Scale Insights Team
Sellers on Amazon looking to use Fulfillment by Amazon (FBA) to store, pack, and ship their products must be aware of the fees associated with this service. Amazon FBA fees are subject to change, and in 2024, there will be some updates to these fees. Knowing how to calculate FBA fees is crucial for sellers to determine their profit margins and make informed decisions about their business.
Amazon FBA fees are determined by multiple factors, including the type of product, the size and weight of the product, and the time of year. For example, there will be a Holiday Peak Fulfillment Fee for FBA orders from October 15, 2023, to January 14, 2024. In addition, starting April 1, 2024, off-peak monthly inventory storage fees will be reduced by $0.09 per cubic foot for standard-size products. Sellers need to stay up-to-date on these changes to ensure they are accurately calculating their FBA fees.
Calculating Amazon FBA fees can be a complex process, but it is essential for sellers to understand the costs associated with using this service. By factoring in the various fees and charges, sellers can determine their overall costs and make informed decisions about pricing their products. In the following sections, we will break down how to calculate Amazon FBA fees in 2024, including the various fees and charges that sellers need to be aware of.
Understanding Amazon FBA Fees
Overview of FBA Fees
Amazon Fulfillment by Amazon (FBA) is an e-commerce service that allows third-party sellers to store their products in Amazon's fulfillment centers. Amazon then takes care of the shipping, handling, and customer service for these products. In exchange for these services, Amazon charges sellers fees known as FBA fees.
FBA fees can be broken down into two categories: fulfillment fees and storage fees. Fulfillment fees are charged per unit sold and cover the cost of picking, packing, and shipping the product to the customer. Storage fees, on the other hand, are charged for the space a seller's inventory takes up in Amazon's fulfillment centers.
Fee Structures and Variables
FBA fees vary depending on several factors, including the size and weight of the product, the time of year, and the seller's chosen fulfillment method. For example, standard-size items that weigh less than 1 lb. and are shipped using Amazon's One-Day Delivery service will have different fees than oversized items that weigh over 150 lbs. and are shipped using Amazon's Heavy-Bulky Delivery service.
Sellers can use Amazon's FBA Fee Calculator to estimate their FBA fees. The calculator takes into account the product's size and weight, the seller's chosen fulfillment method, and other variables to provide an estimated cost per unit sold.
Recent Changes to FBA Fees
Amazon has made several changes to its FBA fee structure in recent years. For example, in 2024, Amazon implemented fee changes focused on improving fulfillment service and speed to customers while reducing collective cost. These changes included adjustments to storage fees, fulfillment fees, and referral fees.
It is important for sellers to stay up-to-date on these changes and understand how they will affect their business. By regularly reviewing their FBA fees and making adjustments as necessary, sellers can ensure that they are maximizing their profits and providing the best possible service to their customers.
Controversial Fee Update: The Low Inventory Fee
Amazon has added a new type of fee, the low inventory fee, which will charge you for not having enough inventory. It's a very complex fee and we'll link to this incredible article by James McConnell of Marketplace Prep.
Some of the key insights include:
- Amazon's low inventory fee, introduced in 2024, applies to standard-size products based on historical inventory levels and aims to encourage sellers to maintain higher inventory levels.
- The fee is calculated using 30-day and 90-day historical stock levels and does not apply retroactively or when no stock is present.
- Three tests determine the fee's application: new seller/ASIN exemption, 30-day historical days of supply rule, and a 90-day rule, providing flexibility.
- Challenges include contradictions with Amazon's IPI score, the impact on new and seasonal products, and the dilemma of balancing stocking levels to avoid both low and high inventory fees.
- The concept of "Optimal Inventory Theory" is introduced, suggesting a balance between avoiding low inventory fees and minimizing storage costs, with specific stocking strategies recommended for different scenarios.
Calculating FBA Fulfillment Fees
When selling on Amazon using FBA, it is essential to understand the various fees associated with the service. Amazon charges a per-unit fee to find, label, and ship items to customers. The fee is determined by the item's size, weight, and category.
There are several categories of products that Amazon considers when determining FBA fulfillment fees. These categories include standard-sized products, large bulky-sized products, apparel products, high return-rate products, and ships in product packaging (SIPP).
Standard-Sized Products
Standard-sized products are items that fit within the dimensions set by Amazon. These products are typically less than 18 inches on their longest side, 14 inches on their median side, and 8 inches on their shortest side. The FBA fulfillment fee for standard-sized products varies based on the product's weight and the destination of the shipment.
