Amazon FBA Fees: The True Cost of Selling on Amazon in 2023

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Amazon FBA fees are what it costs you to sell your items via the Amazon platform. This includes your seller account fee, referral fees, fulfillment fees, storage costs, refund fees, and any other fees pertinent to your product.

While starting an Amazon business offers a fantastic opportunity for small sellers to reach a broad customer base, how do you know you can make a profit selling your chosen product via Amazon FBA?

Amazon FBA fees can be tricky to calculate and can make the difference between a profit or a loss on a sale. So there are several types of fees you should understand before you begin selling on the platform.

This article examines each fee type and explains why Amazon charges them. When you add them all together, you’ll find the true cost of selling products via Amazon FBA in 2023.

How Much Does Amazon Charge to Sell?

To illustrate how this all works, I will use the example of a humble Blue Ray DVD of Dirty Dancing (one of my favorite films of all time!).

In this scenario, let’s assume I’ve got the DVD from a bulk buy at a bankruptcy auction. The DVD is still shrinkwrapped, so the condition is new.

I’ve calculated that I paid $3.50 for the DVD, and I’m hoping to sell it for $12.99.

Amazon FBA transaction fees can be confusing at first glance. There are several types, and the costs layer up a bit like an onion, depending on;

• Your chosen type of seller account
• The product price
• The product weight
• The product size
• The Amazon product category

Before taking a deep-dive into the fees, I’ll quickly remind you of the difference between selling Amazon FBA and FBM.

The Difference Between FBM and FBA

FBA – Fulfilment by Amazon (Amazon FBA) – You list products for sale, then ship them to the Amazon warehouse where Amazon stores them for you. When you make a sale, Amazon packs up the order and ships it directly to the customer.

FBM – Fulfillment by Merchant (Amazon FBM)- You list your products for sale on the Amazon website, but store them yourself. When you sell a product, you have to package up the product and organize shipping to the customer.

The Seller Account Fee

To sell on Amazon, you first need to set up a seller account. There are two types of seller account – Individual and Professional.

An Individual account is ideal for small sellers just starting; there is no charge to register nor a monthly fee to pay. For an Individual seller account, Amazon charges you a per-item flat transaction fee of $0.99 for every sale you make.

Professional sellers pay a monthly subscription fee of $39.99. There is no per-item flat transaction fee of $0.99 when you sell an item with a Professional seller subscription.

A quick calculation tells you that if you manage to sell over 40 items per month, it makes sense to sign up for a professional account as you’ll save in the long run on that flat transaction fee.

If you choose an Individual seller account, you don’t need to pay for the flat transaction fee up-front. Amazon deducts fees from the income of the sale.

If you choose to sell via a Professional account, then the $39.99 monthly fee is also deducted as payment from your Amazon income. Though if you don’t have enough funds in your Amazon balance, Amazon will charge your credit card.

So in the example of our Dirty Dancing DVD, I have a professional seller account and make hundreds of sales per month, so I don’t need to factor in any Amazon account fees here.

The Product-Based Referral Fee

When you sell on Amazon, you are a third-party seller. Amazon allows you to sell on their platform, so the cost of leveraging all that free shopping traffic is that you have to pay a referral fee when you make a sale.

The referral fee is a bit like an affiliate fee. Amazon wants its reward for facilitating the sale.

Amazon charges referral fees as a percentage of the final product sale amount. The rate charged for a product depends on how Amazon categorizes the item.

Amazon publishes a list of referral fee charges for all of its product categories. The percentage charged can be as low as 8% and as high as 45%.

Here are a few examples;

• Clothing – 17%
• Unlocked cell phones – 8%
• Office products – 15%
• Amazon device accessories – 45%

You can see that Amazon is putting a high price on selling items related to its own-brand devices. You often find that products where Amazon makes a lot of profit themselves are categories where the referral fees are high.

Some categories, like luxury watches, have a split-level referral fee structure. If you sold a Rolex, Amazon would charge 16% of the first $1500, then 3% on the remainder.

