FBA (Fulfillment by Amazon) is a seller service by Amazon where sellers can use Amazon’s facility to store and ship their products. It’s a paid service, and the overhead cost depends on many factors, which we are going to discuss in this post on Amazon FBA fees.
Online business is tricky and it’s a good idea to calculate overhead costs before you invest in a product. Particularly, If you are using FBA, it can be tricky to keep track of all expenses such as shipping fees, return fees, fulfillment costs, and more.
In this article, we will talk about various FBA components and their costs in detail. Let’s get going.
Table of Contents
- Amazon FBA: The Cost of Selling
- Is FBM Cheaper Than FBA?
- Final Words: Amazon FBA Fees (2023)
Amazon FBA: The Cost of Selling
FBA is a service provided by Amazon that allows third-party sellers to store their products in Amazon’s warehouses and have them shipped directly to customers. This service enables sellers to utilize Amazon’s wide distribution network and shipping and customer service capabilities. The key advantage of using FBA is that it makes the products eligible for Prime shipping, which can boost sales.
As far as FBA cost is concerned, it includes several different types of fees. Let’s have a look at them in detail.
1. Amazon Seller Account
Here we have explained the type of Amazon seller accounts.
This type of account is perfect for beginners and sellers who sell fewer than 40 items per month. There is no monthly fee for an Individual Seller account, but sellers are charged a per-item fee of $0.99 for each item sold. Also, keep in mind that there are certain products that you can’t sell with an Individual account so it’s better to check the terms & conditions before choosing the seller account.
A Professional Seller Account is suitable for vendors who expect to sell more than 40 items per month. With a Professional account, there is a monthly subscription fee of $39.99 but no per-item commission.
Additionally, a professional account will give you access to advanced seller features, including inventory management, custom report building, and the Amazon Brand Registry services.
2. FBA: Fulfillment Costs
Fulfillment cost comprises storage and order processing costs. Let’s see how Amazon calculates both.
FBA storage fee
The storage fee is the cost incurred for storing your inventory inside Amazon’s warehouses. The fee is calculated based on the size and weight of the products. The storage period of the product has an impact on the fee; the longer the product is stored, the greater the fee.
A Monthly storage fee is applicable as long as you have a single product stored in the warehouse. Amazon calculates the fee based on the space you occupy in the warehouse and the time of the year. Here’s a breakdown:
- For Standard Size products – $0.83/cubic foot ( Jan-Sep) and $2.40/cubic foot (From Oct-Dec)
- For Oversize products (<18x14x8 inches, or <20lbs) – $0.53/cubic foot (Jan-Sep) and $1.2/cubic foot (Oct-Dec)
A Long-term storage fee of $6.90/cubic foot or 0.15%/unit may apply at the end of the month for items stored in the warehouses for more than 365 days. Each month, Amazon conducts an inventory check and based on the age of the products in your inventory, you will be charged.
FBA Order Fulfillment Cost
The order fulfillment fee is the cost of having Amazon process and ship your orders. It also includes customer service and delivery. The fulfillment fee varies depending on the size and weight of the product, with smaller and lighter items having lower fees than larger or heavier products. This is how you will be charged:
|Size||Weight||Fulfillment fee per unit|
|Small Standard||6 oz or less||$3.07|
|–||6+ to 12 oz||$3.22|
|–||12+ to 16 oz||$3.77|
|Small Oversize||70 lb or less||$9.39 + $0.40/lb above first lb|
|Medium||150 lb or less||$13.37 + $0.46/lb above first lb|
|Large Standard||6 oz or less||$3.72|
|–||6+ to 12 oz||$3.96|
|–||12+ to 16 oz||$4.75|
|–||1+ to 2 lb||$5.40|
|–||2+ to 3 lb||$6.08|
|–||3+ to 20 lb||$6.44 + $0.32/lb above first 3 lb|
|Large Oversize||150 lb or less||$86.71 + $0.83/lb above first 90 lb|
|Special Oversize||Over 150 lb||$158.49 + $0.83/lb above first 90 lb|
3. FBA: Referral Fees
Amazon charges a referral fee for each item sold on their platform. It’s the percentage of the sale price and will be charged on top of the other costs such as the seller account fee, FBA fee, and so on.
The referral fee varies by product category but usually goes between 6% to 45% of the sale price. The referral fee is supposedly used to cover the costs of services such as advertising and customer care. Mind that the referral fee will be charged on the entire order amount, including a delivery fee, gift wrapping, and other goodies.
