We get it, not all of us are numbers people. It might seem like a daunting task to start looking up all the figures involved with selling on Amazon FBA and to come to a conclusion on how they affect your business. To make things easier, we want to help you out by collating all this information into one concise article. We will also make sure to mention in every section how specific Amazon FBA fees should translate to your business decisions.
Being informed and aware of all the costs is absolutely the make and break factor that contributes to your Amazon success story. There is simply no way to run a profitable business without having all the data at your fingertips.
So, with that in mind, let’s get to it.
Amazon FBA fees top to bottom
Amazon Seller Fees
These fees apply to you if you sell on the Amazon platform regardless of whether or not you use Amazon as your fulfillment partner. As such, they play just as significant a role in your future business decisions as your actual Amazon FBA fees.
Amazon Seller Account Fees
Let’s start out nice and easy. Seller Account Fees are the first type of fees you will encounter on your Amazon FBA journey and probably the simplest ones to wrap your head around. Nothing good in life comes for free, and that’s also true of the life-transforming opportunity that Amazon FBA presents.
Luckily, these Amazon Seller Account Fees are relatively low and almost negligible if you plan on eventually expanding into a big business. There are two accounts that you can choose from, Individual Seller Account and Pro Merchant Account. Let’s look at them in more detail:
|Fees||What you get/Restrictions||Who is it for?|
|Individual Seller Account||$0.99 per item you sell||
||Individual sellers looking for a more flexible payment structure who don’t plan on selling too many items and committing too much time.|
|Professional Seller Account||$39.99 flat monthly fee||
||Serious sellers who will be selling large numbers of items and want to take full advantage of the Amazon platform and who will dedicate the time to use these tools to their full potential.|
So, which one is for my business?
No one can really give you the right answer here except for yourself. The great thing about these plans is that they offer such different experiences.
The individual seller account requires very little setup and allows you to literally only pay according to how much you use and benefit from the platform. Whereas, the professional account offers a more “all-in” approach, but you still pay $39.99 no matter how much you sell. That might be a lot for smaller, part-time sellers.
The good news is that you can upgrade your account from an individual seller account to a professional seller account at any time. We recommend starting out with an individual seller account, particularly if you don’t plan on selling high-volume items and then upgrading when you feel you have a handle on things.
The referral fee is basically a per-item fee Amazon charges for every item that you sell on their platform. This fee is calculated on the total sales price of the item which includes the delivery price and any gift wrapping options but excludes taxes.
This is important, because when you do your calculations and you sell your item for $8 you shouldn’t only base your referral fee on this amount. Let’s say the delivery cost for this particular product is $4.99 and the gift wrap is $3.99. In this case, the total sales price of the item would be $17.97. If we take the average 15% referral fee, you will be charged $2.69 and not 15% or $1.20 of your listed item price.
The minimum referral fee for most items is $1 while the watches and jewelry categories have a $2 minimum. Amazon will charge the higher amount whether that is the minimum fee or the percentage.
Amazon device accessories have by far the highest fees at 45% while personal computers have the lowest fees at 6%. Most other categories are either 12% or 15% with just a few 8% and 20% categories. Some specialty categories, such as collectibles, gift cards, and fine art have extra requirements.
You can find the entire referral fee table here.
Variable Closing Fee
This fee (VCF for short) is pretty much another referral fee that is charged on ASIN’s that fall inside the “media” category. This includes movies, books, video games, music, videos, DVD’s, and software. This is not a blanket fee for these categories as a video gaming headset is not classified as “media,” for example.
Many people are taken aback by this fee because information on it is relatively scarce and it isn’t always as black and white on what it is charged or not. If it sounds like it might apply to some of your products it’s best to contact an Amazon customer support agent and ask them directly. The VCF for sellers in the U.S. is $1.80 on all items.
Amazon FBA Fulfillment Fees
If you are already tired of reading about fees, don’t stop just yet. We are only just getting to the fees associated with Amazon’s fulfillment program. These fees are related to the organization, warehousing, and shipment of your merchandise.
It’s worth noting that in most cases, for fulfillment at least, Amazon is one of the cheapest around. Their huge infrastructure that covers almost every corner of the U.S. and the world allows Amazon to run logistics on a scale that makes them extremely competitive.
FBA Fulfillment Fee
This is the actual fee that Amazon charges to ship your products to customers. You may be scratching your head at the fact that you as the seller have to charge what is technically a “shipping fee” when you know buyers already pay a shipping fee themselves. Don’t worry.
Amazon credits your account with the shipping fee paid by the customer, thus partly paying off your fulfillment costs with this shipping fee. Although it rarely covers the entire fulfillment fee, it at least cuts down a lot on your losses.
As you can imagine, the heavier and bulkier your item is the more expensive it is to ship. Other aspects that weigh in is the time of year, and whether the product is considered standard-size or oversize.