Whatever products you choose to sell, Amazon has a minimum referral fee charge of $0.30. This is why you won’t find many products for sale on Amazon under $3-4; it cuts too much out of the profit margin.

You need to keep an eye on the referral fee charges. Amazon changes the amounts from time-to-time, and it can turn money-making products into loss-making ones. They usually give plenty of notice for any changes, though.

So, let’s catch up on our DVD. The referral fee percentage for DVDs is 15%, so Amazon will charge me a $2.25 referral fee when I sell the item.

The Fulfilment Fee

This fee relates to the most significant benefit of selling via Amazon FBA – product fulfillment. For small operators, packing and dispatch can take time away from sourcing or marketing products. So having this side of your business handled is a big plus.

Amazon will also deal with returns and any delivery issues too, so you don’t need to get bogged down in customer service issues.

All this convenience comes reasonably priced. You benefit from the reduced shipping charges that Amazon negotiates with logistics companies, and you can be confident that your item will be packaged well.

The cost for Amazon fulfillment is based on the size and weight of your item. Amazon makes a slightly higher charge for apparel items, as you can see in the Amazon FBA fees tables below.

These tables relate to small to medium-sized products.

For larger products – which Amazon calls over-sized – there is a separate fulfillment calculation.

In the case of our DVD, it counts as a small standard-size, so the Amazon fulfillment fee for me to pack and ship the item is $2.50.

The Storage Fee

For Amazon to meet the demand for the products they sell, they maintain massive warehouses across the countries they serve. Some of Amazon’s costs for rent, staffing, and maintenance of their warehouses are passed on to FBA sellers through storage fees.

Amazon charges two types of storage fees: the first is the monthly storage fee, and the second is a long-term storage fee.

Monthly Storage Fees

The FBA monthly storage fees are a little complex to calculate, as they are based on the daily average number of cubic feet you use in the warehouse. The charges also vary depending on the time of year. The amount charged increases in the fourth quarter of the year as competition for sales heat up in the run-up to Christmas. Amazon would also like the space for their products.

The Amazon FBA monthly storage fees are calculated a month in arrears, which means you get charged for the average number of cubic feet you use in the warehouse for January in February.

The charges are applied to your Amazon account balance around mid-month. If you don’t have sufficient funds in your account, then Amazon will charge your credit card.

Long-Term Storage Fees

Long-term storage fees are charges you want to avoid paying if you can. Amazon will only stand your products taking up space in Amazon warehouses for so long. Remember, Amazon makes money when items are selling, so if your products are slow-movers, then Amazon is missing out on potential referral fees.

Amazon would prefer the space your slow-moving product takes up went to alternative faster-selling products. So Amazon incentivizes you to either remove slow-moving stock from the warehouse or lower your selling price to encourage sales.

Amazon does this by adding an extra storage fee for items you have stored in the warehouse for over 365 days. These slow-moving items get an additional monthly storage fee of $6.90 per cubic foot or $0.15 per month, whichever is the higher amount. The longer your product stays in the warehouse, the higher the storage utilization surcharge.

Here’s an example.

If you have a lot of slow-moving stock taking up space in the Amazon warehouse, Amazon may lower the amount of new stock you can send in until you have sold or removed the slow-moving inventory.

Long-term storage fees can quickly add up too. You don’t want to get caught out with thousands of items going over the 365 days storage threshold.

So in the case of our DVD, I’m confident it will sell in a month or so, but to be safe, I’ll build in a cost of three months storage of about $0.09. Let’s add it to the running total and see how we’re doing.

The Refund Fee

It happens, and it can be frustrating. A customer buys an item from you, and for whatever reason, decides they don’t like it. So they send it back to Amazon for a refund.

This is problematic in several ways. First, Amazon will charge you for processing refunds. Second, if the item is in retail packing and the customer opened it first, then you now have a ‘used’ item you can’t sell again for the same price.

