Understanding Amazon FBM Fees: An In-Depth Guide
As eCommerce grows, so does the demand for efficient and cost-effective fulfillment methods. Amazon offers sellers options for this in the form of Fulfillment by Amazon (FBA) and Fulfilled by Merchant (FBM). While the former provides extensive support from Amazon’s logistics network, the latter allows merchants to manage end-to-end fulfillment themselves, from warehousing and packaging to shipping and customer service.
FBM is an attractive option in particular for businesses that desire control over their processes. It does, however, come with an Amazon FBM fees structure that you need to understand if you want to to maintain healthy profit margins. So, to help you navigate the platform’s self-fulfillment costs, we’ll walk you through the ins and outs of Amazon FBM fees.
What is Amazon FBM?
Amazon’s FBM program hands you full responsibility over every aspect of fulfillment, including:
- Inventory storage
- Inventory management
- Picking
- Packaging
- Shipping
- Customer service (i.e., inquiries, refunds, and returns)
This means you prepare and deliver orders yourself, while Amazon serves as your selling platform. Unlike FBA, where Amazon handles these for you, FBM offers total control, along with the freedom to incorporate branding, sell products with specific requirements, and more. The program doesn’t require you to have these capabilities in-house though. In fact, you can work with 3PLs to support your fulfillment.
The advantages of FBM
Amazon’s self-fulfillment program offers some noteworthy upsides:
- Branding opportunities: FBM allows you to take a hands-on role in end-to-end fulfillment. Since you have authority over your inventory, packaging, shipping, and customer service, you can include branding elements and deliver personalized experiences.
- Avoid FBA fees: FBA charges storage and fulfillment fees. With FBM though, you need only worry about Amazon’s selling fees because you take on the responsibility of order fulfillment. Since you circumvent these costs, you can enjoy higher profit margins.
- Inventory flexibility: As an FBM seller, you aren’t subject to Amazon’s inventory policies (think FBA’s inventory and storage space limits). This lets you manage goods in sync with your business operations.
- Logistical freedom: In-house fulfillment infrastructure is a plus, but FBM doesn’t require it. You can partner with a third-party logistics (3PL) provider that can handle these for you or even mix the two, if that best fits your business.
- Circumvent problems with Amazon: FBM isn’t subject to FBA’s strict guidelines, so you avoid any risk associated with changes to Amazon’s policies and fees. You also evade the paperwork and processes associated with FBA.
- Easy business performance tracking: Since your Amazon operations are under your control, you see how you’re faring on the platform more clearly. You enjoy a better view of what does and doesn’t work, which lets you identify any necessary improvements.
Amazon FBM fees
If you’re looking to establish an eCommerce presence on Amazon, a mastery of Amazon FBM fees is essential to drive profitability. Failing to stay on top of them can affect your bottom line, but with a learned familiarity, you can:
- Budget accurately
- Set optimal prices
- Find cost-saving opportunities
Moreover, a clear understanding of the fee structure lets you strategically compare FBM to FBA, then choose the fulfillment option that suits your business model. Amazon FBM fees are based on various factors though. To paint you a clearer picture, we’ve broken them down in detail.
Selling plan fees
The first expense to account for comes from your chosen Amazon selling plan. You have two options:
- Individual: This nets you $0.99 per-item sold.
- Professional: Instead of a per-item charge, this incurs a flat $39.99 per month.
Note: If you sell more than 40 items monthly, we recommend the Professional plan.
