It is time for Amazon’s annual FBA fee hike! Hooray. Not. I’ve updated this annual blog post and spreadsheet with the new information that takes effect on February 18, 2014.
Get a doughnut, a cocktail, or whatever you need to get through this. It is number-crunchy stuff but extremely important – the difference between success and failure as a seller (no pressure).
While scouting tools will figure out Amazon’s fees for you on the fly, you need to know in your head your other out-of-pocket and overhead costs so you can make wise inventory choices. You need to know when you are in the store if something might be oversized or not and what that may mean to your profit margin. Sometimes a few cents can make a difference.
Amazon’s new fees go into effect in about a week and the spreadsheet further down shows some previous sales of mine with the new fees incorporated. If you have my book, the numbers in there are outdated, but you can use it as a foundation to create your own spreadsheet. Your expenses will likely be different from mine.
For those of you using ScanPower Mobile & List, your on-screen data will automatically reflect the new fees starting on February 18th. I’m assuming this is also true for the other tool providers. This analysis is to help you create your own spreadsheet to help determine profit based on your business expenses. It will also help you create your own “Rules of Acquisition” when scouting (yes that was a Ferengi reference).
Here is a link to my new FBA Library that includes a bigger PDF of the spreadsheet below in case the numbers are hard to read. You will need to register to access the spreadsheet (plus other Step-by-Steps and popular blog posts). It is free.
What’s New?
Monthly storage fees will increase as well as Pick & Pack and Weight Handling Fees across the board. If you use Amazon’s Inventory Placement Service, those fees are going up. Those who sell apparel will have some new fees in May. Other fees like multi-channel fulfillment, long-term storage and zero-fee fulfillment are not affected.
Overall, most of the fees are only a few cents higher. It looks like they used a repricer to get these weird numbers. Just like last year, the fees increase steeply as the size and weight of your inventory item increases. Amazon is incentivizing its sellers to ship smaller items, basically.
If you sell apparel, a new fee will go into effect in May. Amazon has not posted the fees yet. If you sell apparel, be sure to go to “Help” in Seller Central and read more about this particular fee.
Size Matters
Not sure if your item is standard or oversized? Here is the current tier of sizes. Each has its own fees (see below for chart):
Small Standard-Size (up to 15” X 12” X ¾” and no more than 14 oz.)
Large Standard-Size (up to 18” X 14” X 8”, up to 20lbs)
Small Oversize (up to 60” X 30”, up to 70 lbs)
Medium Oversize (up to 108”X 22” [130” combined sides], up to 150 lbs)
Large Oversize (108” X 57” [165” combined sides] to 150 lbs)
Special Oversize (over 108”, over 150lbs, i.e. big screen TVs)
Please note that the weight handling fee is based on the outbound weight. That means your product, plus the box and packing materials. The “combined sides” is the total of the length plus width of your item or the two biggest sides.
Fee Changes – Pick & Pack and Order Handling
I’ll pull this all together in the spreadsheet further down. Here are the new fees. These are IN ADDITION to the $39.95 a month you pay to Amazon to be a Pro Seller. “Media” includes books, CDs, DVDs, video games and VHS. “Non-media” is everything else, basically.
Pick and Pack
$1.02 for all Small Standard-Size and Large Standard-Size Media and Non-Media.$4.03 for Small Oversize.$5.07 for Medium Oversize.
$8.12 for Large Oversize.
$10.25 for Special Oversize (like TVs).
Order Handling
$1.00 for Small and Large Standard-Size Non-Media only
Weight Handling Small Standard-Size Large Standard-Size
Small Oversize
Medium Oversize
Large Oversize
Special Oversize
$0.46 per pound for Small Standard-Size$0.55 for Media and Non-Media up to 1 lb.
$0.82 for Media up to 2 lbs
$1.34 for Non-Media up to 2 lbs
$0.82 + $0.41/lb. Media over 2 lbs
$1.34 +$0.39/lb. Non-Media over 2 lbs
$1.34 up to 2 lbs
$1.34 + $0.39/lb. above 2 lbs
$1.91 up to 2 lbs
$1.91 + $0.39 above 2 lbs
$61.62 up to 90lbs
$61.62 + $0.80/lb. above 90 lbs
$124.08 up to 90lbs
$124.08 + $0.92/lb. above 90 lbs
Outbound Shipping Weight Calculation
Dimensional Weight*
Following industry practices, for all Units with a volume greater than 5,184 cu. in. (based on length x width x height), we will use the Dimensional Weight if the Dimensional Weight is greater than the Unit Weight. The Dimensional Weight is the volume of the Unit divided by 166.
Packaging Weight
The Packaging Weight (box and packing materials) will be 2 oz. for Standard-Size Media, 4 oz. for Standard-Size Non-Media and 1 lb. for Oversize products.
Rounding
The weight value of the Unit (either Dimensional Weight or Unit Weight) plus the Packaging Weight will be rounded up to the nearest whole pound.
*You can find dimensional measurements for every item you have in inventory inside your SellerCentral under “Inventory Amazon Fulfills.” The measurements are on the far right of the screen. Something has to be pretty darn big to have a volume greater than 5,184 cu. Inches.
Where you will see the biggest increases are for large items like Ping-Pong tables and large-screen TVs. If you’d like to see more examples on Amazon.com, log in to Seller Central, go to “Help” and then search for “Fulfillment by Amazon Fee Changes.” Amazon gives examples of the fee changes for different sized items at the bottom of that page.