The refund fees Amazon charges are a little tricky to explain. It depends on whether the item in question is a media item or a non-media item. It also matters if you have an Individual seller account or a professional seller account.

If you have an Individual seller account, Amazon keeps the $0.99 flat-transaction fee. For professional sellers, Amazon hasn’t charged this, so you won’t need to worry about it.

For non-media related items, Amazon keeps 20% of the referral fee and fulfillment fee up to a maximum of $5.

Amazon does not charge you for refunds for media-related items (books, DVDs, music, and video). Any referral and fulfillment fees Amazon has charged you are refunded, and it’s as if the sale never took place.

Presuming the customers return the item in the same condition, it can go back in your warehouse storage and be sold again. The catch is, you won’t know the real condition unless you recall the item from the warehouse to inspect it, which has a cost.

Called a removal fee, Amazon charges you to have the item shipped back to you and bases it on product weight. If you don’t want to receive it back, you can choose to have it disposed of for the same price.

Whether you use this option to recall returned items to inspect them is a matter of choice. You may choose to dispose of the item and mark it off as a loss – the cost of doing business via Amazon FBA.

As I’m selling a DVD, I won’t need to worry about the refund fee, so let’s update the overall Amazon fee calculation.

Miscellaneous Fees

There are also a few miscellaneous Amazon seller fees that sometimes apply when you sell on Amazon.

There is an additional charge made for selling potentially hazardous products. Items that fit in this category are those containing lithium batteries, like laptops. Cleaning products that contain corrosive liquids can also fall under the dangerous goods category.

You can find further details on these Amazon FBA seller fees on the Amazon seller website for extra charges for dangerous goods.

One miscellaneous fee I need to consider is the ‘closing’ fee Amazon adds to media products. A flat charge of $1.80 is added to media products. Amazon says the following:

“Media categories are Books, DVDs, Music, Software & Computer/Video Games, Video, Video Game Consoles, and Video Game Accessories.”

I believe that Amazon adds this charge to reduce third-party sellers’ ability to compete in traditionally core Amazon product categories.

But, I want to sell my DVD, so let’s add the $1.80 final closing fee to our running total.

Can We Make Money Selling Our DVD FBA?

So with a target selling price of $12.99, I calculate that the Amazon FBA costs of selling my Dirty Dancing BlueRay DVD stand at $6.64, giving me a return of $6.35. Remember, I paid $3.50 at the bankruptcy sale, so my net profit for this item is $2.85.

I have not factored in here the price to ship the item into the Amazon warehouse. This will vary depending on your location, the carrier you use, and the number of products you are shipping at any one time.

As a rule of thumb, if you budgeted $0.20 per item for small products like DVDs, then you wouldn’t be too far off.

$2.65 doesn’t sound like a huge return on an item that costs $3.50 and sold for $12.99. But you need to think about Amazon as a low-margin high-volume business opportunity. You’ll face stiff pricing competition from other third-party sellers and Amazon themselves.

But there are also millions of shoppers that buy from the site daily. So if you choose to sell via Amazon FBA, look to make volume sales rather than fewer higher-margin sales.

Can I Start Amazon FBA for Free?

It’s crucial to first understand how much are Amazon FBA fees. While the idea of diving into the world of online selling is appealing, the reality is that Amazon FBA is not entirely free. However, you can minimize your initial costs to make the venture more affordable.

The Costs You Can’t Avoid:

1. Product Inventory: No matter what FBA products you decide to sell, there’s usually an upfront cost involved for acquiring your inventory.
2. Seller Account Fees: Amazon provides two kinds of seller accounts: Individual and Professional. An Individual account doesn’t have a monthly fee but charges a $0.99 fee for each item sold. On the other hand, a Professional account costs $39.99 per month but eliminates the per-item fee. This is a basic rundown of FBA fees all Amazon sellers should consider.
3. FBA Fulfillment Fee Changes: The fulfillment fees depend on the size and weight of your product. With Amazon FBA Small and Light changes, the fees might differ, so it’s essential to keep an eye on any updates from Amazon.
4. Referral Fees: These can range from as low as 8% to as high as 45%, depending on the category. These fees are included in the total Amazon FBA pricing.
5. Storage Fees: FBA also involves storage fees, especially if your inventory sits in Amazon’s warehouse for an extended period.

