Amazon FBA Fees: How Much Does It Cost To Sell With Amazon?
Thinking about using Fulfillment by Amazon (FBA) to streamline your Amazon business?
While FBA offers a convenient way to store and ship your products, it’s crucial to understand the associated costs before diving in.
In this blog post, we will provide a transparent breakdown of the key FBA fees you’ll encounter, helping you make informed decisions about your Amazon selling strategy. We’ll explore fulfillment fees, storage fees, and other potential expenses, so you can accurately calculate your profit margins and determine if FBA is the right fit for your business.
What is Amazon FBA?
FBA, which stands for Fulfillment by Amazon, is a service offered by Amazon to its third-party sellers. It essentially acts as an outsourced fulfillment center for your products. Here’s the gist:
- You send your products to Amazon’s warehouses.
- Amazon stores your inventory.
- When a customer orders your product, Amazon picks, packs, and ships it to the customer.
- Amazon can also handle customer service and returns for you.
So, by using FBA, you basically hand off the storage, shipping, and some customer service tasks to Amazon, allowing you to focus on sourcing products, marketing, and growing your sales.
What are Amazon FBA Fees?
Now that we understand how FBA works, let’s delve into the nitty-gritty: the fees. There are several costs associated with using Amazon FBA, and understanding them is essential for calculating your profit margins and deciding if FBA is the best option for you. Here’s a quick breakdown of the main FBA fees:
Referral Fees
Before we completely dive into the FBA fee structure, there’s another important cost to consider: referral fees. This is essentially the commission Amazon takes for each sale you make through their platform. It’s a separate fee from FBA, but it’s a crucial part of understanding your overall Amazon selling costs.
Referral fees are a percentage of the total sales price (including shipping) of your product. The exact percentage varies depending on the product category you’re selling in. Some categories have lower referral fees (around 8%), while others can be as high as 45%.
Here’s a breakdown of Referral fees for different product categories-
| Product Category | Referral Fee |
|---|---|
| Automotive and Powersports | 12% |
| Baby Products | 8% on a sale price of $10 and 15% on sales greater than $10. |
| Backpacks, Luggage, Handbags | 15% |
| Amazon Device Accessories | 45% |
| Clothing and Accessories | 17% |
| Personal Care, Beauty, and Health | 8% for a sale price of $10 or less and 15% for sales greater than $10. |
| Footwear | 15% |
| Furniture | 15% for a total sales price of $200 and 10% for any portion of SP over $200. |
| Office Items | 15% |
| Pet Products | 15% for general and 22% for veterinary diets |
| Gaming Accessories | 15% |
| Home Improvement Tools | 15% |
| Furniture | 15% for sale price up to $200 and 10% for S.P. greater than $200. |
| Jewellery | 20% for S.P. up to $250 and 5% for any portion of SP greater than $250. |
| Garden and Lawn Products | 15% |
| Home and Kitchen | 15% |
| Grocery Items | 8% for total S.P. of $10 and 15% for SP over $15. |
| Toys and Games | 15% |
| Amazon Explore | 30% |
| Base Equipment Power Tools | 12% |
| Business or Industrial Supplies | 12% |
| Full Sized Appliances | 8% |
| Gift Cards | 20% |
| Mowers and Throwers | 15% for a total SP of $500 and 8% for an SP above $500. |
| Media – DVD, Music, Software, Video | 15% |
| Sports and Outdoors | 15% |
| Tires | 10% |
| Video Game Consoles | 8% |
| Watches | 16% for SP up to $1500 and 3% for any portion of SP above $1500. |
| Consumer Electronics | 8% |
| Computers | 8% |
| Compact Appliances | 15% for a total SP of $300 and 8% for any portion of SP above $300. |
| Eyewear | 15% |
| Entertainment Collectibles | 20% for the portion of total sales price up to $100.00, 10% for the portion of total sales price greater than $100.00, up to $1,000.00, and 6% for the portion of total sales price greater than $1,000.00 |
| Electronic Accessories | 15% for the portion of the total sales price up to $100.00, and 8% for any portion of the total sales price greater than $100.00 |
| Sports Collectibles | 15% for the portion of the total sales price up to $100.00 10% for any portion of the total sales price greater than $100.00 up to $1,000.00 6% for any portion of the total sales price greater than $1,000.00 |
| Musical Instruments and AV Production | 15% |
| Everything Else | 15% |
| Collectible Coins | 15% for the portion of the total sales price up to $250.00, 10% for any portion of the total sales price greater than $250.00 up to $1,000.00, and 6% for any portion of the total sales price greater than $1,000.00. |
| Fine Art | 20% for the portion of the total sales price up to $100.00, 15% for the portion of the total sales price greater than $100.00 up to $1,000.00, 10% for the portion of the total sales price greater than $1,000.00 up to $5,000.00, and 5% for the portion of the total sales price greater than $5,000.00. |
Fulfillment Fees
The amounts sellers pay to Amazon for picking, packing, and shipping their orders are called FBA fulfillment fees. Unlike referral fees, which apply to all Amazon sales, FBA is an optional service. While you can fulfill orders yourself, FBA offers significant convenience, especially as your business grows. It frees you from the time-consuming tasks of packing bulk orders and managing customer inquiries related to shipping, allowing you to focus on growing your business.
These Fulfillment Costs are based on the size and weight (including packaging) of the products. FBA divides them into six shipping weight tiers: Small Standard, Large Standard, Small Oversize, Medium Oversize, Large Oversize, and Special Oversize. Additionally, fulfillment fees can vary slightly depending on the product category. We’ll explore the breakdown of fulfillment fees in more detail next.