Large Bulky-Sized Products
Large bulky-sized products are items that exceed the dimensions set by Amazon for standard-sized products. These products require more space and handling, and as a result, have higher FBA fulfillment fees. The fees for large bulky-sized products are determined by the product's weight and the destination of the shipment.
Apparel Products
Apparel products are items that are classified as clothing, shoes, and accessories. The FBA fulfillment fees for apparel products are higher than other categories due to the additional handling required to prepare these products for shipping.
High Return-Rate Products
High return-rate products are items that have a higher than average return rate. Amazon charges higher FBA fulfillment fees for these products to cover the additional costs associated with processing returns and restocking inventory.
Ships in Product Packaging (SIPP)
Ships in product packaging (SIPP) is a program that allows sellers to ship their products to Amazon in their original packaging. The FBA fulfillment fees for SIPP products are lower than other categories due to the reduced handling required to prepare these products for shipping.
Overall, understanding FBA fulfillment fees is crucial to determining the profitability of selling on Amazon. By knowing the fees associated with each product category, sellers can make informed decisions about which products to sell and how to price them.
Inventory-Related Fees
Amazon charges several fees related to inventory management. Understanding these fees is crucial to managing inventory and optimizing profits. In this section, we will discuss the various inventory-related fees charged by Amazon FBA in 2024.
Monthly Storage Fees
Monthly storage fees are charged for all standard-size and oversized items stored in Amazon's fulfillment centers. Effective from April 1, 2024, monthly storage fees for standard-size items will be $0.75 per cubic foot from January to September and $2.40 per cubic foot for October to December. For oversized items, the monthly storage fee will be $0.48 per cubic foot from January to September and $1.20 per cubic foot for October to December.
Long-Term Storage Fees
Long-term storage fees are charged for items that have been stored in Amazon's fulfillment centers for more than 365 days. Effective from April 1, 2024, long-term storage fees will be $6.90 per cubic foot or $0.15 per unit, whichever is greater.
Aged Inventory Surcharge
Amazon will charge an aged inventory surcharge for items that have been stored in Amazon's fulfillment centers for more than 365 days. Effective from April 1, 2024, the aged inventory surcharge will be $0.15 per unit per month for items that have been stored in Amazon's fulfillment centers for more than 365 days.
Inventory Placement Service Fees
Inventory placement service fees are charged for items that require Amazon to split the shipment to multiple fulfillment centers. Effective from April 1, 2024, the inventory placement service fee will be $0.30 per unit.
Storage Utilization Surcharge
Amazon will charge a storage utilization surcharge for items that occupy space in Amazon's fulfillment centers for more than 365 days. Effective from April 1, 2024, the storage utilization surcharge will be $0.15 per cubic foot per month for items that have been stored in Amazon's fulfillment centers for more than 365 days.
In summary, Amazon FBA charges several inventory-related fees that sellers need to be aware of. These fees include monthly storage fees, long-term storage fees, aged inventory surcharge, inventory placement service fees, and storage utilization surcharge. Sellers should carefully manage their inventory to avoid unnecessary fees and optimize their profits.
Additional FBA Service Fees
In addition to the standard FBA fees, Amazon charges several additional service fees to sellers. These fees can vary depending on the type of product, the size of the product, and the fulfillment center where the product is stored. It is important for sellers to understand these fees to accurately calculate their total FBA costs.
Inbound Fees
Inbound fees are charged when a seller sends their products to Amazon's fulfillment centers. These fees cover the cost of receiving, handling, and storing the products. There are two types of inbound fees: the per-item fee and the per-pound fee. The per-item fee is charged for each individual unit received, while the per-pound fee is charged based on the weight of the shipment.
Removal Fees
Removal fees are charged when a seller requests to have their products returned or disposed of by Amazon. These fees cover the cost of locating, retrieving, and processing the products. Removal fees vary depending on the size and weight of the product, as well as the location of the fulfillment center.
Returns Processing Fee
The returns processing fee is charged when a customer returns a product to Amazon. This fee covers the cost of inspecting, testing, and repackaging the product for resale. The returns processing fee is based on the size and weight of the product.
FBA Prep Service Fees
FBA prep service fees are charged when a seller requests Amazon to prepare their products for shipment to customers. These fees cover the cost of labeling, packaging, and preparing the products for shipment. FBA prep service fees vary depending on the type of product and the amount of preparation required.
It is important for sellers to understand these additional FBA service fees to accurately calculate their total FBA costs. By factoring in these fees, sellers can make informed decisions about their pricing and inventory management strategies.