Ways to Save:

1. Utilize FBA Revenue Calculator: This tool helps you keep track of all the fees involved, allowing you to price your products appropriately for profitability.
2. Start Small: Thanks to FBA Small and Light changes, you can now opt for low-cost, fast-moving items to reduce your upfront investment and storage fees.
3. FBM as an Alternative: If you want to bypass some of the FBA fees, you can consider being an FBM seller. While FBM seller fees do exist, they offer a different fee structure that might suit your business model better.

The Amazon FBA business model involves various costs like FBA and FBM seller fees, and you can’t entirely escape the question of how much are Amazon FBA fees. However, smart use of tools like the FBA revenue calculator and keeping updated with FBA fulfillment fee changes can help you strategize better. Though it’s not free, it’s a worthy investment for those willing to do their homework and optimize their Amazon FBA pricing.

Amazon FBA Fees: A Starter Guide

Amazon FBA (Fulfillment by Amazon) can be a game-changer for your e-commerce business, but understanding the ins and outs of Amazon FBA fees is crucial. So, let’s break it down, using some of the most important keywords to give you a thorough understanding of what you’re getting into.

Understanding the Basics

• Fulfillment by Amazon Fees: These are the costs associated with storing your products in Amazon fulfillment centers and having Amazon handle the order fulfillment.
• Amazon Central Account: This is your command center for everything related to selling on Amazon, where you can manage inventory and view fees.
• Fulfilled by Amazon Cost: This includes fees like 2.40 per cubic foot for storage and other variable fees based on item price and shipping weight.
• MCF Fees: Multi-Channel Fulfillment (MCF) fees apply if Amazon is fulfilling orders from channels other than Amazon.
• Seller Fees Amazon: These are the fees you pay to Amazon for the privilege of using their marketplace. It includes selling fees and possibly a professional selling plan fee.

Tools and Resources

• Jungle Scout: A popular tool that many sellers use to estimate Amazon FBA fees and scout for profitable products.
• Amazon FBA Fees Explained: An educational resource, often found in the form of blog posts or videos, that breaks down the various fees.
• FBA Prep: This refers to the preparation requirements for your items before they can be sent to Amazon fulfillment centers.

Additional Costs

• Cheapest Way to Ship to Amazon FBA: Research to find the most cost-effective shipping method to send your inventory to Amazon.
• Amazon Additional Selling Fees: Be aware of extra costs like the aged inventory surcharge and categories Amazon deducts from your earnings.
• Estimated Fee: Found on your manage inventory page, this is an estimate of the fees you’ll incur for each item sold.
• Payment Processing: This is usually a small fee Amazon charges to handle the transaction on your behalf.

Fees Specifics

• Minimum Fee: This is the lowest fee you will be charged for using Amazon’s services.
• Amazon Private Seller Fees: These are applicable if you’re selling as an individual rather than a business. They’re often calculated as a percentage of the total sales price.
• Total Sales Price Greater: Keep an eye on your total sales price, as some fees can be a percentage of this figure, impacting your profitability.
• Fee Categories: These include storage fees, fee per unit, fulfillment method among others.
• Shipping Costs: These depend on the shipping weight and can be estimated using Amazon’s tools.
• Small and Light Program: This is a specific Amazon program that offers reduced fulfillment costs for small, lightweight items.
• Inventory Storage Overage Fee: Charged if your inventory exceeds Amazon’s storage limits.

Selling Plans

• Professional Selling Plan: A monthly subscription that offers more features and lower per-item fees.
• Selling Plan Fees: The costs associated with your chosen selling plan.
• Own Website: If you also sell items on your own website, consider using Amazon’s fulfillment services for those orders as well.

