In a seismic shift for sellers, Amazon FBA fees have skyrocketed by over 30% since 2020. What initially appeared as subtle adjustments have now snowballed into a huge cost surge.
Amazon is unmistakably passing on its mounting expenses to sellers, and this has amplified the need for many sellers to gain a deeper understanding of Amazon FBA fees. As a seller, calculating your fees is no longer just a valuable skill; it’s the key to navigating this dynamic terrain, ensuring not only cost efficiency but also a solid grip on your competitive edge in the ever-evolving world of ecommerce.
Imagine making savvy pricing decisions, optimizing your product selection, and outshining the competition—all while maintaining profitability. Whether you’re a newbie or a battle-hardened seller, keeping track of and calculating your Amazon FBA fees will empower you to make well-informed decisions and take control of your business.
Amazon FBA fees are the charges that Amazon levies on sellers who use its fulfillment services. These fees cover various aspects of order fulfillment, storage, and other services provided by Amazon to streamline the selling process.
The specific fees can vary based on factors such as the size and weight of the product, the product category, and the marketplace (e.g., Amazon.com, Amazon.co.uk, etc.). Some of the most common Amazon FBA fees include:
These are standard selling fees that Amazon charges all sellers for each product sold. They are typically a percentage (8% to 15%) of the item’s sale price.
These fees cover the costs associated with picking, packing, and shipping the products. They are based on the product’s size and weight.
Dimensional weight fees:
Amazon’s updated FBA fee structure now includes dimensional weight pricing, potentially increasing shipping and fulfillment costs for some sellers. Keep your product packaging compact to avoid extra charges. Use our FBA Size Tiers Optimizer to resize your packaging accordingly and potentially save thousands on FBA storage and shipping fees.
Amazon charges sellers for storing their products in its fulfillment centers (FCs). These fees are typically assessed on a monthly basis and can vary depending on the time of year (peak holiday storage surcharge) and the volume of inventory stored.
Storage utilization surcharge:
Implemented on April 1, 2023, Amazon’s utilization surcharge is an extra cost that FBA sellers might incur, calculated based on their storage utilization ratio, which assesses the average daily volume of stored inventory (cubic feet) divided by the average daily shipped volume (cubic feet) over a 13-week period. If your storage utilization exceeds 26 weeks, the surcharge is then added to your monthly storage fees, potentially increasing total monthly storage costs when applied on the 15th of each month.
Aged inventory surcharge:
This is a charge imposed on sellers who have items stored in Amazon’s FCs for an extended period. It encourages sellers to manage their inventory efficiently and helps Amazon maintain warehouse space for more popular and faster-moving products. The fee is typically assessed on items that have been stored in Amazon’s fulfillment centers for 181 days or longer. As of January 2023, rates start at $0.50/cubic foot for items stored between 181-210 days to as high as $6.90/cubic foot for units aged 365 days or more.
Capacity Limits Reservation Fee.
A reservation fee is your highest bid to secure extra capacity beyond Amazon's allocation. Offset it with performance credits ($0.15 for every dollar in sales). You'll earn credits based on the Increased Capacity Ratio.
These are Amazon FBA fees for media categories like books, music, video, and DVDs.
High-volume listing fees:
For active non-media listings with high volumes that haven't sold in 12 months, there is a monthly fee of $0.005 per eligible listing to cover cataloging costs. This fee also waived for the initial 100,000 listings.
Return processing fees:
Amazon charges sellers when a customer returns a damaged or defective product.
Refund administration fee:
When refunding a customer for a paid order, Amazon will reimburse you for the referral fee associated with the item(s), subtracting the lesser of $5.00 or 20% as the applicable refund administration fee. As an illustration, when you issue a $10 refund for a product in a category with a 15% referral fee, your refund administration fee will amount to $0.30 (calculated as $10.00 x 15% referral fee = $1.50, and $1.50 x 20% refund administration fee = $0.30).
Removal and Disposal fees:
These are Amazon FBA fees for removing or disposing of your inventory from Amazon FCs.
