For any business, the overhead cost is one of the first things to consider. That matter applies, too, for anybody considering fulfillment by Amazon (FBA). Before using FBA, you need to understand Amazon FBA fees. (And if there’s a fulfillment fee you don’t know about, you definitely need to know now.)
If you’ve wondered, “How much does FBA cost?” then we can help. We will explain the costs involved in fulfillment by Amazon, so all potential Amazon sellers can have a clear idea of any Amazon FBA fees and how to sell on Amazon FBA.
With a firm idea of the cost of fulfillment by Amazon FBA, you can start turning a cool profit using its fulfillment program.
However, there’s no easy answer to the costs of using FBA. If you want to sell through the eCommerce giant’s FBA program, you will encounter a series of incremental FBA costs for the fulfillment of your orders. The FBA costs for sellers differ across sellers.
To understand how much selling through Amazon FBA will cost, you need to know how Amazon FBA fees work.
Amazon Seller Account
This cost is the first Amazon FBA fee you will encounter. To sell on Amazon, you choose between two Amazon seller accounts: Individual and Professional.
You pay a $0.99 fee per item sold, which the retailer charges to your credit card or subtracts from your account balance after the sale.
This account is best if you don’t plan to sell too much through the FBA program and don’t want to commit to a monthly subscription.
Professional Seller Account
Instead of paying per item sold, you pay an FBA subscription fee of $39.99 per month. It covers all items sold during that time. This option is best if you are moving many products – paying per item through an Individual account would increase costs as you sell more products through FBA.
Amazon sellers may want to consider these additional fulfillment features, too.
A Professional FBA account will include an inventory of your items and streamline order management with feeds and reports to keep you abreast of progress. You can run special listing features like promotions for your products and the ability to upload your items in bulk.
Choosing between Individual and Professional Accounts
If a seller is selling fewer than 40 items per month, the Individual account will be a better fit. Selling more than 40 items per month will cost you more than the monthly subscription of a Professional seller account in selling fees.
However, with the Individual FBA account, you miss out on some Amazon FBA features. The retailer sets shipping rates on your orders, and you have to upload products manually. You also won’t be able to sell specific product categories.
FBA Referral Fees
When selling on Amazon, you have to pay a commission for every product sold on Amazon using FBA. This commission on items is the referral fee, usually a flat percentage of no more than 15% per unit.
The fees come out of your account balance after the sale, so they will never leave you out of pocket. A seller will earn the selling price minus the fees for referral on their items.
You can find a full list of fees Amazon FBA here. The cost you pay depends on the product category and your selling price. For different products, the referral fee varies.
For example, suppose you are selling baby products. The eCommerce platform charges a referral percentage of 8% for a product worth up to $10 and 15% for a more expensive product. There’s a minimum referral fee of $0.30 applied on a per-item basis.
Some products are exempt from the minimum fee, such as books, various collectible items, fine art, food, and music.
FBA Fulfillment Fees
There are two kinds of Amazon FBA fulfillment fees: order fulfillment fees and storage fees.
Order Fulfillment Fee
You can use Amazon FBA to pack and ship your products. The fulfillment by Amazon fees factor in the product size and weight.
When the shipping weight of your product is heavier, it will demand higher fees. Small and light products have much cheaper shipping fees. For items lighter than 10 ounces, you’ll only pay $2.41. The heaviest items (more than 90 pounds) can cost more than $75 plus $0.79 per pound.
FBA Storage Fees
When selling products, you need to store inventory with them. Your products will be in storage in fulfillment centers, for which Amazon charges storage fees. Amazon charges monthly storage fees and long term storage fees for your inventory.
Monthly Storage Fees
The retailer will charge you inventory storage fees each month if there’s stock left in the fulfillment center, which gets charged to your credit card or your seller account balance.
From Jan.-Sept., you pay $0.69 per cubic foot for standard size products, and from Oct.-Dec., you’ll pay $2.40 per cubic foot for a standard size product.
Between Jan.-Sept., oversize items have a storage fee of $0.48 per cubic foot and $1.20 per cubic foot between Oct.-Dec.