4. Other Costs
Closing fee, also known as a Variable closing fee, is a fixed cost incurred when selling media items. It is an additional charge of $1.8 per unit in addition to any other fees that may apply.
Here are the products subjected to Closing fees:
- Computer Video Games
- Software and antivirus
- Video Game Accessories
- Gaming Consoles
- Music Files
Return Order Fee
A Return processing fee is applicable on every valid return order. Selling under FBA, you will experience a higher return rate, particularly for prime products. After the return request is raised by the customer, Amazon picks up the product on your behalf and conducts an inspection. If the product is returnable, you will be charged a small amount as a return fee. This is one of the downsides of Amazon FBA. With other seller agreements, you can distaste your own return policies.
However, there are some product categories such as handbags, jewelry, accessories, food items, undergarments, sunglasses, etc, exempt from return processing fees. The cost of the fee varies based on the product size tier, shipping weight, and item category. Amazon has a standard fee structure for return processing fees which are modified often. Check Amazon’s website to know the current fee structure.
Here is the current return fee according to the latest Amazon guidelines:
|Size Tier||Shipping Weight||Return Processing Fee|
|Small||Less than or equal to6 oz||$2.12|
|–||6oz to 12 oz||$2.23|
|–||12 oz to 16 oz||$2.32|
|Large||Less than or equal to 6 oz||$2.40|
|–||6oz to 12 oz||$2.76|
|–||12oz to 16 oz||$2.85|
|–||1 to 2 lb||$2.96|
|–||2 to 3 lb||$3.41|
|–||3lb to 20 lb||$3.41 + $0.20/lb above first 3 lb|
|Oversize||Small Oversize||$4.19 + $0.20/lb above first 2 lb|
|–||Medium Oversize||$10.57 + $0.25/lb above first 2 lb|
|–||Large Oversize||$43.70 + $0.25/lb above first 90 lb|
|–||Special Oversize||$75.08 + $0.25/lb above first 90 lb|
Inventory removal/disposal cost
If some of your items fail to sell, and you decide to remove them from the Amazon warehouse, you must pay an Inventory removal fee. Sometimes, it costs more to keep a non-selling item than to take it down. This will save you from long-term storage costs which can literally break your budget, particularly if the product is not performing well. The inventory removal fee is primarily based on the number weight and size of the items.
If you plan to remove some products from the warehouse, make sure you do it before the 15 of the month. This is the time when Amazon usually conducts an inventory check to find the product age inside the warehouse.
Here is the current inventory removal fee that Amazon charges:
|Item Size||Weight||Disposal fee (per Unit)|
|Standard||0 to 0.5 lb||$0.52|
|–||0.5 lb to 1 lb||$0.75|
|–||1 lb to 2 lb||$1.14|
|–||> 2 lb||$1.51 + $0.63/lb above 2 lb|
|Oversize (Shoes, Jewelry, watches, dangerous goods, etc)||Up to 1 lb||$1.50|
|–||1 lb to 2 lb||$1.96|
|–||2lb to 4 lb||$2.89|
|–||4 lb to 10 lb||$5.05|
|–||> than 10 lb||$7.25 + $0.63/lb above 10 lb|
Is FBM Cheaper Than FBA?
Now, the question is whether you should stick to FBA or you are better off with FBM (Fulfilled by merchants). Actually, it depends on your business model. With FBM, you need to have your own storage and fulfillment facility along with a trained staff to handle the inventory and process the orders. Additionally, you must have a label printing and packaging service. Lastly, you need shipping partners to deliver your orders. All of this requires an ample amount of money. If you are a beginner, it’s impossible to have all these facilities so you should FBA and outsource these crucial elements to Amazon.
On the other hand, if you have resources and experience in fulfillment, FBM can be a good choice. It allows you to save on FBA costs and have more control over conditions such as return period, delivery time, etc, which is not possible with FBA. However, it requires more time and effort on your part.
Final Words: Amazon FBA Fees (2023)
FBA offers a convenient way to conduct business on Amazon and leverage Amazon’s resources. However, it also comes with additional costs that should be taken into account. To ensure that these costs do not negatively impact your profit margin, it is important to thoroughly analyze your target market and use the FBA calculator to estimate your profits before starting to sell. The FBA calculator takes into account all relevant FBA costs and provides an approximation of your profit margin.
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