Product Types

• Sell Used Items on Amazon: Used items have a separate fee structure that is generally higher than new items.
• Amazon Business Type: Fees can vary depending on whether you’re an individual seller or a business.

Navigating the maze of Amazon fees can be a complex task, but knowing what each fee is and how it impacts your business is the first step to mastering the Amazon selling platform. Whether you’re a novice just starting or a seasoned seller looking for a refresher, this starter guide aims to provide a comprehensive understanding of the fees involved in Amazon FBA.

Amazon FBA Fees: Pros and Cons

Navigating the world of Amazon selling can be a lucrative but complex endeavor. One of the major considerations for sellers is the array of Amazon FBA fees involved. Let’s dive into the Pros and Cons to offer a balanced perspective.

Pros:

1. Ease of Fulfillment: Once your inventory is in Amazon’s hands, they handle packaging, shipping, and even customer service, freeing up your time.
2. Revenue Potential: The Amazon Marketplace has a vast customer base, which can significantly increase your revenue when you sell your products on Amazon.
3. FBA Fees Calculator: Amazon provides an FBA fees calculator, also known as the Amazon FBA fees calculator, allowing you to estimate your costs before making decisions.
4. E-commerce Credibility: Being on Amazon adds a layer of trust and credibility to your brand, which can be invaluable for e-commerce.
5. International Reach: Amazon FBA fee structure includes FBA export fees, allowing you to sell to an international market relatively easily.
6. Size Tier Flexibility: Amazon offers different size tiers for products, letting you optimize your fulfillment fee changes depending on the product dimensions.

Cons:

1. FBA Monthly Storage Fee: Amazon charges a monthly storage fee that varies based on the time of year and the amount of space your inventory takes up.
2. Commission: Amazon takes a cut per unit sold, and these commissions can add up.
3. FBA Returns Processing Fee: If a customer returns an item, you’ll incur an FBA returns processing fee, affecting your bottom line.
4. Complex Fee Structure: With terms like “fulfillment fee changes,” “size tier,” and “FBA export fees,” the fee structure can get complicated. You’ll often find yourself revisiting FBA fees explained on Amazon Seller Central.
5. Packaging Requirements: Amazon has specific packaging guidelines. Failing to meet them can result in additional FBA fees.
6. Revenue Calculator Limits: While the revenue calculator is handy, it may not always account for sudden FBA fee changes or seasonal adjustments.
7. Marketplace Competition: The Amazon Marketplace is crowded. High competition means you’ll have to keep a sharp eye on your FBA fees to maintain profitability.

Understanding the pros and cons related to Amazon FBA fees for sellers is crucial for anyone planning to or already selling on Amazon. It’s always a good idea to keep a tab on Amazon Seller Central for the most current information. With the right strategy, Amazon FBA can be a highly profitable channel for your e-commerce business, but be prepared to dive deep into the nitty-gritty of fees and fine print.

Amazon FBA Fees Summary

As you can see, Amazon FBA fees quickly stack up. So, is Amazon FBA cheaper? It depends and understanding them can sometimes be tricky, as different product categories attract additional percentage-based fees.

Fortunately, there is a free online tool that works out all the Amazon FBA costs for you. With the Amazon fee calculator, you simply enter a product identifier and add your cost price, and it calculates the rest for you.

To find out how to use it effectively, check out my post How to Use the Amazon FBA Calculator for Beginners.

In the meantime, I hope this article has helped you glean some understanding of what is quite a complex fee structure. Put simply, the goal is to buy as low as possible and sell as high as the market will allow!

Check out these Amazon podcasts to dig deeper into the ins and outs of selling stuff on Amazon.

Thanks for reading, all the best with your Amazon business!

Jo😁

Amazon FBA Fees – FAQ’s

How much are FBA fees usually?