Strategies to Reduce FBA Costs
Sellers can reduce their Amazon FBA fees by implementing efficient inventory management, leveraging Amazon's Partnered Carrier Program, and participating in the FBA New Selection Program.
Efficient Inventory Management
Efficient inventory management is crucial to reducing FBA costs. Sellers should regularly review their inventory levels and adjust their pricing accordingly to avoid long-term storage fees. They should also optimize their inventory to minimize storage fees by reducing the size and weight of their products.
Sellers can also use Amazon's Inventory Placement Service (IPS) to reduce their shipping costs. IPS allows sellers to send their inventory to a single Amazon fulfillment center, reducing the number of shipments and associated fees.
Leveraging Amazon's Partnered Carrier Program
Amazon's Partnered Carrier Program provides discounted shipping rates for FBA sellers. Sellers can save up to 50% on their shipping costs by using Amazon's partnered carriers.
Sellers should compare shipping rates between Amazon's partnered carriers and traditional carriers to determine the most cost-effective option. They should also ensure that their products meet Amazon's shipping requirements to avoid additional fees.
Participating in the FBA New Selection Program
Sellers can reduce their FBA fees by participating in the FBA New Selection Program. This program offers reduced referral fees for new products that meet certain criteria, such as being highly rated or having a low return rate.
Sellers should regularly review their products to determine if they qualify for the FBA New Selection Program. They should also ensure that their products meet Amazon's quality standards to maintain their eligibility.
By implementing these strategies, sellers can reduce their FBA costs and increase their profitability.
Amazon's Referral Fees
One of the fees that Amazon charges sellers is the referral fee. It is a percentage of the total sale price of the item sold and varies by category. Referral fees are charged to sellers when an item is sold, and they are calculated based on the category of the item sold.
Determining Referral Fees by Category
To determine the referral fee for a particular item, sellers should consult Amazon's fee schedule. The fee schedule lists all the categories of items that Amazon sells, along with the corresponding referral fee percentage for each category.
For example, as of 2024, the referral fee for most categories is 15% of the total sale price, while some categories have a higher or lower referral fee percentage. For instance, the referral fee for jewelry is 20%, while the referral fee for automotive is 12%.
It is important for sellers to keep in mind that referral fees are charged on the total sale price, which includes the item price plus any shipping and handling charges. Therefore, it is crucial to price items accordingly to ensure that the referral fee does not eat into the seller's profit margin.
In conclusion, referral fees are an essential part of Amazon's selling fees, and it is important for sellers to understand how they are calculated and charged. By following Amazon's fee schedule and pricing items appropriately, sellers can ensure that they are not losing money on referral fees.
External Factors Influencing FBA Fees
When it comes to calculating FBA fees, there are several external factors that can influence the total cost. Understanding these factors is key to accurately predicting costs and optimizing your profits. In this section, we will explore some of the most important external factors that can affect FBA fees.
Dimensional Weight
One of the most important factors that can influence FBA fees is dimensional weight. This is a measure of the amount of space a package takes up in relation to its weight. In general, packages that are larger and bulkier will have a higher dimensional weight than smaller packages, even if they weigh the same amount. As a result, these larger packages may be subject to higher FBA fees.
Supply Chain Considerations
Another important factor that can influence FBA fees is supply chain considerations. This includes factors such as the origin and destination of the package, the mode of transportation used, and the handling requirements of the package. For example, packages that are shipped from overseas may be subject to additional fees and tariffs, while packages that require special handling (such as hazardous materials) may also be subject to additional fees.
Global Logistics and 3PL
Finally, global logistics and third-party logistics (3PL) can also have a significant impact on FBA fees. If you are working with a 3PL provider, you may be able to negotiate better rates for shipping and handling, which can help reduce your overall FBA fees. Additionally, if you are shipping packages internationally, you may need to work with a global logistics provider to ensure that your packages are properly handled and delivered on time.
In summary, there are several external factors that can influence FBA fees, including dimensional weight, supply chain considerations, and global logistics and 3PL. By understanding these factors and taking steps to optimize your shipping and handling processes, you can reduce your overall FBA fees and maximize your profits.
Planning for Seasonal and Promotional Periods
When it comes to selling on Amazon, it's important to plan for seasonal and promotional periods. This will help sellers to avoid any surprises and ensure that they are prepared for any changes in fees.
Non-Peak Monthly Storage Fees
During non-peak periods, Amazon charges a monthly storage fee for inventory that is stored in their fulfillment centers. This fee is based on the volume of space that the inventory takes up and the time of year. It's important for sellers to keep track of their inventory levels and plan accordingly to avoid unnecessary fees.
