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The Complete Guide to Amazon FBA Fees in 2019

image of a chart and the complete guide to amazon fba fees
Many brands choose FBA because it’s fast and easy. Amazon will store, pick, pack and ship your items from their own fulfillment centers. They’ll even handle the customer service and returns for you. As a new business or even a mature business, that is a task that is not only time-consuming but often costly. 
There’s also another great benefit of using the FBA model. FBA merchants (those who sell on Amazon using FBA) are automatically enrolled in Amazon Prime. This is a huge advantage because when customers shop on your page, they’ll see the “Prime” badge and Amazon will ship out your product with free two-day shipping. Considering that there are more than 100 million Prime users, it will only benefit your Amazon business to be enrolled in Amazon Prime.
As you know, Amazon is in the business to provide the best customer experience possible, and also to make money while doing so. Therefore, Merchants using FBA must pay Amazon’s FBA fees. By planning ahead and understanding these fees affect your margins, you can protect your profit while using FBA.

The different types of fBA fees

You will incur some of the following fees:
  • Fulfillment Fees
  • Referral Fees
  • Monthly Inventory Storage Fees
  • Long-Term Storage Fees
  • Removal Fees
  • Disposal Fees
The three unavoidable fees are fulfillment fees, monthly inventory storage fees, and referral fees. You will have to consider these three FBA fees as the cost of doing business on Amazon while using the FBA Model, just as if you were paying the electricity bill for your house. However, long-term storage fees, removal fees, and disposal fees can be minimized or avoided entirely if you plan ahead.

required fBA fees

Referral Fees

These fees are charged to every seller, whether they choose FBA or FBM. It is simply the cost of selling your product on Amazon using Seller Central (3P Model). Generally, your referral fee will be 15% of the sales price. With the exception of a few categories that have higher referral fees (like Jewelry). 

Fulfillment Fees

Fulfillment fees are the price you pay for the convenience and speed of allowing Amazon to pick, fill and ship your product. These fees are calculated based on the size of your item. 
Standard-size and oversize items meet the following criteria: 
standard fba fees
oversized item fba fees
Size is calculated based on a fully-packaged item. Anything larger than the standard sizes above is considered over-sized and is categorized with the four sizes (small, medium, large, special). These items incur fulfillment fees from $8.13 up to $137.32 per unit. If you need more information on these over-sized fees, check out the Seller Central help guide related to these fees.

Monthly Inventory Storage Fee

Amazon charges a monthly inventory storage fee to cover the cost of storing your item in their fulfillment center (FC). These fees are based on the daily average volume of space your inventory occupies. Which means more units in storage will result in higher fees, and conversely, fewer units result in lower fees. If your sales remain steady, you should be able to forecast this number from month to month.
Note: Storage fees are not equal all the time. From October to December, you’ll pay an additional $1.71 per cubic foot for standard-size items and an additional $0.72 per cubic foot for oversize items.
monthly fba fees

Avoidable fBA fees

Long-term Storage Fees

These fees will only go into effect if your product is stored in Amazon’s FC for more than 365 days. As of February 15, 2019, items that have been in a fulfillment center for 181 to 365 days are no longer subject to a long-term storage fee. This is great news for those sellers who had low sales volume. However, you should always keep a close eye on your inventory levels to avoid paying this fee. Ideally, you don’t want any products to be sitting in the FC for more than three to six months.
Note: you’ll pay an additional $6.90 per cubic foot for items that are in a fulfillment center for more than 365 days. The inventory cleanup date is the 15th of every month. The minimum long-term storage fee will be $0.15 per unit.
To be efficient with your inventory, you should be forecasting inventory every three to five months. If you do find yourself in danger of paying long-term storage fees, use promotions and sales to help sell product. 

Removal Fees

If your inventory still isn’t moving then you can removal fees to have the item shipped back to you. This fee will cover the cost of picking, packing and shipping your items. These are usually the reasons why you would choose to remove an item:

  • You’ve discovered a quality issue
  • The item has been updated with new branding or features
  • You no longer want to sell that item
  • You no longer want to have items fulfilled by Amazon
  • An item isn’t selling and the long-term storage fees are adding up
Plan ahead because a removal order usually takes about two weeks, but could also take as long as a month during the holiday season. However, if you forecast and plan ahead you shouldn’t have to worry about removal orders during Q4. The fee incurred for removal is $0.50 for standard items and $0.60 for oversize. The disposal of an item is $0.15 for standard-size and $0.30 for oversize. You can even choose to liquidate your item. 
removal fee descriptions for amazon fba

Disposal Fee

We recommend against paying a disposal fee and have Amazon destroy your product for you, at all costs. You are essentially giving up control of your brand and have no way of knowing what happens to your product after it is marked for disposal. 

Monitor Refunds and Returns

Always keep a close eye on your returns. If a customer returns the product, the customer will always get a refund. Ideally, the product is sent back to Amazon and returned to your inventory to be resold. Unfortunately, that doesn’t always happen. In that case, Amazon won’t notify you of a returned product and it is up to the seller to ensure you’re either credited for the sale, or the product has returned to your inventory. 
We recommend reconciling your returns monthly to ensure your returns are in fact return, or that Amazon reimburses you. You’ll catch any problems early on if you reconcile your refunds regularly. Unfortunately, no one is going to have your back on this, certainly not Amazon, so it is your responsibility to ensure you get the refunds you are owed.

Is FBA Worth It?

FBA has many positive. But it comes with costs, which we’ve laid out for you above. Each Amazon Seller has to decide for themselves whether FBA is worth it. Ultimately, you should have a good understanding of your COGS and margins and calculate the potential FBA fees you will end up paying per unit sold. 

  • Know the size and weight of your product and calculate fees for that product before you even decide to sell.
  • Consider your own costs including manufacturing, shipping to Amazon and FBA fees
  • Understand how promotions and advertising affect your bottom line.
Once you can account for all those fees and costs, you may find that you’ll need to adjust your sales price to maintain your profit margin. Do not wait until you start selling your product and realize that all these fees are eating away at your margins. Make sure you are proactive about understanding your costs before you begin to sell. 
If you need help figuring out FBA fees, the Amazon experts at Laser Sight Digital are here for you.
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