Although selling online is the way to go in this digital age, you need to arm yourself with the proper knowledge to maximize your earnings. This is why we're here to help you understand Amazon FBA fees so that you can make the most out of this handy e-commerce platform.
How Much Does It Cost to Sell on Amazon?
If you've read our in-depth piece on how to sell on Amazon FBA, you know that there are numerous benefits to using this e-commerce platform. The flexibility and convenience alone are incredible. You get to run your business from anywhere in the world without worrying about shipping or storage.
However, before we dive into the FBA fees you should keep in mind while using the service, let's first see what you'll be paying for.
Benefits of Using Amazon FBA
Here are some perks of using Fulfillment By Amazon (FBA).
1. Effortless Logistics
This is one of the best things about using Fulfillment By Amazon (FBA). You won't have to worry about shipping, packing, or returns. Amazon does everything for you. All you have to do is keep track of your listings to ensure that you always have enough stock in the Amazon fulfillment centers.
Once you link your supplier's factory to the Amazon fulfillment center, you can sit back as your products are shipped to the Amazon warehouse and then to your customer.
2. Unlimited Storage Space
No more cramped living room or overflowing basement. With the Amazon FBA service, you don't have to compromise your living space by doing inventory, storage and shipping yourself. You also won't have to rent a warehouse because you'll be using one of Amazon's amazing warehouses.
We'll talk later about the monthly storage fee you'll need to pay for this service. Nonetheless, you'll have access to unlimited storage no matter how big your inventory is.
3. An Edge Over Competitors
Are your competitors still doing their own storage, packing, and shipping? Well, you're about to overtake them, thanks to Amazon FBA. When you become an Amazon seller on FBA, you get access to some perks such as Free Shipping, Amazon Prime Free Two-Day Shipping, and lots more.
This means that your products will be featured with the Amazon Prime logo and be accessible to millions of Amazon Prime members. In addition, the fact that your customers will be able to get your products within days of purchase will give you an edge over your competitors.
4. Better Ranking
We all know that the first rule of online selling is visibility. If the customer can't find you, they won't be able to buy from you. So naturally, this means that ranking is one of your top priorities.
Luckily for you, Fulfillment By Amazon products often rank better on Amazon's search algorithm than non-FBA products. This means that your potential customers will have a better chance of finding your products because of better rankings.
5. Ease of Scaling
By selling on Amazon and enjoying these benefits, you'll have more time on your hands to expand your horizons. In addition, you'll be able to work with greater ideas of growing your business and building your brand. This will, in turn, translate into a faster-growing business.
6. Better Customer Service
When customers buy products on Amazon, they often favor products they can easily return. Therefore, since you won't be shipping and handling returns yourself, this will be a seamless process for your customer.
They will have access to better customer support and an easy return process because they'll be dealing with Fulfillment By Amazon employees and not by an overwhelmed you.
This means that your customers and potential customers will come to trust your business for good customer support and a reliable return process.
Now that we know what you'll be getting, let's see how much you'll pay for these conveniences.
Amazon Selling Fees
So, how much does it cost you to sell on Amazon? Understanding this will allow you to properly price your products and get the right item price because you'll have considered all the selling costs. Let's look at the various fees.
1. Amazon Referral Fees
If you've been selling on Amazon or have been researching how to do it, you've likely come across the term minimum referral fee or referral fee. The referral fee is basically a "commission" that you pay to Amazon for each item you sell.
This fee applies whether you are an Amazon FBA seller or not. This referral fee is often 15% of the selling price.
When Amazon is deducting this fee from your account, it deducts the greater of the two: the referral fee percentage or the minimum referral fee per item. If the minimum referral fee is greater than the referral fee percentage, that's what will be deducted.
When Does Amazon Charge You?
The good thing with this referral fee is that you don't have to pay it upfront.
Instead, the referral fees are taken out of your Amazon account once you've made the sale. Therefore, to get the net profit you want, ensure that you incorporate this referral fee into your item price.
