Amazon FBA Fees Explained: Decode the Costs of Selling on Amazon

Selling on Amazon through its Fulfilment by Amazon (FBA) service can be a lucrative way for UK businesses to reach a huge base of potential customers. However, between storage fees, referral fees, and more, the costs can quickly add up. This guide will decode Amazon’s FBA fees to help sellers calculate if Amazon is the right sales channel for their business.

What is FBA?

FBA stands for “Fulfilment by Amazon” and is Amazon’s fulfilment service. When sellers ship products to Amazon’s warehouses, Amazon handles storage, picking, packing and delivery to customers through a FBA prep centre. This saves sellers time and removes the hassle of self-fulfilment.  

In exchange, Amazon charges various FBA fees to cover their operational costs. Decoding what these fees are is essential for weighing up the pros and cons of selling via FBA.

Monthly FBA Storage Fees

One of the main costs of FBA Amazon UK is storage fees. This pays for space taken up at Amazon’s fulfilment centres. The fee varies depending on product size, peak seasons, and how long inventory sits unsold. Sellers are billed monthly.

To calculate potential storage fees, check Amazon’s FBA revenue calculator. Be sure to factor in peaks like Christmas when planning inventory volumes to balance sales potential against higher storage costs.

FBA Referral and Variable Closing Fees 

Beyond storage at an Amazon prep centre, Amazon also charges referral and variable closing fees as a commission on each sale. The referral fee varies by product category but is generally 15% of the total sales price. Variable closing fees apply for certain product categories like media items.

When weighing up using an FBA prep service UK, calculate the average fees per item sold within your price point and category. Compare costs against potential sales volumes to see if FBA is still profitable for that product.   

FBA Pick and Pack Fees

To cover their staff picking, packing and shipping customers’ orders from Amazon’s warehouses, Amazon also charges FBA pick and pack fees. This fee depends on the product size and weight.

Larger and heavier products cost more for Amazon to handle and ship, so familiarise yourself with the different fee tiers when selecting products to sell via FBA. Building a range with varying sizes can help diversify costs and sales potential.  

Is Selling on Amazon Worth the Costs?

Between storage, referral and handling fees, FBA costs can quickly eat into margins if not properly budgeted for. However, the trade-off is access to an established customer base already primed to spend on Amazon.

Carefully evaluate each product’s profit potential against likely FBA costs over a realistic sales period. Test with small inventory batches and continually evaluate listings to maximise sales. With the right items, FBA can boost scale and revenue even after Amazon’s fees.

Selling on Amazon via FBA promises expanded reach and logistical support but also incurs fees many sellers overlook. Taking time to accurately forecast sales volumes and cost implications is key to maximising success on Amazon’s marketplace. With the right prep work and product selection, FBA can still deliver strong ROI despite Amazon’s various fees.