Referral fees
Amazon considers every successful sale a referral and so tacks on a corresponding fee. They charge each time a buyer’s order ships, and the rate is based on two factors:
- The product’s category
- The total sales price (that includes the item’s selling price, as well as your delivery and gift wrapping charges)
The rate typically ranges from 8% to 45%, but for a more concrete estimate, refer to this table:
| Product category | Fee percentage |
| Amazon Device Accessories | 45% |
| Amazon Explore | 30% for Experiences |
| Automotive and Powersports | 12% |
| Baby Products | 8% for products with a total sales price of $10 or less
15% for items whose total sales price exceeds $10 |
| Backpacks, Handbags, and Luggage | 15% |
| Base Equipment Power Tools | 12% |
| Beauty, Health, and Personal Care | 8% for products with a total sales price of $10 or less
15% for items whose total sales price exceeds $10 |
| Business, Industrial, and Scientific Supplies | 12% |
| Clothing and Accessories | 5% for products with a total sales price of $15 or less
10% for items whose total sales price exceeds $15 but is less than or equal to $20 17% for products whose total sales price exceeds $20 |
| Compact Appliances | 15% for part of the total sales price of up to $300
8% for any portion of the total sales price exceeding $300 |
| Computers | 8% |
| Consumer Electronics | 8% |
| Electronics Accessories | 15% for part of the total sales price up to $100
8% for any portion of the total sales price exceeding $100 |
| Everything Else | 15% |
| Eyewear | 15% |
| Fine Art | 20% for part of the total sales price up to $100
15% for part of the total sales price exceeding $100 but only up to $1,000 10% for part of the total sales price exceeding $1,000 but only up to $5,000 5% for part of the total sales price exceeding $5,000 |
| Footwear | 15% |
| Full-Size Appliances | 8% |
| Furniture | 15% for part of the total sales price up to $200
10% for any portion of the total sales exceeding $200 |
| Gift Cards | 20% |
| Grocery and Gourmet | 8% for products with a total sales price of $15 or less
15% for products whose total sales price exceeds $15 |
| Home and Kitchen | 15% |
| Jewelry | 20% for part of the total sales price up to $250
5% for any portion of the total sales price exceeding $250 |
| Lawn and Garden | 15% |
| Lawn Mowers and Snow Throwers | 15% for products with a total sales price of $500 and under
8% for products whose total sales price exceeds $500 |
| Mattresses | 15% |
| Media – Books, DVD, Music, Software, Video | 15% |
| Merchant Fulfilled Services | 20% |
| Musical Instruments and AV Production | 15% |
| Office Products | 15% |
| Pet Products | 15%, except 22% for veterinary diets |
| Sports and Outdoors | 15% |
| Tires | 10% |
| Tools and Home Improvement | 15% |
| Toys and Games | 15% |
| Video Game Consoles | 8% |
| Video Games and Gaming Accessories | 15% |
| Watches | 16% for part of the total sales price up to $1,500
3% for any portion of the total sales price exceeding $1,500 |
Additionally, Amazon charges a per-unit referral fee with a $0.30 applicable minimum across almost all categories, apart from a couple of exceptions:
- No per-unit minimum referral fee: This applies to categories like Fine Art, Gift Cards, Grocery and Gourmet, Media (Books, DVD, Music, Software, Video), Video Game Consoles, and Video Games and Gaming Accessories
- $2 per-unit minimum referral fee: This applies to Amazon Explore
Closing fees
These fees are incurred from selling media products, namely under categories like:
- Books, DVD, Music, Software, and Computer/Video Games
- Video Game Consoles
- Video Game Accessories
They’ll net you $1.80 per item sold, and Amazon charges this on top of any other applicable fees.
Other Amazon FBM fees
The following platform-related expenses either depend on your offering or are situational:
- Rental book service fee: Amazon charges $5 for every book you rent to customers, which you incur once the order ships.
- High-volume listing fee: If you have an expansive product catalog, you’ll be charged $0.001 per active listing that exceeds Amazon’s allowance of 1.5 million active SKUs. This is billed monthly.
- Refund administration fee: When you refund a customer, Amazon refunds you the referral fee you paid but retains a portion as a refund administration fee. It’s computed on a per-unit basis and is either a percentage of the refunded amount or a flat rate.
| Product type | Amount of refunded charges | Fee |
| Books, Music, Video, and DVD | 100% | $0.00 |
| Under 100% | Varies based on the percentage of the item price you refunded | |
| Everything else | 100% | Either $5 or 20% of referral fees, depending on which one is lower |
The Amazon FBM fees are determined by your product type and the portion of the charges you refunded.
- Digital services fee: This fee applies to digital products and services. It depends on where your business is located, as it’s based on the digital service tax (DST) charged in Canada, the UK, France, Italy, and Spain.
If you’re in the U.S., it won’t apply to domestic sales. But, if you’re established in one of the aforementioned countries and sell in a U.S. store, you’ll incur the digital services charge. The rate itself is a percentage of your fees for selling on Amazon:
- 2% if established in the UK
- 3% if established in Canada, France, Italy, or Spain
Other costs
Effectively maximizing FBM will require you to spend resources on the following elements:
- Advertising: Visibility helps you succeed on Amazon so, if you want to boost that and your sales, look at the various advertising options available. The costs depend on your promotions’ categories and seasonal fluctuations, but it follows a cost-per-click structure, so you only pay when people click your items.
- Overhead: If you want to establish in-house fulfillment capabilities or already possess them, you’ll need to account for these costs:
- Warehousing and inventory management: Having sufficient facilities for storing, managing, and packaging goods costs money. You may even need to pay for an inventory management solution.
- Shipping costs and carrier partnerships: You incur these when you leverage carrier services, but they vary based on your partner.
- Customer service: As an FBM seller, you’ll need resources to handle customer inquiries and requests for refunds and returns. Further, you need to factor in reverse logistics as well.