When discussing Amazon’s FBA (Fulfillment by Amazon) fees, it’s essential to recognize there isn’t a one-size-fits-all amount. FBA fees are composed of two primary charges: Amazon fulfillment fees and monthly storage fees. The FBA fulfillment fee is determined by the size and weight of the item, and this fee covers the cost of picking, packing, and shipping.

Monthly inventory storage fees are charged for the space your items take up in Amazon’s fulfillment centers. Other potential costs include removal order fees, rental book service fees, and high volume listing fees. The best way to get an accurate estimate for your product is to use the Amazon fee calculator.

How much does it cost to start Amazon FBA?

Starting with Amazon FBA involves various costs, including buying initial inventory, FBA fulfillment fees, Amazon referral fees, monthly subscription fee (if you opt for a professional seller account), and shipping fees for sending your products to Amazon fulfillment centers. Additional fees may arise if you use services like the inventory placement service. It’s essential to calculate these initial costs to ensure profitability.

Is Amazon FBA really profitable?

Yes, Amazon FBA can be profitable for many sellers, given the value of having Amazon handle storage, fulfillment, and customer inquiries and service. However, it’s essential to consider factors like FBA storage fees, applicable referral fee percentage, and other Amazon fees. The key is to find products with a good margin, manage inventory to avoid prolonged inventory storage fees, and stay updated with any changes in the fee structure.

Is selling FBA on Amazon worth it?

Many sellers find value in the Amazon FBA program because it allows them to tap into Amazon’s vast customer base while offloading fulfillment logistics. However, it’s vital to weigh the FBA fulfillment costs, monthly fees, and other additional fees against the convenience of using the service and the potential sales uplift from being Prime-eligible.

How many Amazon FBA sellers fail?

It’s difficult to pinpoint an exact number, but a portion of the total number of Amazon FBA sellers does fail. This can result from high competition, lack of market research, not understanding the full spectrum of FBA fees Amazon charges, or unexpected issues like product returns and changes in consumer demand.

Is Amazon FBA a side hustle?

For many, Amazon FBA starts as a side hustle. With the convenience of FBA handling storage and fulfillment, sellers can manage their business part-time. However, as sales grow and complexities increase, it may require more time and dedication to manage.

What is the negative side of Amazon FBA?

While FBA offers many benefits, there are downsides. Sellers have less control over their inventory in Amazon’s fulfillment centers. FBA storage fees can accumulate if products don’t sell quickly. There might also be additional fees, like removal order fees or long-term storage fees, if inventory remains unsold. Lastly, FBA sellers must adhere to Amazon’s strict guidelines, which may result in account suspension if not followed.

How much does the average Amazon FBA owner make?

Earnings can vary widely based on the niche, product selection, and business strategy. While some sellers make a few hundred dollars a month, others generate thousands or more. It’s important to factor in all costs, including FBA fees, shipping cost, and the total sales price of the product, to calculate net profit.

How often does FBA pay out?

Amazon typically pays out FBA sellers every two weeks. However, Amazon deducts all applicable fees, such as the FBA fulfillment fee, referral fees, and closing fees, from the total sales price before the payout.

Who pays Amazon FBA fees?

The seller is responsible for paying all Amazon FBA fees. These fees are deducted directly from the seller’s sales proceeds before Amazon transfers the balance.

Does Amazon FBA charge you for shipping?

When a customer purchases a product, the FBA fulfillment fees cover the Amazon FBA shipping costs. However, sellers are responsible for the shipping fees when sending their FBA inventory to Amazon’s fulfillment centers. Amazon does offer discounted FBA rates with partnered carriers, which can help reduce these costs.

How much do Amazon sellers make a month?

Monthly earnings for Amazon sellers can vary dramatically based on product type, price point, competition, and other factors. Some sellers might make a few hundred dollars, while others can generate thousands or even more. It’s essential to use tools like the Amazon FBA calculator to understand all costs, from FBA storage fees to referral percentages, to gauge potential profits accurately.