Note that Amazon may update its fee structure and policies over time, so be sure to regularly check the most current fee schedules on Amazon Seller Central or consult with Amazon’s seller support for the latest fee information specific to their products and marketplace.
Here are some key reasons why understanding FBA fees is important:
Profitability Analysis: By understanding the fees, you can analyze your product’s profitability and make informed decisions about which products to sell through FBA and which to fulfill yourself. This analysis can help you optimize your product selection and pricing strategies.
Knowing your Amazon FBA fees allows you to accurately calculate the total cost of using Amazon’s fulfillment service. This helps you set competitive prices for your products and manage your profitability effectively.
Amazon charges storage fees for products stored in their fulfillment centers, and these fees vary based on the volume of inventory and time it’s stored. Calculating these Amazon FBA fees helps you make smart decisions about how much inventory to keep at FBA. In addition, consider supercharging your business with D8tadriven, a comprehensive system that provides automated reporting, predictive insights, and practical recommendations crafted to propel you forward and maintain your competitive edge.
Amazon FBA fees are a significant component of your overall cost structure. Calculating them helps you determine the right price point for your products, taking into account both your costs and desired profit margins.
Shipping and Handling:
FBA handles order fulfillment and shipping, but these services come with associated costs. By calculating these fees, you can understand the cost savings and convenience that FBA offers compared to Fulfilled by Merchant (FBM).
If you plan to sell internationally through the retailer’s global fulfillment network, understanding the Amazon FBA fees in different regions and markets is essential for making wise expansion decisions.
Cash Flow Planning:
Accurate fee calculations are crucial for your financial planning and forecasting. They help you estimate your expenses and cash flow, which is essential for running a successful ecommerce business.
A deep understanding of Amazon FBA fees can give you a competitive advantage. You can identify cost-saving opportunities and offer competitive prices while maintaining healthy profit margins.
Understanding Amazon’s fee structure ensures that you comply with their terms and conditions. Ignorance of fees can lead to unexpected expenses or account issues.
Overall, learning how to calculate Amazon FBA fees is crucial for effectively managing your ecommerce business, making informed decisions, and maximizing your profitability on the platform. It’s a crucial skill for anyone looking to succeed as an Amazon seller.
Calculating FBA fees can be a bit complex, as it involves several factors, including referral fees, fulfillment fees, and storage fees. Here’s a general overview of the steps to calculate Amazon FBA fees for selling products on the platform.
For a more streamlined process, you may opt to use an FBA Revenue Calculator.
1. Determine Your Product Category:
First, identify the category your product falls into, as Amazon’s referral fees vary by category. You can find the specific fee structure here.
2. Calculate Referral Fees:
Multiply your product’s sale price by the referral fee percentage for your category to calculate the referral fee.
3. Consider Variable Closing Fees:
Some categories may have additional variable closing fees for media products like books, music, and video games. Check if your product category requires this fee and include it in your calculation.
4. Factor in Fulfillment Fees:
If you use FBA, you’ll need to calculate the fulfillment fees. These fees are based on the size and weight of your product and whether it’s standard or oversize. Refer to Amazon’s latest fee structure for updated rates and then consider using an FBA fee calculator to determine these costs accurately.
5. Account for Storage Fees:
If you store your products in Amazon FCs for an extended period, you may incur additional fees such as holiday peak surcharge, aged inventory surcharge or overage fees. These fees depend on the amount of storage space your products occupy and the time of year.
6. Subtract All Fees from Your Selling Price:
Subtract the referral fees, variable closing fees (if applicable), and fulfillment and storage fees from your product’s selling price to determine your net profit per sale.
7. Consider Additional Costs:
Don’t forget to factor in other costs like shipping, cost of goods sold, Amazon advertising fees, and any other expenses related to your business.
8. Calculate Your Profit:
After deducting all the Amazon FBA fees and costs associated with using Amazon paid services, you’ll have your estimated profit per sale.
Once you incorporate all the mentioned variables, an Amazon FBA fees calculator delivers a good profit estimate for your product, eliminating the need for manual formula calculations or spreadsheet analysis, saving you time and streamlining the decision-making process for your FBA product investments.