Long-Term Storage Fees
When the retailer does its monthly inventory clean-up, it will charge you for products stored for more than 180 days in its fulfillment centers. For those products, it will charge sellers $6.90 per cubic foot.
If you are selling on Amazon, you need to know what’s in your inventory, and you should monitor this inventory stock closely. If one product is difficult to sell, it will rack up some substantial FBA inventory storage fees per month.
Once some stock has been at an Amazon fulfillment center for more than a year, they add a $0.15 fee per unit, thus adding to the fulfillment fee totals. During busy seasons, they may further increase the storage fee per product to encourage you to move inventory.
When the retailer stores your products in inventory, your Amazon FBA fees also cover customer service. Customer service is available for any products in the FBA program.
Multi-Channel Fulfillment by Amazon
This fulfillment method is for those sellers using FBA on a marketplace separate from Amazon. You may be a third-party seller who sells their items and products through a separate site. Multi-channel fulfillment allows sellers to store inventory in the eCommerce giant’s warehouses.
When sellers receive orders for their products, the eCommerce retailer will provide shipping and customer service. Its customer support covers orders outside its marketplace. It continues shipping your product even though it is outside of the eCommerce marketplace.
For these eCommerce sellers, Amazon provides top of the range shipping options for orders of any size and weight. If you sell through the FBA program and other non-Amazon marketplaces, Amazon’s fulfillment network can help you and other sellers with its sound shipping options and inventory storage for your items.
Besides the primary FBA fees you incur, there are smaller FBA fees to consider, too.
Any product in the media category – such as books, music, and DVDs – incurs a flat $1.80 fee. This cost is on top of your orders’ referral fees and deducted when you sell the product.
Refund Administration Fees
A critical part of customer service is processing refunds. If you sell a product, but the customer decides they no longer want it, you’ll have to pay a refund fee for the product.
You will get refunded for your seller fees. You pay $5 or $20 of the product price (whichever is least).
How Are Amazon FBA Fees Calculated?
The product fees depend on a range of variables. These variables range from the shipping weight of your standard size products and product size to costs per cubic foot that your items take up in the fulfillment centers. Fulfillment fees may increase for products sold on Amazon as your sales increase, but so too does your ability to pay the fees.
Long-term storage fees are a good example of how Amazon calculates FBA fees for a product. The longer sellers store their products as inventory in Amazon fulfillment centers, the more FBA fees they accrue. This amount further increases for items larger than the standard size, and the fees increase per cubic foot of space in the fulfillment centers. When Amazon does its monthly storage cleanup, it will also charge for any product that has been there longer than 180 days or a year.
Amazon fulfillment fees increase the more it bears the burden for your products through FBA – per unit and for total orders.
For any seller who wants to calculate the per-unit cost of their products, consider trying Amazon’s calculators.
Given the variables that affect your FBA fees, Amazon offers an FBA calculator to help sellers calculate all the fees they incur per unit. Take a look so you can understand how much fulfillment by Amazon will cost you.
Is Selling on Amazon FBA Worth It?
Many third-party sellers use fulfillment by Amazon. Amazon’s fulfillment program makes selling and shipping your goods easier, and they offer their customer service on your products. When deciding whether it’s worth choosing Amazon FBA, you need to consider your pros and cons needs and what the eCommerce giant includes, such as shipping.
Many sellers considering fulfillment by Amazon worry about shipping. For smaller eCommerce sellers, shipping can be a real pain. Items sold under Amazon FBA are eligible for free two-day shipping for Amazon Prime customers. A seller using FBA can rely on its shipping network and speedy delivery.
How much fulfillment by Amazon costs depends on your needs and your items. Amazon FBA has apparent benefits for servicing your products, from two-day shipping for Amazon Prime customers to storing your inventory items.
Amazon FBA also gives third-party seller access to its network, but how much Amazon FBA costs depends on how many products you are shipping. The more products you sell, the greater your expenses will rise per unit – which means you’d need to choose your seller account carefully. Take a look at the FBA calculator before making any final call about fulfillment by Amazon.