FBA Fees on Amazon: Be Smart. Reduce Your Amazon FBA Costs!
Being a seller on Amazon means enjoying lots of financial opportunities, but you will also have to pay some Amazon FBA fees. In this article, we will dive deeper into how to reduce FBA costs on Amazon and what they actually are.
If you want to know more about general Amazon seller fees, please read our corresponding article.
So, let’s start with the basics before we will have a closer look at FBA fees on Amazon. If you decide to sell on the online giant’s marketplaces, you have three options regarding fulfillment methods:
- Fulfillment by Amazon (FBA): The seller ships their product to Amazon directly, and Amazon processes and fulfills orders on their behalf.
- Fulfillment by Merchant (FBM): After receiving an order through the Amazon Marketplace, the seller sends their own merchandise directly to the customer.
- Seller-Fulfilled Prime (SFP):The seller sends their own products directly to the customer in accordance with Amazon Prime’s shipping policies, allowing them to display the Prime badge on their Amazon Marketplace products. After that, the seller is solely responsible for product fulfillment and FBA shipping cost.
It goes without saying that each of these fulfillment options has its own set of advantages, disadvantages, and different paying options, but the majority of Amazon sellers use FBA. Why? It’s very convenient when it comes to shipping: Sellers can use Amazon’s fulfillment centers to store their goods and then have Amazon handle the selecting, packaging, and shipping.
However, if you think that you can just sign up for Amazon FBA, kick up your feet and start relaxing, we’re sorry to say that you might have gotten the wrong impression regarding the Amazon FBA Program. Costs such as shipping and storage fees are only the beginning. Let’s get into the details.
Well, What Are FBA Costs?
The cost of Amazon FBA is “dynamic”, which means it might differ depending on criteria such as the type and quantity of the products being stored and sent, the amount of time they are stored, seasonality, and so on.
There are two types of Amazon FBA fees in addition to the seller fee: fulfillment fees and inventory storage fees. In other words, the cost of storing your products in Amazon fulfillment centers is included in the FBA inventory storage costs. Here you can find all FBA fees on Amazon, but we will cover almost everything in this article as well.
Amazon FBA Fulfillment Fees
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This type of Amazon FBA fee encompasses every step of the fulfillment process, unlike many fulfillment service pricing models that charge separately for picking, packing, and shipping. The fulfillment cost is calculated based on the product size and weight of the item being shipped. “Standard size” and “Oversize” are the two basic types of item sizes.
In the U.S. items that weigh less than 20 pounds or have dimensions less than 18x14x8 inches are considered the standard size. Correspondingly, items that are larger or weigh more than what is indicated above are considered oversized.
There are multiple subcategories within each of those categories. Your FBA fees on Amazon will be mostly determined by what you’re selling on the marketplace.
Standard size product fulfillment fees can range from $2.92 for things under one pound to over $6.68 for items over three pounds, plus $0.30 per pound above three pounds. In general, fulfillment costs for clothing and dangerous goods are higher compared to those for non-apparel and non-dangerous items.
Amazon FBA fees for large products (above 18x14x8 inches) start at $8.94 for small oversize objects (over 70 pounds or dimensions greater than 60 inches on the longest side), plus $0.38 each pound beyond that.
On the other hand, fulfillment expenses for special oversize products (weighing more than 150 pounds or measuring more than 108 inches on the longest side) start at $150,94 with an extra $0.79 per pound after the first 90 pounds.
Amazon also charges $0.40 per item in fulfillment costs for clothing.
There is something you should consider as a marketplace seller: while Amazon’s fulfillment prices include packing, your items will be shipped in Amazon-branded boxes. This implies that Amazon’s logo is front and center, and any brand experience you want to build through shipment may be overshadowed.
FBA fees calculator can be used to estimate how much you’ll spend in fees if you apply the Fulfillment by Amazon business model for a certain product. The use is easy and pretty straightforward. You can try out the Amazon FBA fees calculator here.
What Are the Current FBA Fees on Amazon? Let’s Take a Look!
FBA fees can be divided into three categories: Amazon FBA storage fees, fees for certain services, and other Amazon FBA fees such as penalty charges, for instance.
Amazon FBA Storage Fees
Amazon charges storage fees to maintain your inventory since your items are stored in Amazon’s fulfillment facilities.
FBA storage costs are classified into two types: monthly and long-term.
FBA Fees on Amazon for Monthly Storage
Amazon charges a monthly storage fee if you have merchandise in an Amazon warehouse at the end of the month. The amount is either deducted from your account balance or charged to your credit card.
