Applicable per-unit LTSF | Billed long-term storage fee (the greater of the two) |
|---|---|---|---|---|
| 1 unit | More than 365 days | $0.1 | $0.15 | $0.15 |
| 2 units | More than 365 days | $0.19 | $0.3 | $0.3 |
| 10 units | More than 365 days | $0.96 | $1.5 | $1.5 |
So, manage your inventory to avoid long-term storage and related fees. You can check your inventory storage time by ASIN. Only those items stored for more than 365 days will be charged according to a first-in, first-out (FIFO) basis.
Or you can actively manage your older inventory by submitting a removal order and setting up automated removals for inventory subject to long-term storage fees. So that your inventory will be removed before the cleanup date to avoid the long-term storage fees.
If the cost of the product is low and there is a lot of inventory, you can sell off your products to reduce the cost of a large inventory. At the same time, the referral fee will be reduced when you sell at a discount, which can reduce the loss caused by high referral fee and long-term inventory penalty while reducing the inventory.
The above covers the main Amazon FBA fees. Next, I will introduce 4 common additional service fees involved in Amazon FBA.
6. Removal order fees
One difference of the Amazon fulfillment center is that you need to pay a removal fee except your warehouse storage costs. if you want to put your inventory or unsold inventory shipped from Amazon or give up the stock altogether, Amazon will charge removal fees.
So if you have a large amount of inventory that is about to be penalized for long-term storage, and you want to remove the goods from the warehouse to avoid the penalty, it may not be the best choice, as the removal fee will still make you suffer from the loss.
The wisest thing is not to overstock, but if you have to deal with this problem, you may need to calculate costs based on how much stock you have left. Removal fees are charged per item removed. The removal fee is also determined by the size and weight of the goods, as shown in the following table.
| Size tier | Shipping weight | Removal/disposal fee per unit |
|---|---|---|
| Standard size | 0 to 0.5 lb | $0.25 |
| 0.5+ to 1.0 lb | $0.3 | |
| 1.0+ to 2.0 lb | $0.35 | |
| More than 2 lb | $0.40 + $0.20/lb above first 2 lb | |
| Oversize and special handling items* | 0 to 1.0 lb | $0.6 |
| 1.0+ to 2.0 lb | $0.7 | |
| 2.0+ to 4.0 lb | $0.9 | |
| 4.0+ to 10.0 lb | $1.45 | |
| More than 10.0 lb | $1.90 + $0.20/lb above first 10 lb |
Typically, removal orders are fulfilled in 14 business days. However, removal order processing may take 30 business days or more during the holiday season and peak removal periods.
7. Returns processing fee
If customers buy fashion category goods include apparel, watches, jewelry, shoes, handbags & sunglasses, luggage. they can use the 30-day free return service to return goods. Amazon’s free returns to customers can help build customer trust and encourages purchases. At this time, sellers will have to bear the handling charge of returning the goods except where the reason for the return is one for which Amazon takes responsibility in accordance with the FBA lost and damaged inventory reimbursement policy.
The number of poundage commonly also is the package size that presses returned goods decides. This fee is equal to the fulfillment fees for per unit. If returned packages need to be repackaged and resold, Amazon charges a repackaging fee.
8. Refund administration fee
If you refund a paid order to a customer, Amazon will refund you the referral fee you paid for the product, but charge an applicable refund management fee. (20% of the applicable referral fee no lesser than $5).
For example, if you refund a customer the $10.00 total sales price of an item in a category with a 15% referral fee, your Refund Administration Fee will be $0.30 ($10.00 x 15% referral fee = $1.50, $1.50 x 20%= $0.30).
9. Unplanned service fee
You need to be prepared to take your labeled inventory to the Amazon fulfillment center, which requires all items to be labeled and barcoded to certain specifications, or else you’ll be charged about 20 cents per item for the labeling fee.
10. Two tips to reduce Amazon FBA fees
First and foremost, choose the suitable products to sell. As you can see about all kinds of Amazon FBA fees, many of them relate to size and weight. If you can choose some high-value but small light products, you will save more fulfillment costs. Especially the new sellers should avoid large size products as possible as they can.
Storage fees are based on weight and size and not price, so it’s better to choose an item with a high sale price because if two products are of similar size and weight, their Amazon FBA costs will be similar too. For instance, if an item with a low price is the same weight and size as an item with a high price, Amazon FBA costs will be the same, but it’s harder for you to make a profit on the item with a low price.
Secondly, You need to constantly monitor your inventory. It is important to reduce FAB costs by avoiding unnecessary expenses, such as long-term storage fees, or clearance fees. This not only requires you to keep an eye on the number of units in stock for each product, but it also requires you to have a rough idea of how many units will be sold over the next period. In particular, some products are sold with obvious seasonality.
Amazon’s Seller center offers the Inventory Performance Dashboard, which you can use the dashboard to monitor your inventory activity, as well as receive suggestions on making better use of your inventory and its management.
There may be many other ways to save FBA fees, but today I only give the above two suggestions, hoping to help you better understand Amazon FBA charging rules.
Final thought
Thank you for reading and you can share it with your friends who need it. Remember to stay tuned on our website, I will bring you more knowledge about Amazon’s business.
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