Some handy examples of real-world items are on the Amazon Fulfillment fees for Amazon.com orders page.
For some oversize items, Amazon charges you based on what they call the “dimensional weight.” This accounts for items that might not be that heavy but are bulky enough to warrant some extra consideration. They arrive at this weight by dividing the volume by 166. For oversize and large standard-size items the greater between the dimensional and actual weight is used.
The packaging weight is added on top of the item weight to arrive at a final cost. You should keep in mind that monitors or TV screens above 42” have a mandatory $40 handling fee added on top because they require special handling.
Monthly storage fee
You also need to pay Amazon a fee for storing your items. As you can imagine, the boom in Amazon FBA sellers has led to space in their warehouses becoming a rare commodity in its own right.
This factor also requires very careful consideration on your part to save on unnecessary costs. You should closely study and try to project your sales, even going as far as to accommodate varying sales across different times of the year. This is especially important since storage is more expensive during the festive season.
Not only is it essential to have stock on hand to avoid missing out on potential sales but it’s also important to not over-stock and have to pay for inventory to sit and collect dust.
Long-term storage fee
If your items have spent more than six months in storage, they are subject to a long-term storage fee of $11.25. That’s 10x what you would even pay for the same amount of space for an oversize item. This is on top of the usual monthly storage fee.
If your item has stayed been in storage for more than 12 months, another $22.50 storage fee applies on top of your usual monthly fee. If that doesn’t convince you to manage your inventory monitor your seasonal sales closely, we don’t know what will.
Luckily, if you see that some items are coming up on their 6 or 12-month stay, you can place a removal order (we will discuss their fees next). If a removal order is in place, you won’t be charged the long-term storage fee.
Removal Order Fees
From time to time, you might want to remove some of your stock out of the Amazon warehouse. This could either be to sell it through another channel or simply to avoid paying the long-term storage fees.
Although these requests are usually fulfilled within 10 to 14 business days, it could take longer during peak times that tend to fall before and after the festive season.
If necessary, you can have Amazon liquidate the items for you in case you go out of business for whatever reason. Amazon will then give you 10% of the proceeds.
This shouldn’t bear too much on your daily business but is still important in case you need to use it.
Returns processing fee
One of the perks of Amazon FBA is that they take all of the fulfillment worries off of your shoulders. This includes handling returns, a time-consuming process that has mired many a small business. It’s important to know under which categories Amazon offers returns.
The processing fee is the same as the fulfillment fee.
Unplanned services fee
We won’t spend too much time on this as it won’t affect your daily running as long as you follow Amazon’s labeling instructions. You can read all about the Product Prep Requirements here and the subsequent fees here. You might also have your items refused altogether.
Shipping to Amazon
You might have missed a glaring omission in our fees so far. How does your product actually get to Amazon? Good question! Unfortunately, Amazon doesn’t handle shipments from sellers to their warehouses directly. However, you can make use of Partnered Carrier Options or just deliver the items yourself.
Putting it all together
Now that we have given you a pretty comprehensive list of all the fees you can expect to pay through Amazon FBA, it’s time to illustrate it more succinctly with a real-world example.
For our example, we will make use of some baby clothes. This is consistently one of the best performing categories for Amazon FBA sellers.
Let’s say that your baby outfit costs a total of $18. You can start to calculate your bottom line on each product using the following method:
- Add on customer shipping fees and extras: The standard shipping fee for items is $3.99 which puts your order total sales price at $21.99. It’s also a gift for a family member, so they order gift wrap at another $3.99, putting the total at $25.98.
- Deduct Amazon seller fees: The referral fee is standard for all products sold on Amazon. For baby clothes, the rate is 15%. Fifteen percent of $25.98 is $3.90, which leaves you with $22.08.
- Deduct Fulfillment fees: We can safely assume that even in a small box with some packaging it will only be a large standard-size. However, clothing does require an extra 40c fee, which brings your total FBA fees to $3.39 during January-September and $3.28 during October-December. We will go with the former, leaving you with $18.69.
Just remember to also account for your production or supply costs. Let’s say you import these baby clothes from China for a total cost of $8. That includes the price of the items themselves, shipping, and import taxes. That leaves you with a bottom-line of $10.69.
You have now successfully calculated a profit margin for your Amazon FBA product. And the good news is that you have made a tidy (hypothetical) profit of 233%!
If you want to go further, you can try to establish a base return rate and also factor that into your calculations. Remember to also compensate for your shipping costs to Amazon’s fulfillment centers.
Know your Amazon FBA fees and keep making a profit!
We hope that this guide on Amazon FBA fees has helped you get one step further in your Amazon FBA journey. Keeping you informed is just one of the ways that we at Sellers Playbook want to make your Amazon FBA experience smooth sailing. Although it might seem tedious, it could save you a lot of nasty surprises, hidden expenses, and frustrating mistakes in the future. Good luck and happy selling!