To help minimize these fees, sellers should consider implementing a just-in-time inventory strategy. This means that they only order inventory when it's needed, rather than keeping a large amount of inventory on hand. Additionally, sellers should regularly review their inventory levels and remove any slow-moving or outdated products.
Peak Season Fee Adjustments
During peak periods, such as the holiday season, Amazon may adjust their fees to account for the increased demand. This means that sellers may see an increase in their fulfillment fees, referral fees, and storage fees.
To prepare for these fee adjustments, sellers should consider increasing their inventory levels in the months leading up to the peak season. This will help to ensure that they have enough inventory to meet the increased demand and avoid any out-of-stock situations.
Overall, planning for seasonal and promotional periods is an important part of selling on Amazon. By staying informed about the fees and making adjustments to their inventory levels, sellers can ensure that they are prepared for any changes and maximize their profits.
Amazon's Additional Programs and Services
Amazon offers several additional programs and services to its FBA sellers. These programs and services can help sellers to improve their product visibility, increase sales, and reduce costs. In this section, we will discuss some of the most popular programs and services.
Amazon Vine Program
The Amazon Vine program is an invite-only program that helps sellers to get reviews for their new and pre-release products. Amazon Vine program allows sellers to send their products to a group of trusted reviewers who provide honest and unbiased reviews. According to ShipBob, the cost of the Amazon Vine program is included in the FBA fees, and there is no additional cost for sellers.
US FBA New Selection Program
The US FBA New Selection program is designed to help sellers to launch new products on Amazon. The program offers various benefits such as free storage, free removals, and free returns for qualifying new products. The program is available to sellers who have been registered on Amazon for at least six months and have an active FBA account. According to Jungle Scout, the cost of the US FBA New Selection program is included in the FBA fees, and there is no additional cost for sellers.
Amazon Warehousing & Distribution Services
Amazon Warehousing & Distribution Services is a program that allows sellers to store their products in Amazon's warehouses and use Amazon's distribution network to ship their products to customers. Amazon offers various services such as labeling, packaging, and shipping for an additional fee. According to Carbon6, the cost of Amazon Warehousing & Distribution Services is not included in the FBA fees, and sellers need to pay for these services separately.
Overall, Amazon's additional programs and services can help FBA sellers to improve their product visibility, increase sales, and reduce costs. Sellers should carefully evaluate each program and service to determine which ones are best suited for their business needs.
Fulfillment by Amazon vs. Other Fulfillment Options
Amazon FBA is not the only option for order fulfillment. There are other options available, such as third-party logistics (3PL) providers. It is important to compare the services and fees of different fulfillment options to determine which one is best for your business.
Comparing FBA with Third-Party Logistics (3PL) Providers
FBA is a popular choice for Amazon sellers because it offers a range of services, such as storage, packing, and shipping, and it integrates seamlessly with the Amazon platform. However, 3PL providers offer similar services and can be a good option for sellers who want more flexibility or who sell on multiple platforms.
When comparing FBA with 3PL providers, it is important to consider the following factors:
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Fees: FBA charges fees based on the size and weight of the product, as well as the time it spends in storage. 3PL providers may charge different fees, such as a flat rate per order or a percentage of the order value.
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Storage: FBA offers storage in Amazon's warehouses, which can be convenient for sellers who want to keep their inventory close to the customer. However, 3PL providers may offer more storage options, such as climate-controlled facilities or multiple locations.
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Shipping: FBA offers shipping through Amazon's network of carriers, which can be cost-effective for sellers. However, 3PL providers may offer more shipping options, such as expedited or international shipping.
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Integration: FBA integrates seamlessly with the Amazon platform, making it easy for sellers to manage their orders and inventory. 3PL providers may offer integrations with other platforms, such as Shopify or eBay.
Ultimately, the choice between FBA and 3PL providers depends on the needs of the seller. FBA may be a good option for sellers who want a simple, integrated solution, while 3PL providers may be a good option for sellers who want more flexibility or who sell on multiple platforms.
Navigating Amazon Seller Central
Amazon Seller Central is the platform where sellers can manage their Amazon account, view their orders, and manage their inventory. Amazon Seller Central is also where sellers can calculate their FBA fees.
Using the FBA Revenue Calculator
The FBA Revenue Calculator is a tool that is available to Amazon sellers through Seller Central. This tool allows sellers to estimate the fees that they will be charged for using the FBA service. To use the FBA Revenue Calculator, sellers need to input information about their product, such as the product category, the selling price, and the weight of the product.
