Starting an Amazon business has become much easier, thanks to the FBA program. With FBA, anyone can sell goods on AMZ without having to worry about fulfillment.
FBA is a service Amazon offers third-party sellers. In this program, AMZ bears responsibility for inventory storage and order fulfillment. Third-party sellers send their inventory to a fulfillment center. Then AMZ picks, packs, and ships orders to customers. Amazon also handles customer service and returns on behalf of the seller. Want to join the millions of sellers who leverage FBA for their business? You should first understand that the service is not free.
The question on your mind now is probably, “how much does FBA charge?” And this is an important question. You need to know the costs involved so that you can price your items profitably. The good news is, we have answers. In this article.
What are Amazon FBA Fees?
AMZ charges for the services it provides to third-party sellers under its FBA program. They generally cover the cost of inventory storage, packing, and shipping. They also provide customer service and manage returns on your behalf.
There are two major fees that sellers have to pay: fulfillment and inventory storage fees.
- Fulfillment fees: This category covers the costs of picking and packing customers’ orders. It also covers shipping and handling, as well as customer service and product returns.
- Inventory storage fees: This category covers the costs of storing your goods in a Fulfillment Center.
A Breakdown of Fulfillment Fees
Fulfillment fees are charged on a per-unit basis. Unlike referral charges, there are no Amazon FBA fee percentages or by category. FBA fulfillment fees are calculated based on a product’s shipping weight and size. The fulfillment charges for clothing items also differ from that of non-clothing items.
AMZ uses two major size tiers to determine fulfillment charges. They are standard size and oversize. And these size tiers have different sub-tiers.
Here’s a breakdown of the current FBA fee structure for fulfillment fees, based on size tiers.
|Size tier (Max dimension)||Weight||Fulfillment fee per unit|
(15″ x 12″ x 0.75″)
|6 oz or less||$2.70|
|6+ to 12 oz||$2.84|
|12+ to 16 oz2||$3.32|
(18” x 14” x 8”)
|6 oz or less||$3.47|
|6+ to 12 oz||$3.64|
|12+ to 16 oz2||$4.25|
|1+ to 2 lb||$4.95|
|2+ to 3 lb||$5.68|
|3+ lb to 20 lb||$5.68 + $0.30/lb above first 3 lbs|
|Size tier (Max dimension)||Weight||Fulfillment fee per unit|
|Small Oversize(60″ x 30″)||70 lb or less||$8.66 + $0.38/lb above first lbs|
|Medium Oversize(108” (longest side)||150 lb or less||$11.37 + $0.39/lb above first lbs|
|Large Oversize108” (longest side)||150 lb or less||$76.57 + $0.79/lb above first 90 lbs|
|Special Oversize(18” x 14” x 8”)||Over 150 lb||$138.11 + $0.79/lb above first 90 lbs|
Clothing items incur an extra $0.87 while items with lithium batteries incur an extra $0.11. You should know that fulfillment charges are usually revised yearly. The current structure took effect from June 1, 2021 (Source: Amazon Seller Central).
FBA Fees: A Breakdown of Inventory Storage Fees
Inventory Storage fees: AMZ charges this based on the amount of space that your inventory occupies. Your inventory volume is calculated per cubic foot. Usually based on the size of the product after packaging and shipping.
There are two kinds of storage fees: Monthly inventory storage and long-term inventory storage fees.
- Monthly Inventory Storage fees: This type of inventory storage fee is charged monthly. AMZ charges this fee between the 7th and 15th day of the month following the month in which the fees were incurred.
- Long-term Inventory Storage fees: This fee is charged on items that stay in AMZs fulfillment centers for more than 365 days. AMZ deducts long-term inventory storage charges monthly. Usually between the 18th and 22nd day of each month.
Here’s a breakdown of the current fee structure for inventory storage:
Monthly Inventory Storage Fees
Monthly inventory storage charges vary based on seasonality. Thus, there are different monthly inventory storage fees. It is split into January to September, then October to December. Like fulfillment, AMZ uses standard size and oversize tiers to determine the fee rate. The fee structure for dangerous goods also differs from that of non-dangerous goods.
Here’s a breakdown of the current fee structure for inventory storage
|January – September||$0.75 per cubic foot||$0.48 per cubic foot|
|October – December||$2.40 per cubic foot||$1.20 per cubic foot|
|January – September||$0.99 per cubic foot||$0.78 per cubic foot|
|October – December||$3.63 per cubic foot||$2.43 per cubic foot|
Here, the charge for oversize products are lower than that of standard-size products. This is because standard-size products are smaller than oversize products. Also, their storage requires more complex and expensive shelving, drawers, and bins.
Long-term storage fees
Amazon deducts long-term storage charges at $6.90 per cubic foot or $0.15 per unit, whichever is greater.
Aside from the above costs, there are other charges to take note of. These are not mandatory, but, a seller could end up incurring them. So it’s best to know what they are.
- FBA disposal order and removal order charges: You incur these costs when you request that AMZ removes unsold items from your inventory. FBA disposal and removal order fees are charged per unit of the disposed item. It is based on the size tier and shipping weight of the item.
- FBA returns processing fee: When a customer returns an item under certain categories, this service fee is charged. This fee are charged per unit and are determined by the size tier and shipping weight of the item.
- FBA unplanned services fee: If you send your inventory to a fulfillment center without proper packaging, AMZ will carry do it for you. But, you’ll be charged unplanned services fees.
To avoid this, pay attention to AMZ’s packaging and prep requirements.
Selling Fees for FBA Sellers
There are other costs that FBA sellers bear. However, they pay these charges for selling on Amazon, not because they use the fulfillment service. It’s important to take these into account, regardless of what fulfillment model you opt for, as this will guide you in pricing your products. Some of these selling fees are mandatory, while some depend on what product category you sell in.
