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Ever wanted a more in-depth break down of the FBA fees? In this article, we’re covering the ins and outs of FBA fees and giving you tips on how can pay less of them!
Read on for all of the details.
The value in the FBA fee structure
Before you complain too much about the FBA fees, remember that they are designed to foster entrepreneurship. Across America, there are thousands of people like yourself making a fantastic living on their Amazon sales.
If the FBA fees weren’t built on a flexible rate structure, it would not be so simple for your orders to be fulfilled on demand.
What are FBA fulfillment fees?
The FBA fulfillment fees are charged only when you make a sale.
These fees cover the following services:
- Pick and packing the orders
- Shipping and handling
- Customer service
- Product returns
Rather than charge for all of these services individually, Amazon FBA combines them into one fee applied to each and every order dependant on size. There are two categories, Standard-Size and Oversize.
For example, an item that is under 12 ounces and smaller than 15” by 12” by .75” is charged $2.41. You can find a table of the fees by size here.
Oversize items are charged a little differently. Rather than a flat fee, there is a starter fee and then an additional price per pound is added to cover discrepancies between items of the same size but varying weights.
What are the FBA monthly storage fees?
In addition to the fulfillment fees there are also monthly storage fees. Without these, sellers would not be as incentivized or motivated to turn over items quickly. Imagine how full Amazon’s warehouses would be if there were no storage fees and you only were charged for sales!
It’s no wonder that during the busy holiday season these monthly storage fees are even higher to encourage sellers to make sales and to keep the warehouses open for the influx of inventory.
As with fulfillment fees, monthly storage fees have two categories, Standard-Size and Oversize.
Within these categories, the fees change based on the month range, whether January-September or October-December.
These fees are not charged per item, but rather by cubic foot.
How to use the FBA fees when assessing new products
When sourcing new products, it’s important to not just think about the numbers. The days when you could succeed on Amazon by selling one-off, random small products are over. In today’s market, you need to create a branded line of products that serve a specific audience, so you can create fans and repeat buyers. Without that strategy in place, it’s nearly impossible to scale to 7 figures.
That said, conducting FBA fee calculations is still an important part of the process.
Using this rough formula, you should look for at least a 50% margin so you can still cover your own costs of doing business and marketing.
Cost of sale – (cost of product + fees)
This can be a helpful way to quickly guestimate results when vetting new potential products, but when you’re ready to consider sourcing that product and pulling the trigger, you should use an advanced fee calculator like the one that Amazon provides.
How to pay only the fees that you owe
As you can see, Amazon FBA fees are complex. Naturally, with so much inventory in the Amazon warehouses, problems can arise.
The most common occurrences of sellers accidentally overpaying Amazon for the FBA service are with customer returns. Specifically, when a customer returns something but the seller doesn’t get credited the item or the cash amount, or when a customer doesn’t return something and the seller is out the item and the fee.
That said, there are issues that can arise with just the fees themselves.
Misappropriated size fees can have a huge impact on your profits. Imagine if your small product was charged the large Standard-Size fees for a few months straight!? It could drastically eat into your profits. Unfortunately, this happens regularly, simply due to the massive volume of the Amazon marketplace. 99% of the time they get it right, but that 1% can really cost you.
To protect your account from overpaying FBA fees, we offer a custom service. We crawl your account with our proprietary software to search for issues and after a manual review, we submit any necessary claims for reimbursement.