Amazon FBA Fees Explained: Understanding Seller Fulfillment Costs
November 2, 2018
What do you want to learn?
FBA is many merchants’ top choice for fulfilling Amazon orders. This is because sellers can leverage Amazon fulfillment centers to store inventory and Amazon is responsible for the pick, pack, and ship steps of the multi channel fulfillment process.
While FBA can help Amazon sellers simplify their ecommerce shipping processes, pricing for this service can be complex, variable, and expensive.
In this article, we’ll break down the logistics costs that make up Amazon FBA. We’ll also share a free tool to help you compare the costs and complexities of fulfilling Amazon orders through FBA vs. outsourcing fulfillment to a third-party logistics (3PL) company for orders on your own website hosted by an ecommerce platform like Shopify.
Types of Amazon fulfillment methods
If you sell on Amazon, you have three fulfillment methods to choose from:
- Fulfilled by Amazon (FBA): Seller ships inventory to Amazon, and Amazon fulfills orders on the seller’s behalf.
- Fulfilled by Merchant (FBM): Seller ships their own products directly to the customer after receiving orders from Amazon.
- Seller-Fulfilled Prime (SFP): Seller ships their own products directly to the consumer according to Amazon Prime’s strict shipping standard, allowing them to display the Prime badge on listings they fulfill from their own facilities.
Each of these Amazon shipping options has its own pros, cons, and pricing structures.
Disclaimer: This article and the included calculator are meant to serve as an example of the fees Amazon FBA sellers may encounter. The fees discussed within for both FBA and ShipBob will vary depending on several factors, including a seller’s industry, products, seasonality, sales channels, order volume, and more. Rates and types of fees are subject to change.
What is FBA?
FBA is when a merchant ships its products directly to Amazon warehouses across the country for fulfillment. FBA products can sell quicker, but it’s the most expensive order fulfillment option out of the three method. Different fees such as long-term storage fees, warehousing fees, and fulfillment fees add up quickly for FBA sellers.
How much is Amazon FBA?
Amazon FBA costs are dynamic, varying based on seasonality, the type and size of the items being stored and shipped, and a variety of other factors. Here is an example of current Amazon FBA fees (as of 11/2/2018). We’ll break down what each of these fees means below.
Amazon FBA Fees table:
|Monthly inventory storage (per cubic foot)||From $0.48 to $2.40 depending on season and size of item|
|Long-term storage (per cubic foot) – 181 to 365 days||$3.45|
|Long-term storage – Over 365 days||$6.90 per cubic foot or $0.50 per unit (whichever is greater)|
|FBA fulfillment fees (per unit) – Standard size||From $2.41 to $4.71+ (cost depends on weight)|
|FBA fulfillment fees (per unit) – Oversize||From $8.13 to $137.32+ (cost depends on size classification)|
|Inventory removal (per unit) – Return||From $0.50 to $0.60 depending on item size|
|Inventory removal (per unit) – Disposal||From $0.15 to $0.30 depending on item size|
(Source: Amazon Seller Central)
What are common Amazon FBA fees?
Amazon charges all sellers 15% of the product’s selling price on each product sold, regardless of the ecommerce fulfillment method.
Outside of the seller fee, Amazon FBA charges two main types of fees: fulfillment fees and inventory storage fees.
The FBA fulfillment fee includes the entire picking, packing, and shipping process for each order shipped.
FBA inventory storage fees include storing your products in Amazon fulfillment centers.
Here is what exactly each fee means and why prices for each can vary so wildly.
FBA fulfillment fees
Unlike many fulfillment service pricing models that charge for picking, packing, and shipping as separate line items, FBA Amazon fulfillment fees include every step of the fulfillment process.
The fulfillment fee varies depending on the product size and shipping weight of the item being shipped. There are two main categories of item size: standard size and oversize.
Standard size products are items that weigh less than 20 pounds or have dimensions smaller than 18x14x8 inches.
Oversized shipping includes items that are larger or weigh more than what’s listed above.
Within those categories, there are several additional subcategories.
Fulfillment fees for standard size products can range from $2.41 for items under one pound to over $4.71 for items over two pounds, with an additional $0.38/pound over two pounds.
For oversize products (over 18x14x8 inches), fees start at $8.13 for small oversize products (over 70 pounds or dimensions greater than 60 inches on the longest side), with an additional $0.38/pound over the first two pounds.
On the other end of the spectrum, fulfillment fees for special oversize products (over 150 pounds or dimensions greater than 108 inches on the longest side) start at $137.32, with an additional $0.91/pound over the first 90 pounds.
FBA also tacks on an additional $0.40/item in fulfillment fees for apparel.
At the end of the day, your FBA fulfillment fees are going to depend majorly on what exactly you’re selling — there’s no one-size-fits-all fee here.
It’s also worth noting that while packaging is included in FBA fulfillment fees, Amazon will ship your products in Amazon-branded boxes. This means that Amazon’s branding is front and center, which can eclipse any brand experience you intend to create through your shipping. While this may not be a deal breaker, it’s worth keeping in mind.
Other FBA fees explained
Depending on your business needs, using FBA to fulfill Amazon orders may incur additional fees.
Product Return fees
For example, if your product is eligible for free returns through Amazon Prime, you will have to pay an additional fee for FBA returns. (Returns processing is covered in the fulfillment fee for products without free returns.)
Inventory removal fees
In addition, if you decide you no longer want to use FBA, it can be costly to remove your inventory from their fulfillment centers. If you choose to have Amazon remove and return your inventory to you, they’ll charge $0.50-$0.60 per item depending on the item size. For Amazon to dispose of your inventory for you, it’ll cost you $0.15 to $0.30 per item.