Fee Changes – Inventory Placement
If you wanted to reduce the number of inbound shipments (and warehouses) where you sent inventory, you used to be able to pay Amazon a flat per-unit fee. If your item is under 1 lb. or less (Standard-Size) or under 5 lbs (oversize), your fee remains the same. Once again, the bigger your item, the more you pay. Please note for this service that the fee applies to everything in your box even though you may only be adding one or two additional items.
Standard-Size
$.30 for 1 lb. or less$.40 for 1-2 lbs$.40 + $.10/lb. above 2 lbs
Oversize
$1.30 for under 5 lbs$1.30 + $.20/lb. over 5 lbs
Fee Changes – Monthly Storage Fees
Your monthly storage fees are based on the total cubic feet of your inventory and the month of the year. Fees have only gone up a few cents per cubic feet:
January-September $.48 per cubic foot
October-December $.64 per cubic foot
A recent storage fee for me was just over $90 – about 200 cubic feet at $.45 cents. Under the new fees it would be $96 a month.
This is Amazon’s way of encouraging fast sales rather than long-tail sales.
Making Your “Rules of Acquisition” Based on These Fees
For the accountants and other financial folk I will state for the record that this chart does not represent all of my expenses accurately. I own another business that covers a lot of my overhead like my space, office equipment, computers, cell phones, printers, office supplies, etc. This is why it is important to create your own chart. You will likely have other expenses that need to be included in order to create your Rules.
The actual sales price is the price at which I SOLD my book. Amazon’s fees include its commission, the order handling fee of $1, the new pick & pack and weight-based fees. Plus there is a variable closing fee for media of $1.35.
In the next section, I’ve included my other costs. Besides the out-of-pocket cost, I figured out what my average listing fee is per item based on the $39.99 cost from Amazon, Scan Power and other related programs, and then the actual number of items I sell per month. This fluctuates, but 20 cents is a good average for me after comparing several months’ worth.
I base my shipping estimate to the warehouse on a typical cost of 50 cents per pound that I get when I use Amazon’s UPS account. Again, this varies somewhat depending on which warehouse and how many total pounds of items I have in my shipment. More weight=less cost per pound. I send a lot of books which are generally closer to 25 cents a pound.
For our purposes, I assumed that it would take around 8 weeks for these items to sell and that I would pay one month’s storage fee. Of course, that varies too, but I do try to turn my inventory quickly. Lastly, the “Miscellaneous Expenses” cover things like tape and boxes, labels for my Dymo, costs for things like ScanPower List & Mobile, etc. I pulled together a year’s worth of expenses and then broke it out by the number of items I sold in a year to get this figure. Your number could be MUCH different than mine. Be sure to do this calculation thoroughly and don’t leave out any expenses.
In my case, for example, overhead like my cell phone, utilities, tax preparation costs, etc., are paid for out of my main business. My “day job” as it were. In your case, these may be new costs for you and you need to figure it into your overall profit and loss.
If you are just starting out, take the cost of the supplies you used in your first month and divide by the number of items you sent in to Amazon. So it might be one quarter of a roll of tape, 8 boxes, 300 labels, that kind of thing.
In the case of my CD, I decided to lower the cost and break even rather than pay the 50 cents to have it shipped back to me or disposed of by Amazon. It was sitting out there in storage and the value had changed significantly since I bought it.
With the coffeemaker, I sold it for less than my original list price, too. Luckily I had enough margin that I could lower my price and still more than double my money. Ideally, I like to double my money after fees and expenses – like the diaper disposal sack – or better. You can see from my chart why I find books and media so appealing.
Notice on the very bottom that I included my 2013 totals for the same products. This is to show you the difference the new fees make.
Aside from the CD which was just a mistake, these new fees wouldn’t be enough to discourage me from buying these items again. This is because I had really good margins built in.
If I bought the Cuisinart based solely on the number I saw on ScanPower ($71.13), I might be upset later if I hadn’t accounted for the extra packing and shipping weight on my end in my mental calculations. This is a particular concern with appliances, food and beauty where the items can be really heavy.
My Rules of Acquisition
So now that I have a handle on my costs, I’ve set some Rules of Acquisition for myself. I talk more in my book about my rules of thumb. With the new fees, I’m not interested in paperback books unless I can sell them for at least $7. When I get to a book sale, I look at the price sheet and I subtract that cost from the “net” prices that ScanPower gives me.
Would I sell a book for $5.99? Possibly. My rule is a starting point. I would also look at other factors like ranking, whether or not there are a lot of FBA sellers, if Amazon is selling the book, and so on.
As you can see, my Rules of Acquisition go hand-in-hand with my Rules of Pricing. I have to be able to price high enough to cover a little bit of loss or discount down the road.
You will create rules of your own as you go along. My friend Lynn, for example, refuses to buy anything oversize (i.e. over 18 inches), not only because of the extra fees, but because it is a hassle for her. She knows that her shipping and supplies go up with oversized items as well as weight fees and the oversize fees. I will buy big. I have a supply of boxes in bigger sizes for my toys, bedding, appliances, collectible games & puzzles, etc.
I’ve recently embraced food and beauty. I avoid baby items that are most likely to be recalled like strollers, cribs, etc. That’s just me. Some folks I know are only selling toys or only selling books and media. There is no right or wrong to this – just personal preference and comfort level. The most important thing to do in this business is to act and to start scanning everything in your chosen categories.
Send in inventory and make some money! Amazon will continue to raise its prices every year which means you will continue to do what retailers do around the world which is…pass along the costs to the consumer.
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