Although the Amazon referral fee is a standard percentage of your selling price and is not determined by the size or weight of your product, other Amazon FBA fees are. And we'll look at those in a minute.
What Are Some Factors that Determine Amazon FBA Fees?
Three factors determine how much you pay for the Amazon FBA service. These include:
- The weight of your product (volumetric weight)
- The size of your product
- Channels you'll use to sell your product (Amazon or external sites)
Based on the factors of weight and size, we get two categories that your products may fall under. These include standard size and oversize.
Products that fall under this category weigh less than 20 pounds and have dimensions less than 18” x 14” x 8” when fully packed.
Products in this category exceed the above-stated weight and dimensions. Therefore, if your product weighs more than 20 pounds and measures more than 18 inches on its longer side, you'll know that it falls under this category.
These factors are carefully used to determine how much you'll pay within these two categories of prices. These are the Amazon Fulfillment fees and the Monthly Storage Fee.
2. Amazon Fulfillment Fees
Amazon Fulfillment fees are payments that sellers pay to have their orders fulfilled. But, what does fulfillment mean?
Fulfillment means having your products picked from your supplier, packed, shipped to your customer, having your returns handled and providing customer support to your customer.
One thing to note is that this fulfillment fee is measured per unit.
You'll need to incorporate the above factors to calculate the fulfillment fee for the product of your choice. Use the Amazon Revenue Calculator we'll look at below to get the exact figures you'll be working with.
Let's look at the other type of fee.
3. Monthly Storage Fees
These are the cost estimates of storing your inventory in the Amazon Fulfillment Center. Although not having your living room sprawled with packages and boxes is a great thing, you'll have to pay for this convenience.
The price you pay for storage will depend on the space occupied by your products. This is calculated per cubic foot.
These storage fees are often charged between the 7th and 15th day of the month that follows the month for which the fee is applicable. For example, your storage fees for the month of January will be charged between the 7th and 15th days of February.
You'll find that when it comes to storage, the cost for standard-size products is more than for oversize products. Why? Because standard-size products use complex shelving and bins that can be costly.
Nonetheless, the storage fee often varies depending on the product size tier and the time of the year.
For example, the storage fee from January - September is $0.99 per cubic foot for standard-size products and $0.78 per cubic foot for oversize products.
For October - December, the fee is 3.63 per cubic foot for standard-size products and $2.43 per cubic foot for oversize products.
Although the rates for standard-size products are higher than those of oversize products, you'll find that you're spending less for standard-size products because of the volume.
Something else you should know when it comes to storage fees is the long-term storage fee.
Amazon FBA Long Term Storage Fee
If your inventory remains in the Amazon fulfillment center for more than 365 days, you'll need to be a monthly long-term storage fee (LTSF). This is often $6.90 per cubic foot or $0.15 per unit, whichever is higher.
Amazon calculates this fee on the 15th day of each month.
Amazon FBA Calculator/Amazon Revenue Calculator
The Amazon FBA calculator allows you to determine your net margin and other costs associated with using the platform. You also get to know your profit margins no matter the fulfillment method you choose. This will allow you to choose the right item price for your products.
The Amazon FBA calculator comes in handy when you're deciding which products to sell or how to price your items.
Thanks to this Amazon FBA calculator, you get to incorporate the referral fee, shipping cost, and all other costs associated with the fulfillment method you're using, then get the net profit.
What Are Other Fees to Look Out For?
Whether you're using FBA or FBM, here are some other selling fees that you may come across.
1. Subscription or Individual Per-Item Fees
Whether or not you'll pay a monthly subscription fee or the individual per-item fee per sale depends on the type of Amazon seller account you have. You can either hold an individual account or a professional account.
If you have an individual Amazon seller account, you'll pay Amazon a flat fee of $0.99 per sale transaction. On the other hand, if get a professional seller account, you'll pay a monthly subscription fee of $39.99.
These Amazon fees are often taken out of your Amazon account balance.