Pro tip: Keep in mind that these steps provide a general overview of the process, and the specific Amazon FBA fees may change over time. Always refer to Amazon Seller Central for the most up-to-date information and use their fee calculators to get precise calculations for your products. In addition, be sure to download our “Attack of the Fee Stack” whitepaper to know when each FBA fee drops, reduce the impact of fees, and how to minimize or offset any Amazon fee hike.
Take, for instance, the burden of maintaining excess inventory, which can inflict damage on your business finances. These associated holding costs typically encompass expenses related to warehousing, additional Amazon FBA fees like aged inventory surcharge, opportunity costs, insurance, and potential losses due to spoilage or shrinkage. It’s essential to recognize that the longer excess inventory remains unsold in storage, the higher these costs soar.
On the flip side, the issue of stocking out presents its own set of financial challenges. Clear stockout costs, such as low rankings, lost revenue, and expedited air shipping expenses, are readily evident. However, beneath the surface, concealed costs await, including dissatisfied customers, reduced productivity, and the financial implications of managing backorders (orders that cannot be filled at the current time due to a stockout situation).
Overall, the usual challenges related to inventory management and cash flow planning often result from a lack of effective inventory monitoring and the ability to predict demand accurately. This is precisely where access to a robust inventory management system like SoStocked becomes evident.
SoStocked simplifies the management of your minimum and maximum inventory levels, purchase order oversight, and supplier lead times. By automating these tasks, it not only boosts operational efficiency but also mitigates the occurrence of both stockouts and surplus inventory.
Ensure your Amazon inventory stays lean and efficient by following a regular cleanup regimen. Begin by accessing your Inventory Health report through the Manage Inventory Health section of Seller Central.
Within this report, closely scrutinize essential columns, including the current age of your sellable inventory, estimations of long-term storage fees, recent 30-day shipment figures, and more.
Identify and compile a list of aging inventory, giving priority to those incurring higher storage fees. Then, develop a strategic plan for these items before the impending inventory clean-up date. Note that Amazon conducts inventory assessments on the 15th of each month to flag items that have remained in their FCs for over a year. Such aging inventory becomes susceptible to long-term storage Amazon FBA fees, making it prudent to clear these items prior to the next assessment date to minimize costs.
Consider innovative strategies for these slower-moving products, such as bundling them with your top sellers or participating in Lightning Deals to stimulate increased sales. Employ advertising campaigns to drive additional traffic to these items, especially those with lackluster sales rankings. Implement listing optimizations to enhance conversion rates and boost your overall sales performance. These tactics will empower you to more effectively manage aging inventory while elevating your sell-through rates.
Recovering funds owed by Amazon is entirely feasible with the assistance of reimbursement service providers. Do not assume that an Amazon refusal marks the end of your claim.
Consider partnering with a service provider well-versed in the intricate process, such as Seller Investigators (SI). Their expertise lies in maximizing your reimbursements, often surpassing the capabilities of run-of-the-mill Amazon software suites, which might offer automated reimbursement management as one of many features.
SI excels at securing approvals for previously declined requests. If you’ve encountered challenges with approval, you require a service well-versed in the nuances of Amazon's reimbursement system.
Time is of the essence when pursuing your owed funds, as the window for filing reimbursement claims is limited to 18 months. Any requests submitted beyond this deadline are ineligible for reimbursement.
Whether you’re just starting out or have a wealth of ecommerce experience, delving into the intricacies of Amazon FBA fees can be a game-changer, safeguarding your profit margins and providing valuable insights for your pricing strategies.
Harness the power of the FBA revenue calculator to unveil your product’s profit potential before making crucial business decisions. Running profit calculations is the compass guiding you to determine if FBA is the right avenue or if there are alternative paths to explore like FBM or Seller-Fulfilled Prime.
For greater efficiency, optimize your inventory management to steer clear of the pitfalls of understocking and overstocking, two costly extremes that can directly impact your profit margins. Additionally, if you find yourself with an excess of inventory, consider the strategy of offering discounted prices to stimulate sales, boost your rankings and capacity limits, and ultimately elevate the overall health of your inventory.