Interested in selling on Amazon but don’t want to handle storage and shipping alone? FBA (Fulfilled by Amazon) could be just what you’re looking for. The FBA program makes it easy to build your Amazon business, and it comes with plenty of perks for sellers.

However, Amazon doesn’t give you those perks for free. You’ll have to pay several fees to sell through FBA, and those fees can take a big bite out of your bottom line.

Here’s everything you need to know about calculating Amazon FBA fees.

What Is Amazon FBA?

Amazon FBA is a program that allows you to outsource order fulfillment to Amazon. Through the program, you can send products to Amazon’s global network of fulfillment centers and give your customers free two-day shipping via Amazon Prime.

When a customer buys from you, Amazon handles packing and shipping, so you don’t have to. Amazon also manages returns and customer service for your sales.

It isn’t free to use FBA, but if you’re looking for a hands-off way to sell your Amazon product, those fees could be well worth it.

Here’s why you might want to consider using FBA to sell on Amazon:

• Your customers will score free two-day shipping for products sold via FBA. Customers who order on Amazon expect to get their purchases quickly, and FBA helps you deliver.
• You can take advantage of Amazon’s excellent reputation. Many customers are reluctant to purchase items directly from your website, especially if you’re not very well known as a brand yet. By selling products through FBA, you’ll convince more potential customers to give you a shot.
• Packing and labeling can take hours per day if you do everything on your own. By selling through FBA, Amazon handles those tasks for you, giving you more time to focus on growing your business.
• You won’t need to worry about paying staff to handle customer service. If a customer has a problem with their order, Amazon’s team takes care of it on your behalf.

Amazon FBA Fees: A Breakdown

At first glance, FBA fulfillment fees don’t look very expensive, but they can add up quickly. Here’s a breakdown of what you can expect to pay and how to calculate Amazon FBA fees.

Fulfillment Fees

The fulfillment fee, also known as the pick-and-pack fee, is the per-item price you’ll pay for Amazon to find, label, and ship purchases to customers. Amazon doesn’t charge a set fee for every order; rather, it determines the fee based on the item’s size, weight, and category.

Amazon has a handy fee chart to help you figure out how much you’ll pay. As an example, for a large apparel item weighing 12 to 16 ounces, you’ll pay $4.75.

Amazon charges higher fees for dangerous goods. This category includes laptops, phones, chemical-based items, and products containing magnets, such as headphones.

Storage Fees

Amazon charges sellers a monthly fee based on how much space their items take up in warehouses. Fees may be higher or lower depending on the time of year and your product category. For example, fees might increase around Christmas and other holidays.

To calculate this fee, Amazon considers:

• Product size tier
• Product volume
• Current month
• Storage utilization ratio
• Dangerous goods classification status
• Average daily units

Referral Fees

Amazon charges a referral fee for every item sold. You’ll pay either a percentage of the total item price or a flat minimum amount, whichever is greater. For most items, the minimum is 30 cents. You may pay a referral fee of:

• 20% for gift cards
• 17% for clothing
• 8% for computers
• 15% for kitchen goods

Returns Processing Fees

Part of the appeal of FBA is that Amazon handles returns for you, but those returns aren’t free for sellers. Expect to pay anywhere from $2 to $43 per item returned, depending on the weight and size of the product.

Removal Order Fees

If you’d like Amazon to dispose of or return an item to you, you’ll pay a removal order fee. How much you’ll pay depends on the size and weight of your item. Fees range from 20 cents to about $2 per unit removed.

Unplanned Service Fees

Amazon encourages sellers to label items properly before sending them to fulfillment centers. If you make a mistake, you’ll have to pay an unplanned service fee for Amazon to fix it. If you left off the Amazon barcode, for instance, you’d pay a fee of 20 to 40 cents per item.

Calculating Amazon FBA Fees

If all those fees make your head spin, you’re in luck because there’s no need to calculate them manually. Amazon offers a free Revenue Calculator that tallies up your expected fees.

To use it, just enter your item cost, its weight and size, and its product category. You can also enter the product’s ASIN (Amazon Standard Identification Number) to have Amazon input some of those details for you.

Other Costs To Consider

FBA fees aren’t the only costs you’ll need to think about. You’ll also have to consider your costs for buying inventory, professional photography for Amazon pages, and samples if you give products away to customers.

You’ll need to budget for marketing costs, such as PPC (pay-per-click) advertising fees, too. With PPC advertising, you pay every time someone clicks on an ad for your Amazon products.

Managing PPC ad campaigns can be tough, and that’s where Click Fluency’s PPC ad management comes in. If you’re wondering, “What is Amazon PPC management?” reach out to Click Fluency to find out more.

Let Us Help Build Your Amazon Business

Now that you’ve learned how to calculate Amazon FBA fees, it’s time to get started on your PPC ads campaign! Running a campaign is a great way to get more exposure for your products, but knowing how to manage your ads can be a real challenge.

If you’d like to learn more about PPC ads, including a few tips for setting an Amazon PPC budget, schedule a call with us today.