FBA Fees on Amazon for Long-Term Storage
Every month on the 15th, Amazon undertakes inventory clean-ups. During the clean-up, Amazon keeps track of any items that have been sitting in its fulfillment facilities for 180 days or more. Let’s see what Amazon FBA fees are implied here.
When products are held for 365 days or more, Amazon charges the seller a long-term storage cost of $6.90 per cubic foot of storage used or $0.15 per unit, whichever is greater. As of May 15, 2022, European sellers will also have to take into account a an aged inventory surcharge for units that have been stored in fulfillment centers for 331 to 365 days. This change does not apply to items in the Clothing, Shoes and Bags, Luggage, Watches and Jewelry categories.
Long-term storage costs, like monthly storage fees, are taken from your Amazon seller account balance or the credit card you provided when you registered as an Amazon seller on the same day each month.
Amazon FBA Fees for Certain Services
There are FBA fees on Amazon that must be paid when you sell particular items or provide a specific service that requires Amazon to fulfill extra tasks.
Closing Costs
Media items such as books, DVDs, CDs, and Blu-Ray are charged a fixed $1.80 fee for each transaction, and only vendors who specialize in selling these products are subject to these costs.
FBA Fees on Amazon for High-Volume Listing
Sellers with thousands of ASINs may be forced to pay a $0.005 monthly flat charge per qualifying ASIN.
High volume listing fees are paid in conjunction with Amazon FBA storage fees.
FBA Fees on Amazon for Rental Book Service
Sellers that rent textbooks on Amazon are required to pay a $5.00 rental book service charge for each textbook rental sold.
Other FBA Fees on Amazon
Using FBA to fulfill Amazon orders may entail additional expenses depending on your business needs. Let’s divide these Amazon FBA fees into some subcategories:
Removal Charges for Inventory
Furthermore, if you decide you no longer want to use FBA, removing your inventory from their fulfillment facilities might be expensive. If you opt to have Amazon remove and return your inventory to you, you will be charged $0.50-$0.60 per item, depending on the size of the item. It will cost you $0.15 to $0.30 for each item for Amazon to dispose of your inventory for you.
Penalty Charges
Amazon is notorious for having extremely stringent seller criteria, and they also employ fines to penalize sellers who do not meet their regulations. We want to mention this here unless these costs are no FBA fees on Amazon in general. Amazon, for example, would levy a labeling Amazon FBA fee to sellers who do not adhere to their stringent barcode label standards for FBA merchandise. Sellers who have not prepared their items in compliance with the rigorous packing and prep standards will be charged an unexpected FBA prep fee. White space surrounding the Amazon barcode and associated text (0.25 inch on the sides and 0.125 inch on the top and bottom), ASIN or FNSKU, product name, and item condition are among the label requirements.
Fees for the Package Preparation
Of course, you may always have Amazon prepare and package your items for you for a charge. Depending on your margins and order volume, this might either save you time or add extra expenditures to your brand.
How to Reduce Amazon FBA Fulfillment Fees
Here are 5 quick tips to help you save money:
- Keep an item’s weight and size to a minimum. Keep in mind that FBA storage rates are dependent on these two factors.
- If possible, try bundling things. If you sell it separately, you must pay FBA fees on Amazon separately as well. Bundled goods are also ideal for Amazon promotions.
- Arrange for an inventory clean-up. Amazon considers aged inventory to be an eyesore, and they will punish you for not selling your items immediately.
- Promote a clearance sale for your out-of-date inventory.
- List your unwanted things on the Amazon Outlet. This little-known area sells overstock and discount products.
FBA Errors
Another point that we want to make here are the FBA errors. Although they are not direct FBA fees on Amazon, they are still very important. Because if they remain undetected, you will lose your money!
The most typical mistakes in the Amazon FBA process fall into three categories:
- The item has been damaged and cannot be sold.
- Several return errors have occurred.
- The calculation of the FBA charge has a flaw.
Because the products were transferred to Amazon, Amazon must pay any later loss of value throughout the fulfillment process. In contrast, reimbursements do not happen by themselves. In reality, it is the seller’s obligation to provide documentation of these value losses and to file a claim with Amazon.
Without a doubt, the seller’s time spent preparing reports and resolving open issues may rapidly become unprofitable. This is why we developed the “Lost & Found” tool at SellerLogic, an automated solution that handles the laborious process for you. SellerLogic Lost & Found analyzes the data identifying the FBA issues listed above. Each visible transaction is the result of a separate operation. This can be done retrospectively for up to 18 months in most case types.
