Entrepreneurs all over the world are taking advantage of Amazon’s Fulfillment by Amazon (FBA) program. And why not?! When you’re an FBA seller, a lot of the work is done for you. This means you can ship your product directly to Amazon’s warehouse, and they will pick, pack and ship your product when an order comes in. It also makes a seller’s product(s) eligible for Prime shipping.
However, as with any decision, choosing to use FBA has its pros and cons. And the fees Amazon collects for doing this work for you is definitely a con. Being an FBA seller isn’t inexpensive, and its fee structure can be confusing. But I’m about to break those fees down for you. I promise; they’re not as bad as many people think. In fact, Amazon just restructured its FBA fees. Storage fee changes took effect on February 15th, 2019, while the fulfillment and referral fee changes took effect four days later, on February 19th, 2019. Some of these changes benefit sellers, so let’s start from the beginning.
Is there a monthly cost to be an Amazon FBA seller?
When it comes to selling on Amazon, there are two types of seller accounts to choose from. There is an individual seller account, and a professional seller account. As an individual seller, you would have to pay a $1.00 fee for every product you sold. A professional seller, on the other hand, pays $39.99 each month. They don’t have to pay a fee for each sale they make.
This may seem drastically different at first glance, but the difference really depends on how much you plan to sell in a month. If you plan to sell more than 40 units per month, you save money by choosing the professional seller account. Think of it this way—you pay a flat fee of $39.99, regardless of your sales numbers. As a professional seller, if you sell 1000 units in one month, you pay $39.99. But, if you’re an individual seller, you would have to pay Amazon $1000 for those same, one thousand units.
What other types of fees does Amazon have?
There are many different types of fees for sellers. Here is the breakdown:
- Referral fees. After you sell a product on Amazon, you have to pay a referral fee. Usually this is a percentage of the price for which the product was sold. The percentage varies from category to category, but it’s often below 15%. And as Jungle Scout reported referral fees recently changed; happy news for some sellers, as fees were lowered in certain categories.
- Variable closing fees. These are flat fees applied to each unit sold in a media category. It’s on top of the referral fee. Categories with variable closing fees include books, DVDs, and other forms of media.
- Seller fees. These are the fees I mentioned earlier. Either you pay as an individual seller ($1.00 per unit), or you pay a monthly subscription fee of $39.99 under the professional seller plan.
- Storage fees. When you store your inventory in one of Amazon’s warehouses, there is a fee for the storage space. These fees vary based on the size and weight of the product. They also vary based on the length of time the products are stored (long-term storage fees).
Fulfillment and Storage Fees
Here’s the deal: Amazon is going to charge you to keep all of your inventory in their warehouse. And they’re also going to charge you to pack your product and ship it out on your behalf. But, considering they’re doing most of the work (like dealing with product returns and refunds), the fees are understandable.
Here’s a very simple chart, explaining the Fulfillment and Storage fees.
Amazon’s Fulfillment Fees
|Standard Size||Price per unit||Oversize||Price per unit|
|Small (1 lb. or less)||$2.41||Small Oversize||$8.13 +$0.38/lb above 2 lbs.|
|Large (1 lb. or less)||$3.19||Medium Oversize||$9.44 +$0.38/lb above 2 lbs.|
|Large (1lb. to 2 lb.)||$4.71||Large Oversize||$73.18 +$0.79/lb above 90 lbs.|
|Large (over 2 lbs.)||$4.71 +$0.38/lb above 2 lbs.||Special Oversize||$137.32 +$0.91/lb above 90 lbs.|
*Add $0.40/unit for clothing items
Amazon Monthly Storage Fees
|Month||Standard Size Price (per cubic foot)||Oversize Price (per cubic foot)|
Additionally, if your inventory has been in their warehouse for an extended period of time, you will be charged a long-term storage fee. However, with the recent changes, long-term storage fees will only be levied on inventory stored for longer than 365 days. It’s another big win for sellers.
If you’d like to calculate your own FBA fees, check out the FBA Fee Calculator from Jungle Scout
So what does all this mean?! It means that Amazon changes their fees fairly frequently, as they work to find the structure that benefits both sellers and Amazon (as a fulfillment service). And while it can be difficult to keep up with the changes, we’re going to do everything we can to keep you informed. Plus, Amazon knows that over half of their sales came from third-party sellers last year, so they want to do what they can to keep those sellers happy.