Amazon FBA Pricing and Fees: Demystifying Costs for Successful Sellers

Amazon Expert

Hi I’m Steven, Founder of My Amazon Guy, a 500+ person Amazon Seller Central agency out of Atlanta, GA. We Growth Hack eCommerce and Marketplaces through PPC, SEO, Design, and Catalog Management.

As a seller, understanding Amazon FBA pricing and fees is crucial for determining the profitability of your venture. In this blog post, we will address frequently asked questions about the costs of using FBA, including fulfillment fees, storage fees, and other pricing considerations. 

Keep reading until the end where a bonus content awaits you!

Amazon FBA Pricing and Fees: Is Amazon FBA Paid?

When it comes to Amazon FBA, it’s important to recognize that there are costs involved. Let’s break down the various expenses associated with using FBA and help you understand how they impact your business’s profitability.

 

Watch Steven Pope, founder of My Amazon Guy, as he explains how to calculate Amazon seller fees in this video:

Amazon FBA Pricing and Fees: Fulfillment Fees

The FBA fulfillment fee is a per-unit cost levied to fulfill items purchased from the Amazon store to customers. The fee is determined by the type, size, and weight of the item. It is also known as the “pick and pack” cost.

 

Details, computations, and prices for this fee may differ for products enrolled in FBA Small and Light or Multi-Channel fulfillment.

Fee Details

Time of charge – This is the time of order shipment to the buyer’s address.

Fee Structure –  Per completed unit. The rate is determined by the product category, size tier, and delivery weight.

Values In The Fee Calculation

  • Product size tier – Product size tiers categorize items based on their actual weight, dimensions, and dimensional weight. You can determine your product’s size tier or view size tier information for previously fulfilled products using the Monthly Storage Fees report.
  • Shipping weight – Shipping weight is determined by the item’s unit weight or dimensional weight and is used to calculate fees. Shipping weight is based on unit weight or dimensional weight, whichever is greater, depending on size tier.
  • Dimensional weight – Dimensional weight may be used instead of unit weight for shipping weight in certain situations. Calculate dimensional weight by multiplying package dimensions (length, width, height) and dividing by 139.
  • Fee category – Fee categories determine rates for certain fee types on a specific product.

Strategies to minimize fulfillment costs

There are several strategies that can help minimize fulfillment costs on e-commerce platforms like Amazon. Here are a few tips:

Amazon FBA Pricing and Fees: Storage Fees

Amazon FBA storage fees are calculated based on the amount of space your products occupy in Amazon’s fulfillment centers over time. These fees are typically charged on a monthly basis and are determined by two factors: 

 

  • The volume of your inventory is measured in cubic feet and is calculated based on the unit dimensions provided for each of your products in Seller Central. Amazon will measure the height, width, and length of each unit and multiply them together to determine the total volume.

 

  • The time your inventory remains in storage is measured in months. Amazon assesses monthly storage fees based on the average volume of inventory you have in their fulfillment centers throughout the month.

Practical Ways To Optimize Inventory Management For Reduced Storage Costs

To optimize Amazon FBA inventory management for reduced storage costs, consider implementing the following practical strategies:

  1. Conduct regular inventory audits: Perform routine checks to identify slow-moving or stagnant inventory. By identifying these items, you can make informed decisions about whether to liquidate, discount, or remove them from FBA storage to avoid long-term storage fees.

 

  1. Use Amazon’s Inventory Performance Index (IPI): Amazon’s IPI is a metric that evaluates your inventory management performance. Aim to maintain an IPI score of 450 or higher to avoid overstocking and excess storage fees. Focus on improving your IPI by regularly monitoring it and taking necessary actions, such as increasing sales or removing slow-moving inventory.

 

  1. Utilize Amazon’s FBA storage fee schedule: Familiarize yourself with Amazon’s FBA storage fee schedule, which provides information on the monthly storage fees based on the time of the year. By understanding the fee structure, you can plan your inventory levels accordingly, avoiding unnecessary storage costs during peak seasons.

 

  1. Implement just-in-time inventory management: Adopting a just-in-time inventory strategy can help minimize storage costs. By keeping inventory levels lean and replenishing stock as needed, you can reduce the amount of time products spend in FBA storage, thereby decreasing storage fees.

 

  1. Utilize FBA long-term storage fee avoidance strategies: Amazon charges additional fees for inventory stored in their fulfillment centers for an extended period. To avoid these long-term storage fees, consider tactics such as offering promotions, utilizing FBA removal orders for slow-moving items, or adjusting your inventory levels based on demand.

 

  1. Optimize packaging and product dimensions: Efficiently using packaging space can help maximize storage capacity. Consider using compact packaging materials and optimizing product dimensions to minimize wasted space and reduce storage costs.

 

  1. Leverage inventory forecasting tools: Utilize inventory forecasting tools to better predict demand and adjust inventory levels accordingly. By accurately estimating sales, you can avoid overstocking, reduce storage costs, and ensure products are available when customers need them.

