Amazon FBA Fees

Understanding the Costs of Selling on Amazon in 2024

In 2024, Amazon’s Fulfillment by Amazon (FBA) service continues to be a popular choice for merchants looking to leverage Amazon’s huge fulfillment network. This service simplifies the shipping process for sellers by handling storage, picking, packing, and shipping. However, the complexity and cost of this service can be significant. This guide aims to provide an in-depth look at the fees associated with FBA and explore how a third-party logistics provider, like 3PL Center can enhance efficiency and cost-effectiveness.

What is FBA?

FBA involves shipping your products to Amazon’s fulfillment centers across the country, where Amazon takes over the handling, packing, and shipping of products to customers. This method can lead to faster sales and delivery times with Prime eligibility. However, FBA can come at a higher cost compared to other fulfillment methods due to various fees like storage and fulfillment charges. These FBA fees can ultimately impact profitability. 

Types of Amazon Fulfillment Methods

Amazon offers three main fulfillment methods:

Fulfilled by Amazon (FBA): Inventory is stored and shipped by Amazon.

Fulfilled by Merchant (FBM):  Sellers handle the shipping of products directly to customers after receiving orders from Amazon. 

Seller-Fulfilled Prime (SFP): Sellers ship directly to consumers but must adhere to Amazon Prime’s shipping standards. This allows sellers to use the Prime shipping badge on products they ship themselves.

Universal Amazon Seller Fees

All sellers on Amazon, whether they opt for Fulfillment by Amazon (FBA) or Fulfillment by Merchant (FBM), need to pay certain fees to sell on the platform. These include:

Referral Fees

These are commission fees that Amazon charges for each item sold, usually a percentage of the sale price, typically up to 15%. Fortunately, these fees don’t need to be paid upfront. These fees will be taken out of your Amazon’s account after the sale is made.  In 2024, Amazon will reduce referral fees for certain apparel items, making it more cost-effective to sell lower-priced products.

Referral Fee Changes for 2024:

Amazon is lowering referral fees for apparel items priced under $20.

Items under $15: Fee reduced from 17% to 5%

Items between $15 and $20: Fee reduced from 17% to 10%

Here is the current list of Amazon referral fees:

Individual Seller Fees or Subscription Fees 

There are two main types of seller accounts on Amazon: individual and professional, each with its own fee structure.

Individual Seller Per-Item Fee: Sellers who opt for an individual account pay a $0.99 fee per item sold, instead of a monthly subscription. This fee is deducted from the sale proceeds and is not required to be paid upfront. Instead, it is subtracted from the revenue deposited into your Amazon account balance after a sale is completed.

Professional Seller Subscription Fee: Professional sellers, on the other hand, are not charged per item sold. Instead, they pay a monthly subscription fee of $39.99. This fee is also deducted from the seller’s Amazon account balance. In cases where there aren’t sufficient funds in the account, the fee is charged to the seller’s registered credit card.

Each fee type aligns with the different account models, providing options depending on the seller’s volume of sales and business model.

Refund Administration Fees

When a customer requests a refund for a product and Amazon processes it after you have received payment, a refund administration fee is charged. This fee is the lesser of $5.00 or 20% of the refunded amount. Similar to other fees, the refund administration fee is deducted from your Amazon account balance. If there are insufficient funds in your account, the fee is then charged to your linked credit card.

Exclusive Fees for FBA Sellers

FBA Fulfillment Fees

FBA sellers benefit from Amazon handling shipping, packaging, and storage as Amazon’s fulfillment team manages the picking, packing, and shipping of your products. but they pay specific fees for these services. The fees for these services are determined by the size and weight of your product.

2024 Changes to FBA Fulfillment Fees:

Effective February 5, 2024, Amazon rolled out new, detailed rate cards for standard-sized products and introduced tiers for large bulky and extra-large sizes. Further, starting April 15, 2024, the FBA fulfillment fees for standard-sized and large bulky-sized products will be reduced.

