Amazon FBA Fees Explained: A Guide to FBA Seller Costs in 2024

Happy Tuesday, everyone!

I hope you've had a great weekend so far!

These days, time flies, and we're already a few months into the new year of 2024. Whether you're a DTC brand or an Amazon seller, make sure you're planning well for inventory management to ensure you have enough stocks to sell during these year-end events.
Whether you're a seasoned player in the e-commerce landscape or a newbie, let's sit back and observe how the peak season circulates. I can see the term "Amazon FBA" trending again - the same as every year.
Thus, today, I'd like to take this opportunity to write and share some practical insights from my end about the Amazon piece, as I've been handling some of the Amazon shipments for my clients in my work.
Okay, let's dive deep into it throughout my somewhat clumsy writing, guys :)

How many types of Amazon fulfillment methods are there?

From the seller's perspective, when you sell on Amazon, you have two options for fulfilling orders. This means that after listing your products on the Amazon marketplace, the next question that arises when a customer makes a purchase is, "How do I get the product shipped to my customer?" In the logistics world, this process is referred to as "fulfillment." If you're unfamiliar with this terminology, please visit What is Order Fulfillment? – The Future Ecom for further details. P/S: This is another blog I wrote the other day.
Alright, so there are two options for fulfillment:

1. Fulfilled by Merchant (FBM): This means the seller ships the products directly to their own customer after receiving Amazon orders on the Amazon platform.

1. Fulfilled by Amazon (FBA): This means the seller ships the inventory to an Amazon Distribution Center (Amazon DC). When orders come in, Amazon assists the seller in picking, packing, and shipping the order to the customer. Of course, these activities are associated with costs from Amazon, known as "Amazon FBA Fees," which I will explain in the next section.

So, you might notice that there are two options for the Amazon Fulfillment Program. This blog is dedicated to Fulfilled by Amazon (FBA) and focuses more on the fees/costs. If you wish to understand the overall model, you can read about it here Amazon FBM vs. Amazon FBA - Which option is the most suitable for your – The Future Ecom

What is Amazon FBA?

Amazon FBA stands for Amazon Fulfillment by Amazon. I'd like to reiterate that this fulfillment method is taken care of by Amazon Distribution Centers (DCs). They operate on behalf of you, with associated costs, to help reduce the logistics burden on your end. Once again, the choice between FBM and FBA depends on each seller's unique business, as it's not a one-size-fits-all decision.
I've taken the time to create this illustration for you guys, and I hope it helps!

How much is Amazon FBA?

Throughout my blog, you might have come across mentions of the "cost/fee associated with the Amazon FBA method," and indeed, it is a dynamic aspect that varies across different factors. These factors include the nature of the products (standard size or oversized, product category such as cosmetics or apparel), the countries you are selling in (USA, UK, APAC), and the storage method.
Below are examples of Amazon FBA fees in the US: 

Fee Type	Price
Monthly inventory storage (per cubic foot per month) - standard size	From $0.87 to $1.81 + (cost depend on the sizes, and the duration for storage)
Monthly inventory storage (per cubic foot per month) - oversized	From $0.56 to $1.19 + (cost depend on the sizes, and the duration for storage)
FBA fulfillment fees (per unit) - standard size	From $3.22 to $6.85 + (cost depends on weight and product type)
FBA fulfillment fees (per unit) - oversized	From $9.73 to $179.28+ (cost depends on weight and product type)
Aged inventory surcharge (per cubic foot per month)	From $0.50 to $6.90 + depending on the days stored
Inventory storage overage fee	$10 per cubic foot
Inventory removal and disposal fee	From $0.97 to $9.43+ depending on the shipping weight of the product

What are the common fees?