Amazon FBA Pricing and Fees: Multi-channel Fulfillment Fees

Amazon MCF is a 3PL service that uses Amazon’s fulfillment network to handle orders from various e-commerce channels. When using Amazon FBA service to fulfill orders from non-Amazon sales channels, the pricing structure typically consists of the following components:

 

  1. Fulfillment Fees: These fees cover the costs associated with picking, packing, and shipping your products. They vary based on the size and weight of the item, as well as the fulfillment service level (Standard, Oversize, or Special Handling). 

You can find detailed information about these fees on Amazon’s FBA Pricing page.

 

  1. Storage Fees: If your inventory is stored in Amazon’s fulfillment centers, you may incur storage fees based on the volume of space your products occupy. These fees are typically charged monthly and are calculated based on the size and time of storage. 

It’s important to manage your inventory effectively to avoid excessive storage fees.

 

  1. Additional Services: Amazon offers additional services that may incur separate fees. These services include labeling, polybagging, removal orders, and more. The fees for these services depend on the specific requirements of your product and the service you choose.

Here’s another video from Steven where he demonstrates how to complete a Multi-channel Fulfillment Order.

Pros And Cons Of Using FBA For Multi-Channel Fulfillment

Benefits of using FBA for multi-channel fulfillment:

 

  1. Prime eligibility: By utilizing FBA, your products become eligible for Amazon Prime, which can attract more customers and potentially increase sales. Prime members can enjoy fast and free shipping, enhancing the overall customer experience.

 

  1. Fulfillment expertise: Amazon has a vast and efficient fulfillment network, allowing you to leverage their expertise in order fulfillment and logistics. This can save you time and resources in managing your own fulfillment operations.

 

  1. Order accuracy and customer service: FBA takes care of picking, packing, and shipping orders, ensuring accuracy and timely delivery. Amazon’s customer service team also handles customer inquiries and returns, easing the burden on your own customer support.

 

  1. Scalability and flexibility: FBA allows you to scale your business quickly by leveraging Amazon’s extensive fulfillment infrastructure. You can easily expand into new markets and handle increased order volumes without worrying about capacity constraints.

Drawbacks of using FBA for multi-channel fulfillment:

 

  1. Cost: While FBA provides convenience, it comes with fulfillment fees, storage fees, and other associated costs. These fees can vary depending on factors such as product size, weight, and storage duration. It’s crucial to carefully evaluate the cost implications and ensure that the benefits outweigh the expenses.

 

  1. Limited control: When using FBA for multi-channel fulfillment, you may have less control over certain aspects of the fulfillment process. This includes packaging, branding, and the overall customer experience. Additionally, FBA may have different inventory requirements and restrictions compared to your other sales channels.

 

  1. Inventory management challenges: Coordinating inventory across multiple sales channels can be complex. It’s essential to have robust inventory management systems and processes in place to ensure accurate stock levels and prevent overselling or stockouts.

 

  1. Channel diversification limitations: While FBA allows you to fulfill orders from multiple sales channels, it is primarily designed for Amazon orders. Some features and benefits, such as Prime eligibility, may only apply to Amazon sales. If you primarily sell on non-Amazon channels, it’s important to assess whether FBA aligns with your specific needs and requirements.

Amazon FBA Pricing and Fees: International FBA Fees

Additional costs and considerations when using FBA for international marketplaces

  1. Shipping and Import Costs: Selling internationally through FBA may involve additional shipping and import fees. These costs can vary based on factors such as the destination country, shipping method (air, sea, etc.), and the size and weight of the product. It’s important to consider these costs when pricing your products and assessing their profitability in international markets.

 

  1. Customs and Import Regulations: Each country has its own customs and import regulations, which may include specific requirements for labeling, product documentation, and compliance with local standards or certifications. It’s important to research and understand these regulations to ensure smooth customs clearance and avoid any potential delays or penalties.

 

  1. Local Tax Obligations: Selling internationally may also require you to comply with local tax obligations, such as VAT (Value Added Tax) or GST (Goods and Services Tax). The tax rates and requirements can vary by country, and it’s important to understand and factor in these costs when selling in international marketplaces.

 

  1. Currency Exchange and Conversion: When selling internationally, you may need to consider currency exchange and conversion fees when converting your sales proceeds from the local currency to your preferred currency. These fees can vary depending on the marketplace and the currency exchange provider used by Amazon.

 

  1. Customer Support and Communication: Selling internationally may require additional customer support and communication efforts to cater to customers in different time zones and languages. It’s important to have strategies in place to handle inquiries, provide localized support, and address any language or cultural barriers.

 

  1. Market Research and Localization: Each international marketplace has its own unique characteristics, competition, and customer preferences. Conducting thorough market research and tailoring your product listings, keywords, and marketing strategies to each marketplace can help maximize your success and sales potential.

 

In this video, Steven and My Amazon Guy’s VP of Marketing, Kevin Sanderson discuss about creating one’s international selling empire.