Amazon FBA Fees Explained: Merchant’s fees and tariffs
May 17, 2023November 3rd, 2023
On this page
Some FBA fees can significantly affect the pricing and competitiveness of those who trade on Amazon. Only if the trader has a complete overview of the possible costs, the margins can be calculated and the prices for the items can be set. Therefore, those who want to trade on Amazon should know them in detail. Moreover, this helps the merchant to decide whether the start-up capital for trading on Amazon is sufficient at all.
Granted, you can't say that Amazon FBA costs that much and that's why a merchant should have that much startup capital. There are always different factors that affect the cost. Therefore, prices are basically very individual. Nevertheless, there are definitely some fixed costs that are always incurred.
Assuming you are considering working with Amazon FBA and want to learn about FBA rates, this little article is for you. We will describe what types of costs FBA sellers face so you can plan accordingly to build an excellent Amazon business.
1. The basis for estimating Amazon FBA fees
Of course, the numerous FBA benefits are not free. The Amazon FBA fees are based on a few key components:
Weight of the goods
Measurements of the goods
Type and classification of the goods
2. What kinds of FBA fees could occur?
Amazon charges 2 main types of fees for FBA: fulfillment fees and storage fees.
The first one covers the cost from pickup to delivery. In other words, it covers the cost of the entire fulfillment process. The second fee is charged for storing the items in Amazon's fulfillment facilities.
This rate is based on the size and weight of the goods, as Amazon calculates the transportation cost taking into account the weight of the dimensions.
All goods are divided into 4 main groups according to size:
Small and Light: Goods that have a low price and a rather small size can be traded through Amazon FBA's Small & Light program. This is especially convenient as this plan includes lower handling fees and free delivery for Prime customers.
Standard: includes goods in small and large standard sizes
Oversize: includes goods that are bulkier or heavier than standard goods.
Special oversize: includes heavy and massive goods
But that's not all, because under each size category there are other subcategories.
It should be noted that the seller must pay differently for the handling of dangerous goods. These goods, also called dangerous goods, must be stored and managed in a special way.
2.2. FBA Monthly storage fees
Amazon charges a storage fee once a month to merchants who store their goods directly with Amazon. These payments are calculated on the 7th through 15th of each following month. They are based on the dimensions of the goods and the time of year, and are calculated per cubic foot.
Most often, storage costs skyrocket between October and December, as fulfillment facilities around the globe are at full capacity during this time due to peak selling season.
2.3. FBA Long-term storage fees
For goods that remain in stock for a long period of time and are not purchased, the merchant should pay extra. Amazon FBA recently started charging this fee differently. Previously, merchants had to pay extra only for goods that remained unsold for more than 365 days. Now, this fee will gradually increase for goods that remain unsold between 271 and 365 days. Amazon estimates these fees on the 15th of each month.
2.4. FBA Referral fees
Merchants must make payments for each item traded through FBA. To be exact - on the full price, the buyer pays for each commodity. These fees vary depending on the categorization of the goods. However, in general, they range from 6% to 45% of the retail price of the goods.
2.5. FBA Returns fees
The merchant should make further payments for FBA returns if the item qualifies for free returns under the Prime program. In other words, the merchant pays in cases where the customer receives free returns. The reassuring news is that the management of the returns themselves is fully covered by the fulfillment fee for items without free returns.
2.6. Removal fees
If a merchant no longer wants to trade with FBA, they will have to pay for the removal of the goods from Amazon facilities. The calculation of this fee depends on the dimensions and location of the goods.
2.7. Penalty fees
Amazon also charges fees to penalize sellers who do not comply with its very strict rules. For example, if the barcode on a package does not meet certain specifications, a business owner must pay a labeling fee. Or if a good is not packaged according to its strict packaging and preparation rules, an involuntary Amazon FBA prep fee will be imposed.
2.8. FBA Fees for trading plan
Every month, merchants must compensate Amazon for the ability to sell goods on the platform. Currently, Amazon offers 2 sales programs: individual and professional. Under the individual program, the merchant must make certain payments for each individual item sold. The professional program, on the other hand, charges a monthly fee. For sellers who sell less than 35 items per month and are not sure which market they want to enter, the individual program is a suitable option. The professional program is an investment for those who sell more and need promotion from Amazon.
2.9. Preparation fees
A good strategy to ensure that goods are properly prepared for delivery is to assist Amazon in the preparation process. This is helpful in averting spontaneous unwanted penalties from Amazon. Amazon prepares qualified items for a per-unit fee.
3. How Amazon FBA fees are estimated?
Whether you are a newcomer to Amazon or already an experienced FBA merchant, you should perform the right analysis and calculations for the goods you trade. In addition to the prices we've already talked about, you should also consider the turnover and cost of goods sold.
You now have gotten the majority of the Amazon FBA fees explained. We hope that this little summary of the expenses that might be incurred in connection with the FBA, might help you in calculation of prices and in building a competitive enterprise.
Get in contact with Fulfillment-Box
Our managers will answer any questions you may have