Mandatory Selling Fees
Here are the selling fees FBA sellers (and FBM sellers) have to pay:
- Selling Plan Fees: Every seller pays these fees to sell on Amazon. Selling plans incur a monthly subscription fee or a per-item fee. The amount depends on the Selling Plan you choose when signing up.
If you opt for the Individual Selling Plan, you will be charged a fee of $0.99 on each item you sell. If you use the Professional Selling Plan, you will be charged a flat fee of $39.99 every month. The professional selling plan fee doesn’t depend on how many items you sell. Selling Plan charges are usually deducted from your account balance. But, your credit card will be charged if there are not enough funds in your account.
- Referral fees: For every item that you sell on the Marketplace, Amazon gets a commission. This is known as a referral fee. Referral fees are a flat percentage of the total sales price. They mostly range from 8% to 15%, depending on the product category. For some categories, the referral fee is based on sales in dollars. For example, Electronics are charged 15% of the total sales price up to $100, then 8% on any portion greater than $100.
Like fulfillment costs, Amazon adjusts its referral charges yearly. The current fee structure for referral became effective on June 1, 2021. You can view the 2021 referral fee changes here.
Other Selling Fees
- Variable Closing fees: AMZ charges variable closing fees for products in the Media Category. This includes products such as Books, Music, Software, Video Games, and so on. Variable closing charges usually amount to about $1.80 per item.
- Refund Administration charges: When a customer requests a refund for an item you have already been paid for, AMZ will process the refund. They will also refund you the referral fee paid for the item. But, AMZ will deduct a refund administration fee, which is usually $5 or 20% of the referral fee, whichever is less.
- High-volume listing fee: If you have more than 100,000 products listed, then you will be required to pay a high-volume listing fee of $0.005 per item. High-volume listing and FBA storage charges are paid at the same time.
- Rental book service fee: If you rent textbooks on Amazon, then you have to pay a $5 rental book fee for each textbook you rent. This fee is usually charged at the time of sale.
How to Calculate Amazon FBA Fees
When starting an FBA business, it’s not enough to know the structure for the charges. You need to also calculate how much you will be paying as a seller charge for every product you decide to sell. Familiarizing yourself with FBA Costs is important. It will help you choose a product with high-profit potential. and guide you in pricing your products in a way that yields good profit margins.
Amazon provides a free calculator that you can use to estimate how much you’ll be paying as an FBA seller. The Calculator provides an estimate of your fulfillment costs and other seller fees. All you need to do is enter the price and cost of the product. The calculator also calculates your proceeds, net profit, and net margin.
The calculator allows you to compare the costs of fulfillment through FBA or FBM. This raises the question, “is FBA cheaper than FBM?”
FBM vs FBA Fees
The aim of every business owner, sellers included, is to earn a lot of profits while cutting costs. That’s why sellers want to know if it is cheaper to opt for FBA or FBM.
Unlike FBA sellers, FBM sellers do not have to pay any extra costs, since they fulfill orders by themselves. But, FBM sellers have to bear all the major costs. They’ll also have to handle customer service and returns.
Although FBM sellers do not have to pay any fees, the costs they incur are usually higher than FBA fees. This is because AMZ is a conglomerate. Hence, they have an advanced fulfillment infrastructure and distribution network. As a result, AMZ can negotiate lower shipping rates with logistics service providers.
There are other factors to consider before choosing a fulfillment option. Product size is an important factor. FBA is better suited for small and light items that sell fast. What if you sell heavy and expensive items that do not sell fast? You’re better off using the FBM model so that you don’t rack up hefty charges.
Well-established businesses can negotiate with reliable freight forwarders. So, FBM may be more beneficial in this case.
You can also use the Calculator to determine which fulfillment option costs less.
How to Reduce FBA Fees
The charges may seem like a small price to pay for the many benefits that you’ll enjoy from using FBA. But FBA charges can eat into your profits if you’re not careful. Here are some measures you can take to reduce your expenses:
- Sell small and lightweight items: Fulfillment and storage costs depend on the size and weight of the item. So, the lighter and smaller the product, the lower the fees costs you incur. Selling small, low-priced products qualifies you for the FBA Small and Light program. This program offers reduced fulfillment costs.
- Monitor Your Inventory Performance Regularly: Within your Seller Central account, you can assess your inventory performance. Use the Inventory Performance Index (IPI) score. Check for items that are not moving and take these off the warehouse. If you don’t, you will incur higher charges, called long-term storage fees.
- Check Your Invoices for Discrepancies and File the Appropriate Claims: Audit your invoices and look for discrepancies. Should you find any, you can file a claim for reimbursement. Keep in mind that there is a time limit for these and the deadlines depend on what type of claim you are filing. If your claim is proven valid, AMZ will reimburse the retail value of the affected inventory. So you earn back the profit that you would have made on that inventory.
- Remove any unfulfillable order returns from fulfillment centers: Order returns are inspected by Amazon and decide whether these can be resold. Products that are no longer in good condition are kept in the fulfillment center. As a result, they’ll continue to incur storage charges. Check the Inventory Health report in Seller Central. This way, you can see if you have any unsellable inventory. Then you can opt to have these destroyed or returned to you.
FBA is truly an amazing service that third-party sellers can gain from. But the service is not free. There are various costs involved. You need to proactively learn about these and manage them well. Else, you’ll end up paying for certain charges that you could have easily avoided.
Remember, there are tools available for you. ZonBase can help ensure that you are getting the most from your FBA business. The Zonbase software suite contains all the tools that will help you reach your goals as a seller. Go ahead, start your free trial today.