Under the new rate cards, fulfillment fees will be reduced for standard size which vary by dimension and weight. For example, a small item under 1 lb might cost $3.82, whereas a larger item up to 1 lb could be $4.75. Additional weight incurs extra charges. 

Oversize fulfillment fees begin at $9.73 for small oversized items and can go up to $196.95 for special oversized items, depending on weight and dimensions.

The changes in rates and size tiers, effective from February 5, 2024, along with the updated rates starting April 15, 2024, are illustrated in the charts below. These charts detail the previous and current FBA fees.

FBA Fulfillment Fees for Apparel:

FBA Fulfillment Fees for Hazardous Materials:

FBA Storage Fees

Storing your products in Amazon’s fulfillment centers incurs storage fees, which are essential for maintaining your inventory. These fees are categorized into monthly and long-term storage types. These monthly storage fees  vary depending on the time of the year and the size of the stored items. Starting in April 2024, these fees will decrease for standard-sized items during off-peak months.

2024 Changes to FBA Storage Fees:

Amazon has announced that starting April 1, 2024, the off-peak monthly inventory storage fees for standard-size products will decrease by $0.09 per cubic foot. This reduction will be reflected in the charges for May 2024, covering storage during April 2024. This means that storage fees for standard size products will cost $0.78 to $2.40 per cubic foot, varying with the season.

There will be no changes to the off-peak monthly storage fees for large bulky or extra-large products, nor to the peak monthly inventory storage fees for any product size categories. For oversized products, the storage fees range from $0.56 to $1.40 per cubic foot, more expensive during the holiday season (October to December). Charges are higher during the holiday season due to increased warehouse demand.

FBA Storage Utilization Surcharge

Amazon introduced a storage utilization surcharge to the monthly storage fee on April 1, 2023. This surcharge is calculated based on the storage utilization ratio, which measures the ratio of your average daily inventory volume (in cubic feet) to your average daily shipped volume (in cubic feet) over the preceding 13 weeks. The storage utilization ratio is determined on the last day of each month.

2024 Changes to the Storage Utilization Surcharge:

Starting April 1, 2024, Amazon will implement more detailed fee tiers for the storage utilization surcharge. Additionally, this surcharge will now apply to Professional sellers with a storage utilization ratio exceeding 22 weeks. Importantly, inventory that has been in storage for between 0 and 30 days will be exempt from this surcharge. These updates will be reflected starting with the charges for May 2024, which account for storage during April 2024.

FBA Aged Inventory Surcharge (also known as Long-term Storage Fees):

Amazon charges an aged inventory surcharge for products that remain in their fulfillment centers beyond certain time thresholds. This fee encourages sellers to keep their inventory fresh and moving.

Amazon performs inventory clean-ups on the 15th of each month, identifying products that have been in the fulfillment centers for 181 days or longer. If your items have been stored for 181 days or longer, Amazon will apply the aged inventory surcharge based on the duration the products have been stored.

As with monthly storage fees, the aged inventory surcharge is deducted from your Amazon seller account balance on the same date each month. If there are insufficient funds in your account, the charge will be applied to the credit card associated with your Amazon seller account.

2024 Changes to FBA Aged Inventory Surcharge:

Starting February 15, 2024, the surcharge for inventory stored between 271 to 365 days will see an increase. However, surcharges for inventory stored between 181 to 270 days and for inventory stored for 365 days or more will remain unchanged.

This fee is designed to encourage turnover of inventory to prevent long-term storage. It escalates from $0.50 per cubic foot for items stored between 181-270 days to $6.90 per cubic foot for items stored over a year.

Low-Level Inventory Fee

Starting April 1, 2024, Amazon will introduce a new low-level inventory fee targeting standard-sized products that maintain consistently low inventory compared to customer demand.

Amazon states that low inventory levels relative to unit sales can impede their ability to distribute products efficiently across their network, which in turn can slow down delivery speeds and increase shipping costs.

The low-inventory-level fee will be imposed only if a product’s inventory levels, based on historical demand (termed historical days of supply), fall below 28 days. This fee applies when both the long-term historical days of supply (over the last 90 days) and the short-term historical days of supply (over the last 30 days) are below this 28-day threshold. For instance, if a product’s short-term historical days of supply exceeds 28 days, but the long-term is below, the low-inventory-level fee will not be charged.