2. Rental Book Service Fee
Like the referral fees we discussed earlier, these fees are charged once the customer rental order is shipped.
These fees apply to Amazon sellers who rent textbooks on Amazon. It is often a fixed rate of $5.00, and it applies to each textbook rented. Therefore, if you plan on renting books in the future, ensure you incorporate this fee into your rates.
3. Closing Fees
These fees apply to you if you want to go into the business of selling CDs, DVDs, books, and Blu-Ray. Amazon sellers who are in this business pay a flat fee of $1.80 per sale.
Just like most referral fees, this fee will be deducted from the proceeds of your sale. Therefore, you won't worry about paying in advance.
4. High-Volume Listing Fee
You don't have to worry about these fees unless you have more than 100,000 products listed. Nonetheless, we want you to be prepared if you upscale and have thousands of ASINs.
This fee is often a flat fee of $0.005 per eligible ASIN. You'll pay for this listing fee at the same time as you're paying your monthly storage fee. If there's no money in your Amazon account balance for it to be deducted, this fee will be deducted from your credit card.
5. Refund Administration Fees
These refund administration fees are charged when a customer requests a refund for your product after you've already been paid for the item price. When Amazon successfully issues a refund to the customer, you'll then be charged the fee, which is either $5.00 or 20% of the refunded charge, whichever is lower.
These Amazon fees are often charged to your Amazon account or your credit card if you don't have money in your Amazon account.
Frequently Asked Questions About Amazon FBA Fees
1. How much will it cost to Advertise on Amazon?
The charge depends on the type of ad campaign you want to run. However, Amazon ads are arguably some of the most affordable ads, especially if you think about the fact that you're advertising to visitors with buyer intent.
Nonetheless, you can budget for a pay-per-click cost ranging between $0.20 and $6.
2. What Amazon FBA fees are included in the Amazon Profit Calculator?
You can use this Amazon Revenue Calculator to compare various product estimates and the fulfillment method to use.
You can use this Amazon FBA calculator to check how much sellers pay based on the FBA channel they use to allow you to make the best decision. The fees that are included in this Amazon FBA fee calculator include the referral fee, fulfillment fee, monthly storage fee, and the variable closing fee.
You can use this FBA calculator to set your item price after you've included all these fees.
The fees that are not included in this FBA calculator are the monthly subscription fees, high volume listing fees, rental book service fees, return processing fees, per-item fees, unplanned service fees, refund administration fees, long-term storage fees, removal order fees, FBA inventory storage overage fees, and other less common fees.
To get up-to-date, accurate costs for your Amazon business, we provide documents for Cashflow Forecasting, Product Tracking, and the FBA Masterclass Road Map.You can get access to all these worksheets when you download The Simple Path To Amazon Wealth.
How Much Does It Cost To Start An Amazon FBA Business?
It really depends on how much capital you have to work with. Some have started with $3,000, $5,000, $10,000, $50,000, or even up to $100,000. By learning Amazon FBA's business model and figuring out what your current budget is, you'll get the full picture of what your costs will look like.Here are the expenses you have to keep in mind:
- Product Samples, Barcodes
- Supplier, Shipping, Inspections and Storage
- Packaging, Logo, Branding Assets, and Product Inserts
- Product Photography and 3D Renders
- Copywriting and Graphics for your listing and marketing campaigns
- Taxes, Customs and Insurance
- Business Software
- Advertising (PPC, Facebook Ads, Social Media, etc)
- Amazon Seller and Fulfillment Fees
- PayPal and/or Wire Fees
- Promos and Giveaways
- Other variables such as Trademarks, Incorporation, Courses, Virtual Assistants, or Professional Services such as Accounting/Bookkeeping and more
Worksheets for Cashflow Forecasting, Product Tracking, and the FBA Masterclass Road Map will help you calculate all of your specific expenses and how to make your business profitable. These are all included in The Simple Path To Amazon Wealth e-book.
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