- Staff: You can’t manage your FBM operations alone, so account for hiring employees to handle inventory management, shipping, customer service, and the like.
- 3PL services: For businesses that can’t afford their own fulfillment network, working with a 3PL can make up for the capabilities they lack. The costs, however, are based on the chosen service. For instance, MyFBAPrep’s services will net you $0.50 or $1 per unit we fulfill, depending on your chosen subscription. High-volume sellers may even receive a price tailored to their needs.
How to calculate Amazon FBM fees
To ensure profitability as an FBM merchant, you must accurately estimate the Amazon FBM fees you’ll incur periodically. To ease the process, here’s a step-by-step guide to calculating your Amazon FBM fees.
Step 1: Identify selling plan costs
As a Professional seller, you’ll need to account for Amazon’s $39.99 monthly fee. Meanwhile, if you opt for an Individual account, just multiply the $0.99 per-item charge by the number of products you sold. Let’s say you fulfilled 25 units; that would look like $0.99 x 25 units, which equals $24.75.
Step 2: Estimate referral and closing fees
This is where the computations become complex, especially if you offer products in multiple categories, so we’ll show a few examples.
To start, the formula for determining an item’s referral fee is: (product price + delivery charges + gift wrapping charges) x the product category’s referral fee rate. The per-unit minimum applies if its value is greater than the percentage rate.
Example A: Footwear
Imagine you sold a pair of shoes for $75. Based on the table shown earlier, its category rate is 15%, while its applicable minimum is $0.30. Including shipping and gift-wrapping charges (which are made up for the sake of this example), your calculations would look like this:
- Product price: $75
- Delivery: $8
- Gift wrapping: $4
- Total sales price: $75 + $8 + $4 = $87
- Referral fee: $87 x 15% = $13.05 (this applies since it’s greater than the minimum)
Example B: Jewelry
This category is a special case because its rate fluctuates based on value. Here’s a table showing how it works:
| Total sales price | $150 jewelry | $300 jewelry |
| 20% for part of the total sales price up to $250 | $30 | $50 |
| 5% for any portion of the total sales price exceeding $250 | $0 | $2.50 |
| Referral fee | $30 | $52.50 |
Example C: Books
As mentioned earlier, Amazon charges a flat $1.80 closing fee on top of any other applicable cost for items under categories like Books, DVD, Music, and Software.
Say you sold a book at $20, and its referral rate is 15% with no applicable minimum. This is what your total Amazon FBM fees would look like:
- Product price: $20
- Delivery: $2.50
- Gift wrapping: $1.50
- Total sales price: $20 + $2.50 + $1.50 = $24
- Referral fee: $24 x 15% = $3.60
- Closing fee: $1.80
- Total fees: $3.60 + $1.80 = $5.40
Step 3: Account for additional fees
Next, you’ll need to account for Amazon fees that you incur on top of the core charges tackled in Steps 1 and 2. To reiterate, these could include the following:
- Rental book service fee: $5 per book rented out to customers
- High-volume listing fee: $0.001 per active listing that exceeds Amazon’s 1.5 million active SKU allowance
- Refund administration fee: This varies based on your refunded product’s type and the amount of charges you refunded. You can view some sample computations here.
- Digital services fee: 2% (UK) or 3% (Canada, France, Italy, or Spain) of your Selling on Amazon fees. For some examples, see this reference.
Step 4: Factor in operational costs
Finally, isolate the expenses that your FBM operations generate. They comprise your storage facilities, inventory management, logistics, staff, and your 3PL’s charges. Once you’ve totaled everything, you’ll have an accurate estimation of your Amazon FBM fees.
How to reduce Amazon FBM fees
Simply knowing your Amazon FBM fees isn’t enough though. To stay on top of them and maximize your profitability, employ effective strategies and consider these tips.
Negotiate bulk shipping rates
If your business enjoys consistent FBM order quantities, negotiate with carriers for more cost-efficient bulk rates. Some of them offer discounts for high-volume shippers, and these can significantly reduce your per-package expenses.
Use regional shipping services
If a significant chunk of your consumer base resides in specific, niche regions, partnering with local carriers can lower your costs. Due to their close proximity to buyers, they can also guarantee fast delivery times consistently.
Leverage Amazon’s carrier partnerships
Amazon’s Buy Shipping program offers FBM merchants discounted rates for major carriers like UPS, Amazon Shipping, FedEx, USPS, and more. It eases the purchase and printing of shipping labels, as well as reduces costs while protecting your account health despite delivery-related claims.
Leverage inventory management software
Software like a distributed order management system (DOMS) helps you maintain optimal levels of stock based on demand and seasonality. This cuts costs by circumventing two key inventory management issues:
- Overstocking: An excessive amount of goods will require more storage space and incur additional holding costs.