The historical days of supply will be calculated at the parent-product level. The low-inventory-level fee will then be added to the FBA fulfillment fee for all shipped units of products that meet the low inventory criteria. Below you can find the rate card outlining the specific fees for low inventory levels:

FBA Inbound Placement Service Fee

Starting March 1, 2024, Amazon will introduce an FBA inbound placement service fee. This new fee applies to both standard and large bulky-sized products and is designed to cover the costs associated with distributing inventory to fulfillment centers that are strategically located near customers.

This fee reflects Amazon’s efforts to enhance delivery efficiency by ensuring that inventory is positioned closer to potential buyers, thereby improving delivery times and potentially lowering transportation costs. The implementation of this fee will help Amazon continue to provide high levels of service responsiveness across its vast distribution network.

Fees and Costs for FBM Sellers Compared to FBA

FBM (Fulfillment by Merchant) sellers, unlike their FBA (Fulfillment by Amazon) counterparts, do not pay specific Amazon-handling fees but often encounter higher overall costs due to managing logistics independently.

FBM sellers are responsible for the entire logistics chain, including storage, picking, packing, and shipping of their products. They also handle customer service directly. These responsibilities introduce several cost components that FBA sellers do not face directly.

Example Cost Comparison:

Consider the scenario of selling a pair of wireless headphones for $50:

As an FBA seller, suppose you would pay a referral fee of $7.50 (typically 15% of the sale price) and FBA fees totaling $6.50 (this might include picking, packing, and shipping, as well as handling returns). The total Amazon fees would therefore be $14.

As an FBM seller, you handle the fulfillment process yourself. Let’s estimate shipping costs at $5 (based on weight and distance) and packaging costs at $2 (for a sturdy box and protective padding), resulting in direct fulfillment costs of $7. However, you also need to consider additional overhead such as labor for packing the orders and possibly monthly storage costs if you don’t sell through your inventory quickly. These additional costs could realistically add another $3 per item sold, bringing your total to at least $10.

Overall Cost Implications: In this scenario, the direct costs of FBM ($10) are already close to the total costs incurred under FBA ($14), and this is before any considerations of customer service and return handling, which can add further complexity and cost to FBM. While FBA involves higher upfront fees, it offers significant conveniences, potentially making it a more attractive option for sellers not wanting to manage logistics.

This example illustrates how different factors such as product size, fulfillment complexity, and overhead costs can influence the decision between FBA and FBM.

Despite the apparent simplicity of managing fulfillment in-house, FBA might be more cost-effective for sellers who are able to utilize Amazon’s streamlined logistics services effectively.

Miscellaneous Service Fees

Amazon imposes a few specific service fees that apply under certain circumstances, regardless of whether the seller is using Fulfillment by Amazon (FBA) or Fulfillment by Merchant (FBM). These fees are deducted from the sale proceeds, so there is no requirement for upfront payment.

Closing Fees

This fee pertains to media products such as books, DVDs, CDs, and Blu-Ray, with a flat rate of $1.80 per sale. It is specifically applicable to sellers who specialize in these types of products. Like referral fees, the closing fees are automatically deducted from the proceeds of the sale, meaning sellers do not need to pay these fees upfront.

High-Volume Listing Fee

Sellers with a large inventory on Amazon, particularly those with over 100,000 products listed, are subject to a high-volume listing fee. This fee is charged at a rate of $0.005 per eligible ASIN each month. The fee is automatically deducted from the seller’s Amazon account balance along with FBA storage fees. If the account balance is insufficient to cover the fee, it is then charged to the seller’s registered credit card.

Rental Book Service Fees

Sellers who rent out textbooks on Amazon must pay a service fee of $5.00 for each textbook rental transaction. Similar to other transaction-based fees on Amazon, the rental book service fee is deducted from the sale proceeds at the time of the transaction, ensuring that sellers do not have to pay these fees in advance.