Once the seller has input all the relevant information, the FBA Revenue Calculator will provide an estimate of the fees that the seller will be charged for using the FBA service. The fees that are calculated by the FBA Revenue Calculator include the referral fee, the fulfillment fee, and any other fees that may be applicable.
In addition to providing an estimate of the fees that the seller will be charged, the FBA Revenue Calculator also provides information about the seller's profit margin. This information can be helpful for sellers who are trying to determine the profitability of their products.
Overall, Amazon Seller Central is an essential tool for Amazon sellers who are looking to manage their account and calculate their FBA fees. By using the FBA Revenue Calculator, sellers can get an accurate estimate of the fees that they will be charged for using the FBA service, which can help them make informed decisions about their business.
Best Practices for Amazon Sellers
When it comes to selling on Amazon, there are certain best practices that can help sellers optimize their product listings and maintain healthy inventory levels. By following these practices, sellers can reduce their Amazon FBA fees and increase their overall value as a seller on the platform.
Optimizing Product Listings
One of the key ways to reduce Amazon FBA fees is by optimizing product listings. This involves ensuring that product titles, descriptions, and images are accurate, detailed, and visually appealing. By doing so, sellers can increase their chances of making a sale and reduce the likelihood of returns, which can incur additional fees.
Additionally, sellers should consider using Amazon's Enhanced Brand Content (EBC) feature to create more engaging product listings. EBC allows sellers to add high-quality images, videos, and text to their product pages, which can help to differentiate their products from competitors and increase sales.
Maintaining Healthy Inventory Levels
Another important factor to consider when selling on Amazon is maintaining healthy inventory levels. This involves monitoring inventory levels closely and ensuring that products are restocked in a timely manner to avoid running out of stock.
By maintaining healthy inventory levels, sellers can avoid the low-inventory-level fee, which is charged when inventory levels fall below a certain threshold. This fee can be quite substantial, so it's important for sellers to keep a close eye on their inventory levels to avoid it.
In addition to reducing fees, maintaining healthy inventory levels is also important for sellers who have sustainability goals. By avoiding overstocking and minimizing waste, sellers can reduce their environmental impact and contribute to a more sustainable future.
Overall, by following these best practices, Amazon sellers can reduce their FBA fees and increase their value as a seller on the platform. By optimizing product listings and maintaining healthy inventory levels, sellers can improve their chances of success on Amazon and achieve their business goals.
Frequently Asked Questions
How is FBA fee calculated?
FBA fees are calculated based on the size and weight of the product, including handling, packing, shipping, customer service, and returns. These fees vary depending on the item's dimensions and weight, and the fee structure is publicly available on Amazon's website.
Is FBA calculator free?
Yes, the FBA calculator is a free tool provided by Amazon that helps sellers estimate their fees and profitability for products they plan to sell through Fulfillment by Amazon (FBA).
How much are FBA fees usually?
FBA fees usually include a fulfillment fee that ranges from a few dollars for small items to more for larger, heavier products, and a monthly storage fee calculated per cubic foot. The exact amount can vary widely based on the product's size, weight, and storage duration.
What factors influence the calculation of Amazon FBA fees in 2024?
The calculation of Amazon FBA fees in 2024 is influenced by several factors such as the product size and weight, storage duration, and order handling fees. Amazon has updated its fee structure for 2024, which includes changes to the fulfillment fees, referral fees, and storage fees. Sellers can use the Amazon FBA fee calculator to estimate their fees based on their product category and dimensions.
What are the latest changes to Amazon FBA storage fees in 2024?
Amazon has made several changes to its FBA storage fees in 2024. The storage fees are based on the volume of space that a seller's inventory occupies in an Amazon fulfillment center. The fees are calculated on a monthly basis and vary based on the time of year, product size and weight, and the duration of storage. Sellers can use the FBA fee calculator to estimate their storage fees.
How can sellers estimate their monthly FBA costs in 2024?
Sellers can estimate their monthly FBA costs in 2024 by using the Amazon FBA fee calculator. The calculator takes into account various factors such as product size and weight, storage duration, and order handling fees. Sellers can input their product information into the calculator to get an estimate of their FBA costs.
Have there been any adjustments to the EU Amazon FBA fees for 2024?
Yes, there have been adjustments to the EU Amazon FBA fees for 2024. The fees are based on the product category, size and weight, and the duration of storage. The referral fees for EU sellers are the same as those for US sellers, but there are differences in the fulfillment fees and storage fees. EU sellers can use the Amazon FBA fee calculator to estimate their fees for 2024.