Amazon has very strict seller requirements, and they also use fees to penalize sellers for not following their rules (here is an article on avoiding mistakes when selling on amazon). For example, Amazon will charge a labeling fee to sellers who do not follow their strict barcode label specifications for FBA stock. An unplanned FBA prep fee is charged to sellers who have not prepped products in accordance with the stringent packaging and prep guidelines.
Package prep fees
Of course, you can always choose to have Amazon prep and package products for you — for an additional fee. Depending on your margins and order volume, this can either prevent hassle for your business or incur unnecessary additional costs.
Note: This is meant to serve as a high-level overview and is by no means comprehensive — there are several additional potential fees that accompany Amazon FBA. See their Seller Central documentation for more information.
Long-term storage fees
Inventory that has been in an Amazon fulfillment center for more than 365 days will be charged a monthly long-term storage fee of $6.90 per cubic foot or $0.15 per unit, whichever is greater. Long-term storage fees are calculated using an inventory snapshot on the 15th of each month. FBA calculate inventory age based on first in, first out.
How to calculate Amazon FBA seller fees
As mentioned above, all Amazon sellers must pay to sell on the marketplace. When you sell something on Amazon through the Professional plan, Amazon’s seller referral fees are 15% of the product’s selling price. For example, if your product sells for $100, Amazon would take a $15 cut of the sale, leaving you with $85 in revenue before other fees.
But as you now know, there’s more to Amazon FBA than selling fees.
Are you leaving money on the table or even losing money by selling and shipping via Amazon FBA?
Whether you’re launching a new product or are a veteran FBA seller, make sure you do the right research and calculations for each product you sell.
This includes taking into account all of the fees mentioned above, plus order revenue, production costs, platform costs, and more.
Because FBA fees are so variable, if you don’t stay on top of how much you’re paying Amazon, you may find that your profits are lower than expected, or even that you’re barely breaking even.
That’s why we built an Amazon FBA Cost Calculator — to show you how much you’re spending on Amazon FBA. Below is instructions on how to use it.
1. Enter your product and order details
Enter the following:
- Number of orders per month
- Average number of items per order
- Average sale price per item
- Average production cost per item
- Average item weight and dimensions
The weight and dimensions allow the calculator to compute your fulfillment and storage fees, while the cost, pricing, and order information factors into margins, profitability, and seller fees.
2. Discover your FBA costs
Once you enter the information above, you can view your monthly costs for Amazon FBA.
Steve Staffan, Founder and CEO of Brummell Co.
3. Review your monthly cost and profit breakdowns
Next, you’ll see a full breakdown of every monthly line item charged based on the order and product information you entered above. This breakdown may offer insight into where moving to an ecommerce platform and shipping through ShipBob can cut costs the most throughout the inventory storage and fulfillment process.
4. Request pricing from an FBA alternative
The calculator is strictly for illustrative purposes, but if the FBA fees are looking expensive, you might want to shop around and find better alternatives to FBA. For example, ShipBob is a 3PL that can increase sales on your ecommerce website offering affordable 2-day shipping.
ShipBob offers Fulfillment by Merchant (FBM) and if you utilize Amazon fulfillment today, we highly recommend diversifying your fulfillment options (e.g., use both FBA and FBM) to maximize sales. Learn why sellers have moved off of Amazon to ShipBob for FBM here.
If you like what you see and you’re interested in learning more about ShipBob as a fulfillment provider, you can request a free quote from ShipBob. Get familiar with the platform and services that can help your business save money on fulfillment.
Amazon FBA FAQs
If you’re still confused by the pricing above, you’re not alone. Here are some of the most commonly asked questions about Amazon FBA fees.
Is there a monthly fee for Amazon FBA?
The only FBA fee charged monthly is the inventory’s monthly storage fee. There is no additional monthly fee for using FBA.
How much is the Amazon seller fee?
All Amazon sellers must pay to sell on the marketplace. There are two plans for Amazon sellers to choose from based on monthly order volume: the Individual plan, at $0.99 per item sold, and the Professional plan, at $39.99 per month.
- Individual (selling fewer than 40 items per month):
- No monthly seller fee
- $0.99 fee for each item sold
- Variable post-sale fees depending on category
- Professional (selling over 40 items per month):
- Monthly subscription fee of $39.99
- Referral fee for each item sold (typically 15% of product’s selling price)
- Variable post-sales fees based on shipping details
How do I start an Amazon FBA business?
Before you choose Amazon as a sales channel and FBA as a fulfillment method, take a step back and look at your ecommerce strategy as a whole. What products will you sell? What brand experience do you want to create?
The FBA fulfillment model is not for everyone — while it can maintain healthy margins for some businesses, it may not make sense for others.
To get started, check out this Ecommerce Store Launch Checklist for a step-by-step guide to getting started selling online.
How does Amazon FBA work?
Sellers using FBA sell their products on Amazon’s marketplace and store their inventory in Amazon’s fulfillment centers. FBA sellers pay Amazon for inventory storage space.
When a customer orders your product through Amazon, Amazon takes a 15% cut of the product selling price.
The order is then picked, packed, and shipped to the customer by Amazon in an Amazon-branded box or poly mailer, and the seller is charged a predetermined fulfillment fee.
Want to avoid FBA fees?
Get in touch with ShipBob and learn how our technology, fulfillment services, and straightforward pricing can help your ecommerce business. Request a pricing quote below and speak with a fulfillment expert.