Amazon FBA offers various options for sellers, but it comes with a complex cost structure that can be overwhelming. Don't worry; I've got your back. Here are some common fees that typically arise in your normal products and orders:

FBA Fulfillment Fees

This fee covers the pick/pack process at Amazon Distribution Centers (DCs). It is charged when the order is shipped to the customers and is applied per unit fulfilled. To determine this fulfillment fee, there are two elements:
1.Product Size Tier:
   - Standard Size
   - Oversize
   - Special Oversize

Product size tier	Unit weight*	Longest side	Median side	Shortest side	Length + girth
Small standard-size	16 oz	15 inches	12 inches	0.75 inch	n/a
Large standard-size	20 lb	18 inches	14 inches	8 inches	n/a
Small oversize	70 lb	60 inches	30 inches	n/a	130 inches
Medium oversize	150 lb	108 inches	n/a	n/a	130 inches
Large oversize	150 lb	108 inches	n/a	n/a	165 inches
Special oversize	Over 150 lb	Over 108 inches	n/a	n/a	Over 165 inches

2. Shipping Weight

Core FBA
Size tier	Shipping weight
Small standard size	Unit weight
Large standard size	The greater of the unit weight or dimensional weight
Oversize	The greater of the unit weight or dimensional weight
Special oversize	Unit weight

Monthly Storage Fee

Amazon charges a monthly storage fee for the cubic footage of space used to store your products in their facilities. Monthly storage fees typically range between $0.56 to $3.34 per cubic foot. The pricing can vary based on factors such as:

1. Time of year: (October, November, and December tend to be busier months, with higher storage fees).
2. Physical size of items
3. Type of item:(Dangerous goods may have higher storage fees).

Other FBA Fees Explained

- Aged Inventory Surcharge or Long-Term Storage:
  If your products remain stored in Amazon DCs for more than 181 days, Amazon starts charging a fee. The fee varies based on aged storage tiers, including items aged 181-210 days, 211-240 days, 241-270 days, 271-300 days, 301-330 days, 331-365 days, and items aged 365 days or more. Different costs are applied to each tier.
- Amazon Removal and Disposal Fees:
  If you decide to have Amazon remove or dispose of your products, specific fees apply.
- Amazon Prep Service Fees:
  If you opt for Amazon's prep service to prepare your products for shipment, additional fees may be incurred.
And the list goes on, including various fees depending on your specific business needs and the services you choose to utilize through FBA.

How to Calculate Amazon Fee for Your FBA Business?

When it comes to these questions, for the Amazon Sellers, please consider doing some analysis, I would say, to see how your business would thrive in a year or even quarterly.

Here are some tips I collected from my work after working with Amazon sellers:

To calculate your Amazon FBA costs, you’ll first need to:

Gather the following data points for your business

• Consider your product and order details
• Number of orders per month
• Average number of items per order
• Average sale price per item
• Average production cost per item
• Average weight and dimensions per item
• The weight and dimensions information will help you compute your fulfillment and storage fees, while information on your orders, pricing, and production cost will help you calculate margins, profitability, and seller fees.

Understand about the Amazon Selling Fees

So in this section, it is not only the Amazon FBA also the selling fees come together as well.

On the other hand, when it comes to the cost analysis for the Amazon FBA model, this formula you can consider:

Amazon FBA Total Cost = Selling Fees + FBA Fees

1. Selling Fees can be: Referral fees + Monthly subscription fee + Per-item selling fees + Closing fees
2. FBA Fees can be: FBA fulfillment fees + Monthly inventory storage fees + Long-term storage fees + FBA disposal order fees

Lay all of them out in the cost sheet

I would say we should have a big analytical mindset to consider this. Might need to break down the cost on an Excel sheet clearly in the lines of Revenue, Cost, and Margin to see if it is worth considering Amazon FBA or should we switch to Amazon FBM instead.
Again, I leave you guys with this to think and work at your end.

Final thought

I hope the information shared in my Amazon series has been helpful. If you have any questions about the topics discussed above, don't hesitate to leave me a message—I'll be sure to pick it up and provide answers.

Wishing you a good rest of the days!
See you in the next blogs!