- Understocking: A shortage of items can result in lost sales and increased ordering costs.
A DOMS can automate various order fulfillment processes as well, reducing not only manual errors but also labor costs and shipping delays.
Optimize your packaging
Carrier charges are based on your item’s weight and dimensions. If you sell light yet bulky products, decreasing the size and weight of your packaging can help you lower these expenses. Look for durable, cost-effective packaging materials as well.
Offer product bundles
Product bundling can reduce referral fees by combining multiple complementary items under one listing. This is particularly effective for a category like Beauty, Health, and Personal Care, whose rate jumps from 8% to 15% once your total sales price exceeds $10.
Sell on multiple channels
A multi-channel eCommerce strategy offsets costs through a wider audience, more fulfillment methods, and a higher volume of sales. By selling on platforms like Amazon, eBay, and your own website, you shrink FBM fees and improve overall cost efficiency.
Consider a hybrid approach to Amazon FBM Fees
Utilizing FBA alongside self-fulfillment can also help you slash Amazon FBM fees. Their unique differences can influence the amount of resources you consume while operating in both programs:
- Responsibility: With FBM, you take on inventory storage and management, packaging, shipping, and customer service. Amazon handles these on your behalf in FBA.
- Prime access: FBA listings instantly qualify for Amazon Prime, while FBM suffers from a lack of visibility to Prime members. To work around this limitation, you must enroll in Seller Fulfilled Prime (SFP).
- Overhead: As an FBA seller, your fulfillment capabilities aren’t a concern. If you don’t partner with a 3PL for FBM though, you’ll have to invest in storage, logistics, and staff.
- Dependency on Amazon: FBM merchants are less beholden to Amazon’s policies, so they don’t have to worry as much about staying on top of rule changes like FBA sellers do.
Depending on your offering, you can employ both fulfillment options to maximize cost savings if you:
- Place bulkier, slower-moving goods in FBM, as they’ll rack up storage and fulfillment Amazon FBM fees.
- Sell lightweight, compact, and high-velocity items via FBA, since they’ll quickly move through Amazon’s fulfillment network.
This avoids dedicating warehousing, labor, and logistics to goods that Amazon can handle on your behalf. You’ll still pay FBA’s fees, but these will consume significantly less capital than investing in additional in-house capabilities.
FBA fees
Be aware, though, that participating in FBA subjects you to the program’s fees, all of which are included on top of Amazon’s selling charges. They include:
- Fulfillment fees: These are derived from your product’s category, size, and weight and are charged on a per-unit basis.
- Storage fees: These depend on the amount of space your goods occupy in Amazon’s fulfillment centers.
- Other fees: These apply to aged inventory, returns processing, and removal, disposal, and liquidation orders.
Find a reliable 3PL
If you lack the fulfillment infrastructure needed to handle your orders, partnering with a 3PL can minimize the costs of warehousing, labor, and shipping. MyFBAPrep, for instance, simplifies logistical concerns for Amazon sellers so you can focus on growing your business.
Our SFP and FBM services not only provide cost-effective fulfillment but also diversify your FBM strategy. We can help you attain Prime-like shipping speeds, enroll in SFP, and sell to Amazon’s more than 200 million Prime members.
If you opt for a hybrid approach, our Amazon FBA prep services will ensure your goods are prepared and delivered to FBA’s network seamlessly.
Minimize returns and refunds
There are multiple ways to reduce these customer service concerns:
- Write detailed and compelling product descriptions: By including elements like clear item images and specifications, you manage shopper expectations and reduce the likelihood of returns.
- Provide reliable customer support: Prompt, professional customer service can resolve an issue before it escalates to a return or refund. This also lets you avoid the cost of reverse logistics and Amazon’s refund administration fee.
- Establish returns procedures: This ensures speedy returns processing and reduces the time and labor it consumes. MyFBAPrep offers reverse logistics solutions as well that can streamline this aspect of your FBM operations.
Stay in the know on Amazon FBM Fees and FBA Fees
Amazon regularly updates and changes their selling fees and policies. Those fluctuations can disrupt your business and shake up your operations, so it’s vital you stay informed and adjust your processes or practices when necessary.
Wrapping up — Master Amazon FBM fees to maximize your eCommerce profitability
A clear understanding of Amazon FBM fees enables you to make informed decisions that optimize costs and drive profitability for your eCommerce store. Learn which of these self-fulfillment charges apply to you so your business can minimize them, budget properly, and set competitive pricing. Further, effective FBM fee management can ensure lean operations, which helps you stay competitive in Amazon’s ever-evolving marketplace.
To learn more about how MyFBAPrep can drive your FBM fulfillment strategy in a seamless, cost-efficient manner, get in touch today.