Amazon FBA Costs And Pitfalls You Should Know About
Okay, so you’re thinking about giving Amazon FBA a go? It sounds like a decent way of turning a profit online without having to run a fully-fledged business.
Before you go rushing into any business decision you need to make sure you understand the costs of doing business on Amazon to ensure you are correctly pricing your products and making profits and not losses.
In this article, we will take a look at issues such as the cost of Amazon FBA, how to calculate Amazon FBA fees – and we will also take a look at ways how you can avoid painful long-term storage fees so that the benefits of selling on Amazon FBA outweigh the costs.
Overview Of The Different Types Of Amazon Fees (What are Amazon FBA Fees?)
There are different fees involved and different guidelines for each country. The first fees you need to be aware of are the monthly seller account fees charged by Amazon.
When you first start to sell on Amazon, you have to make a choice between a Basic account and a Pro seller account.
The Basic account is totally free and doesn’t cost anything per month to renew. However, in reality, it’s not all free: For each item sold, you’ll need to pay Amazon £0.75 (plus VAT) charge every time you sell a product on Amazon.
The Pro seller account costs £25 + VAT ($39.99 in the US) to renew each month. As part of this deal, you don’t have to pay anything extra each time you sell an item.
This means if you are selling more than 34 products a month you should look at signing up for a professional account as 34 * £0.75+VAT is greater than the monthly Pro seller account charged by Amazon.
Amazon Monthly Storage Fees and Long Term Storage Fees
In addition, Amazon typically charge two types of storage fees. The first storage fee is a monthly storage free for storing your products held in their fulfilment centre.
Monthly storage fees are based on the daily average volume (measured in cubic feet) for space your inventory occupies in Amazon fulfilment centres.
The volume measurement is based on unit size when properly packaged and ready to ship in accordance with FBA Policies and Requirements.
The amount you pay in monthly storage fees differs according to the average daily volume of space that your inventory takes up in an Amazon fulfilment centre. Amazon base the volume measurement on unit size after an item has been properly packaged and is ready to be shipped.
Usually, you will be charged for your monthly inventory storage fees between the 7th and 15th of each month.
Amazon.Co.Uk. Monthly Storage Fees
Presently, if you’re an Amazon.co.uk FBA seller, you’ll be charged £0.48 per cubic foot between the months of January and December, and £0.68 between the busier periods of October and December.
To find out about the latest Amazon.co.uk & Euro monthly storage fees visit login to your seller central and visit the current link here.
Amazon.com Monthly Storage Fees
Alternatively, if you’re an Amazon.com FBA seller, you’ll be charged as much as $0.64 per cubic foot between the months of January and December, and $2.35 between the more hectic periods of October and December.
To find out about the latest Amazon.com monthly storage fees visit Amazon here.
The second type of storage fee that Amazon may charge you is long term storage fees in addition to monthly storage charges.
Long Term Inventory Storage Fees
Long Term Storage Fees apply only to units that are kept in an Amazon fulfilment centre for over six months. For .com seller’s, any unit that has been in an Amazon fulfilment centre for between six and twelve months will incur a charge of $11.25 per cubic foot.
Any unit that has been kept in an Amazon fulfilment centre for over twelve months will incur a charge of $22.50 per cubic foot.
In the UK, the prices are a lot higher. If your unit has been kept in an Amazon fulfilment centre for over twelve months, you will be liable to pay £882.50 per cubic foot.
How To Avoid Long Term Storage Fees
The easiest way to avoid long term storage fees is to only purchase small test order amounts when first buying an item in order to make sure that they will sell before going all in and placing large shipments.
If you do intend to send large shipments into Amazon, because Amazon calculates their fees on February 15 and August 15 each year, there is a small window of opportunity for you to game the system, so to speak.
If you wait until just after February 15 before sending in items that will possibly be in holding for over six months, you could escape being charged.
What should happen is that, when Amazon calculates their long-term storage fees in August, you will only be charged for items that were placed in storage before February 15.
Understanding Amazon Fulfilment Fees
The next type of fee you need to worry about are Amazon fulfillment fees.
Fulfillment fees are the cost of fulfilling your order and are determined according to the weight and dimensions of a packaged item.
The Amazon FBA Calculator
How much does Amazon FBA cost exactly? A great way to work out how much you will be charged when you use the Amazon FBA service or the cost of fulfillment by Amazon is to use the Amazon FBA calculator.
This tool also comes with a comparison feature which allows for you to crunch your numbers and compare both FBM (Fulfilment by Merchant) vs FBA, fees to see which is a more cost effective option for your business.
How To Calculate Amazon FBA Fees Using The Amazon FBA Calculator
Using the calculator is simple enough to get the hang of. First, you need to locate the Amazon Listing of the product you intend to sell.
If you are launching a product for the first time and you are still in the product research stage, my advice would be to compare a product of similar size and weight.
You can do this by scrolling down the page until you find the Amazon Product ASIN (ASIN is the Amazon Standard Identification Number) on the Amazon product listing. This looks like the image below:
Next, you need to choose the appropriate Amazon platform you wish to sell on in order to correctly calculate the costs.
Naturally, the exact cost will depend on where you are based. Below are links for the Amazon FBA Calculator for some of the major countries:
Next, paste in the ASIN number into the calculator and hit search
Next, enter a price you want/hope to sell your product for and hit calculate.
As you can see below Amazon will now tell you the different costs associated with selling a product through Amazon FBA versus doing self-fulfillment or Merchant Fulfilled. For self-fulfillers, you need to enter your average prep and shipping costs, too.
Overview Of The Major Amazon Fulfilment Calculator Cost Line Items
➤ Amazon Referral Fee – Each time you sell an item, Amazon takes home a 15% commission. It’s only fair; Amazon is after all the biggest online retailer who’s letting you trade on their marketplace. In the above example, this is £1.50.
➤ Fulfilment Fee is comprised of the Monthly Fee for storing a unit of product in an Amazon fulfilment centre. Calculated based on the volume of the product in cubic feet.
In this example, we can see what the £4.48 fulfilment fee breakdown is by clicking on the question mark.
£4.18 for Amazon fulfilling the product and the 30p Monthly Storage fee, Amazon charges you for letting you store your goods in their warehouses.
Cost of Product -This is where you can input the cost of acquiring the product from your supplier, or the cost required to manufacture/produce a single unit.
Finally, you can see that the Amazon calculator spits out the profit of the product after all fees based on the numbers you have inputted.
FBA is super popular among those who want to run an online business because it makes it so damn easy to start selling!
Before you dive in it’s important that you work out the cost of Amazon FBA to see if the benefits actually do outweigh the costs. Otherwise, if you can’t answer the question: How much does amazon fba cost? You risk a profitable opportunity quickly turning into a loss making opportunity where you will end up paying consumers to buy your products.
If you want to know more about selling on Amazon then feel free to subscribe to our free Amazon Email Arbitrage Course which teaches you how to start your own on Amazon Arbitrage business.
Now if you have learnt from this article and want to keep up to date with more money-making tips, then do not forget to join our mailing list and we’ll even give you a complimentary enrollment into my Four Day Fast Starter Mini Course where you’ll learn the following:
Four Day Email Course
Day 1 – The Amazon money making system;
Day 2 – What to buy;
Day 3 – Where to buy; and
Day 4 – Scaling & Growing
Fast Starter Training Videos
Video 1 – How to make money selling on Amazon;
Video 2 – How to register your seller account;
Video 3 – How to list inventory on Seller Central; and
Video 4 – How to prepare Amazon inventory shipments