Fulfillment fee for Apparel
Fulfillment fee for Dangerous Goods
Monthly Inventory Storage Fees
When you store your products in Amazon fulfillment centers (FCs) using FBA, you’ll incur monthly storage fees. These fees are based on two key factors:
- Storage volume: The amount of space your products occupy in cubic feet (cu. ft.) in Amazon’s warehouses.
- Time of storage: Storage fees can be higher during peak season (October to December) due to increased demand for warehouse space.
By understanding these factors, you can better estimate your storage costs and potentially optimize your inventory management strategy.
In the next section, we’ll explore how these factors influence the actual storage fee rates.
What are other types of Fees associated with Amazon FBA?
While FBA fulfillment fees, storage fees, and referral fees are the main costs associated with Fulfillment by Amazon, there are other charges to be aware of when calculating your overall selling expenses on Amazon. Let’s explore these additional fees:
1. Subscription Fee
Whether you are an FBM seller or FBA, the subscription fee is the basic fee that every seller has to pay. To become an Amazon seller, one has to choose a plan from the two options below:
There are two main Amazon seller account plans:
- Individual Selling Plan: This plan has no monthly subscription fee, but you pay a per-item fee ($0.99 as of June 2024) for each item sold. This can be cost-effective for sellers with low sales volume.
- Professional Selling Plan: This plan requires a monthly subscription fee ($39.99 as of June 2024) but eliminates the per-item fee. It’s ideal for sellers with higher sales volume or who want access to additional selling features.
2. Refund Administration Fee
When you process a customer refund, Amazon will credit you back the referral fee you paid on the sale. However, they deduct a small fee to cover administrative costs associated with the refund. This fee is either a flat $5 or 20% of the original referral fee, whichever is lower.
3. Closing Fees
Media products like books, music, DVDs, software, and video game consoles incur a closing fee per unit sold. This fee is typically around $1.80 (as of June 2024).
4. FBA Aged Inventory Surcharge fee
This fee, previously known as long-term storage fees, applies to inventory that remains unsold for an extended period (over 181 days) in Amazon fulfillment centers. The fee is assessed per unit on the unsold items. This incentivizes sellers to manage their inventory effectively and avoid stockpiling slow-moving products.
5. Returns Processing Fee
When a customer returns a product, you’ll incur a returns processing fee. This fee varies based on the size and weight of the returned item. As of June 2024, Amazon has added a return processing fee for high-return rate products, excluding apparel and shoes.
6. Inventory Removal and disposal fees
If you need to remove items from your inventory due to damage, expiration, or other reasons, you’ll be charged inventory removal and disposal fees. These fees vary depending on the size, weight, and standard/oversized classification of the removed items.
7. Low Inventory-level fee
A recent addition to the fee structure, the low-inventory level fee penalizes sellers who consistently fail to maintain sufficient stock in Amazon fulfillment centers. This can lead to delays in order fulfillment and increased shipping costs for Amazon. Maintaining at least a four-week supply of inventory can help avoid this fee.
8. FBA inbound placement service fee
Introduced in March 2024, this fee applies to FBA sellers who utilize split shipments for faster order fulfillment. Split shipments involve distributing your inventory across different fulfillment centers closer to your customers. The inbound placement service fee applies to standard-sized and large/bulky products after 45 days of them being received by Amazon.
9. High-volume listing fees
Sellers with a large product inventory exceeding 100,000 units on Amazon will incur high-volume listing fees. This fee is a small charge (0.005 cents per month, as of June 2024) applied to each additional item listed beyond the 100,000 limit.
10. Rental book Service fees
If you sell books through Amazon’s Rental Book Service, you’ll be charged a fee per rental transaction (typically $5) after the rental is completed. There’s no upfront cost for this service.
How to calculate your overall selling fees on Amazon FBA?
The Amazon FBA revenue calculator can be a helpful tool for getting a quick estimate of your total selling fees. You can access it within Seller Central by searching for it. Once you find it, simply provide the ASIN (unique product identifier) of the item you’re interested in.
The calculator will then retrieve product details and might prompt you for additional information like estimated sales volume and storage needs. After filling in all the relevant details, click “Calculate” to get an estimated breakdown of Amazon fees, including referral fees, FBA fulfillment fees, and potential storage fees.
How to deal with high Amazon FBA Fees?
High Amazon FBA fees are a common concern for sellers. But fear not! Here are some effective strategies to minimize or even avoid them altogether:
1. Prioritize Profitable Products:
Focus on products with a minimum profit margin of 40% after factoring in FBA fees. Consider the product’s weight, size, and category during selection. This ensures you can comfortably invest in FBA and grow your business.
2. Price Optimization is Key:
Focus on products with a minimum profit margin of 40% after factoring in FBA fees. Consider the product’s weight, size, and category during selection. This ensures you can comfortably invest in FBA and grow your business.
3. Manage Inventory Levels Wisely:
Maintaining optimal inventory levels is key to avoiding expensive storage fees associated with low stock. By strategically managing your inventory, you can save money and keep your business running smoothly.
4. Conquer Dimensional Weight:
Remember, the higher the dimensional weight of your product, the higher the fulfillment costs. To reduce it, consider using compact packaging, bundling similar products together, and modifying product dimensions if feasible.
5. Monitor Performance Like a Hawk:
Keep a close eye on your profits, pricing, and overall performance. Utilize the Amazon FBA calculator for necessary calculations and leverage analytics tools to track expenses effectively.
By implementing these strategies, you can significantly reduce the impact of FBA fees on your business, allowing you to focus on growth and profitability.
Conclusion
While Amazon FBA offers undeniable convenience and potential for growth, understanding the associated fees is crucial for success. By carefully considering referral fees, fulfillment costs, and storage charges, you can make informed decisions about product selection, pricing strategy, and inventory management.
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