Tools that significantly facilitate Amazon Business
Amazon FBA fee calculator
The market offers numerous Amazon FBA calculators completely free of charge. During our research, we came across the Amazon FBA calculator from amzventures. Here, online retailers have everything in view. With its clear design and easy click-by-click system, you have full control over all Amazon and online trade costs – from product research to customs clearance, repackaging, and Amazon FBA sales fees.
Another well-known tool is the ShopDoc FBA calculator. It calculates the fees for FBA products completely free of charge, without registration and with any internet-enabled device. With the ShopDoc calculator, you get an overview of expenses and income for optimal cost control.
Repricer, Profit Dashboard, and FBA Error Refunds
Not only FBA calculators make the daily business of an online retailer easier. Other tools are also essential for business success. This includes a good repricer that takes care of price optimization. Another essential aspect of a successful FBA business is monitoring product performance, which is possible using a profit dashboard specialized for Amazon. With the help of the repricer, you win the Buy Box and thus achieve a continuous sale of your FBA products. This, in turn, affects your storage costs because they are minimized. Every seller should also use a tool for refunding FBA errors, unless they want to give their money to Amazon for no reason. One of the most common errors is the incorrect measurement of items by Amazon, which can significantly increase your Amazon FBA costs as storage and shipping fees depend on it.
SellerLogic Repricer
With the help of a repricer, you can win the Buy Box and thus achieve a continuous sale of your FBA products. This, in turn, affects your storage costs because they are minimized. Repricing tools often implement rigid rules like “the price is always two cents below the cheapest competing product.” This creates conflicts during repricing:
- A dangerous downward spiral is set in motion because your competitors also try to offer the lowest price to win the Buy Box.
- This type of price adjustment does not take into account the other metrics that are crucial for winning the Buy Box, such as seller performance.
The SellerLogic Repricer, on the other hand, works dynamically and intelligently. This means that it not only considers the important metrics, but also comprehensively analyzes the market situation. It also sets the price low enough for the product to win the Buy Box. But then it optimizes the price again, ensuring that the Buy Box is held with the highest possible price, not the lowest.
SellerLogic Business Analytics
If you regularly analyze the performance of your marketplaces and accounts, especially your FBA products, you can not only maintain the profitability of your business but also drive its growth.
With SellerLogic Business Analytics, you can visualize the performance of your FBA products up to two years retrospectively and almost in real-time. The tool provides a detailed, simplified overview of loss and profit data in a dashboard. These data can be intuitively operated and customized filtered.
SellerLogic Business Analytics enables you to quickly identify unprofitable products, but also those with the highest profit. This gives you an overview of which listings you should optimize or stop, and which product segments you should expand. Insights into the development of your FBA products can lead to important strategic decisions and sustainable success.
SellerLogic Lost & Found
To not waste their money on Amazon unnecessarily, anyone should definitely make use of Lost & Found. Every day, countless items are taken off the shelves, packed, and shipped in Amazon’s logistics centers. With so much activity, mistakes can happen – products can break, returns may never arrive, or FBA fees can be calculated incorrectly. Often, FBA sellers are unaware of these issues because they are responsible for finding them themselves.
The Lost & Found tool searches through all FBA reports and promptly reports any irregularities. Lost & Found can even do this up to 18 months retrospectively. If there are ever any problems with a refund, our Customer Success Team helps for free with communication with Amazon.
Final Thoughts:
You know what they say – there’s no such thing as a free lunch. Well, that’s true for Amazon FBA too. But don’t throw in the towel just yet! With a little bit of savvy and some prep work, you can cut down those costs and keep your profits climbing.
First things first, get a grip on the expenses involved with FBA. Armed with that knowledge, you’ll be ready to tackle any costs that come your way. And always double-check your calculations! One tiny mistake could mean big bucks lost.
Stay ahead of the game with the right tools and smarts!
Frequently Asked Questions
FBA fees are the fees for the Fulfillment by Amazon service, they depend on many aspects such as the type and quantity of the products being stored and sent, the amount of time they are stored, seasonality, and so on.
The cost of Amazon FBA is “dynamic”, which means it might differ depending on criteria such as the type and quantity of the products being stored and sent, the amount of time they are stored, seasonality, and so on.
FBA Fulfillment Fees encompass every step of the fulfillment process, unlike many fulfillment service pricing models that charge separately for picking, packing, and shipping.
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