These specific fees help Amazon maintain the efficiency of its platform by ensuring that sellers account for the costs associated with selling particular types of products or managing large volumes of listings.

Calculating Amazon FBA Seller Fees

Calculating Amazon FBA fees accurately is essential for sellers to manage their finances effectively and ensure profitability. Here’s a step-by-step breakdown of how to approach these calculations:

Gather Product Details:

Dimensions and Weight: Measure the size and weight of each product to determine which size tier (standard or oversized) the product falls into, affecting the fulfillment and storage fees.

Product Category: Some categories have different fee structures, especially for items like apparel or electronics.

Understand Fee Components:

Monthly Inventory Storage Fees: Calculate the cubic footage your inventory occupies and multiply by the relevant rate for the time of year (higher in Q4).

Fulfillment Fees: These fees are per unit and vary based on size, weight, and whether the item is standard or oversized. Use Amazon’s FBA calculator or detailed fee charts to get precise amounts.

Aged Inventory Fees: Track how long items have been in inventory to anticipate when higher tiered storage fees might kick in.

Seasonal Variations:

Recognize that fees for storage increase during the holiday season (October to December). Plan inventory levels accordingly to avoid high storage costs.

Calculate Total FBA Costs:

Per Item Calculation: For each item, add the fulfillment fee to the monthly storage fee multiplied by the months expected in inventory.

Total Inventory Calculation: Sum the costs for all different items to get a total cost of FBA fees.

This approach helps in understanding the impact of each fee on the overall cost structure.

Consider Additional Fees:

Removal and Disposal Fees: If you plan to remove or dispose of unsold stock, factor in these costs per unit.

Return Processing Fees: If selling items eligible for free returns, consider the costs associated with return processing.

Profit Margin Calculation:

Subtract the total FBA fees from your sales revenue to determine your profit margins.

Consider using software tools or spreadsheets to regularly update and monitor these calculations as prices and fees change.

Use Tools for Assistance:

Amazon’s Revenue Calculator: Provides estimates of FBA fees and potential profitability.

Spreadsheets: Maintain a detailed spreadsheet with all costs and revenue to see trends and adjust pricing or inventory levels as needed.

Review Regularly: Regularly review your fee calculations, especially when Amazon announces fee updates or during changes in your inventory levels or sales strategies.

By following these detailed steps, Amazon sellers can more accurately predict their costs related to FBA, enabling better financial planning and decision-making. This meticulous approach to calculating FBA seller fees ensures that sellers can maintain healthy profit margins while utilizing Amazon’s extensive fulfillment network.

Enhancing FBA and FBM Operations with 3PL Center

3PL Center supports Amazon sellers by optimizing both FBA processes and providing comprehensive logistics solutions for FBM and other shipping needs. Our services encompass a range of tools designed to enhance efficiency and reduce costs:

Advanced Warehouse Management System (WMS): Our WMS provides detailed inventory management, reporting, and rate shopping, allowing for meticulous control over your stock.

Optimization Tools: These tools are crucial for streamlining logistics across multiple warehouse locations throughout the U.S., ensuring that your products are stored and shipped efficiently.

Exclusive Discounted Carrier Rates: Additionally, we offer our customers access to exclusive discounted shipping rates from our negotiated bulk discounts with most major carriers. This unique advantage allows you to enjoy lower shipping costs, enhancing your overall profitability and competitive edge in the marketplace.

By integrating these services, 3PL Center helps Amazon sellers not only meet their fulfillment requirements but also significantly improve their operational workflows and cost structures.

Partner with 3PL Center

At 3PL Center, we understand the complexities involved in managing FBA fees and the broader challenges of Amazon selling. By leveraging our specialized FBA prep services, comprehensive FBM support, and exclusive discounted carrier rates, sellers can optimize their operations and cost structures. We encourage you to partner with us to enhance your efficiency and profitability in the ecommerce marketplace. For more information on how we can help you navigate the intricacies of Amazon FBA and FBM, visit our website or contact 3PL Center today. Together, we can streamline your processes and ensure your success in the competitive ecommerce marketplace.