In a nutshell, it is a free tool provided by Amazon that estimates how much they will charge you for fulfilling your orders if you take part in the FBA program. It helps sellers understand how much it will cost them to use FBA for their products and include said estimates into their financial model.
Taking care to count every cent crucial for beginner traders, as wrong pricing can doom the whole operation. Find out what comprises FBA selling fees, what amazon fulfillment calculator can be used for, and what other useful instruments will help you make your Amazon business thrive.
What makes up an FBA fee?
FBA fees are greatly influenced by the marketplace, product category, and characteristics. Understanding those underlying payments is key to taking measures to cut the expenses. So let’s take a look at what Amazon charges for the FBA program participants:
● Referral fees: those are charged for each item sold. They mostly vary from 8% to 20% depending on the product category. Amazon Device Accessories product category has the largest fee. It amounts to 45%.
● Fulfillment fees: those are costs associated with handling the shipment of your product. When delegating order fulfillment to Amazon, it handles all the processes themselves and charges you an amount corresponding to the work involved. When you decide to work with a third-party delivery service, Amazon charges the shipping rates based on the category and delivery service you selected and then returns said amount as shipping credit to cover the expenses.
The fulfillment fee itself consists of two parts: fee for handling the parcel (packing, delivery, support, etc.) and monthly storage fee. The cost of monthly storage depends on the size of the product. Higher volume means a higher storage price. Take into account that additional fees may be applied to the seller under different circumstances, like a long-term storage fee, which is charged monthly for goods stored in the fulfillment center longer than a year.
Best Ways to Use FBA Calculator
Besides determining expenses for using Fulfillment by Amazon, you can also use this instrument to estimate your possible profits. It is a powerful tool for market research and financial planning. Knowing a product’s prime cost, weight and dimensions, demand characteristics, and competitor’s proposition, you can build a financial model to include all profits and expenses. Based on this model an entrepreneur can make a decision if it’s sound to enter the market with current product and market conditions or calculate a margin that provides maximum profits.
You can even use it to assume the amount of money your competitors are spending on fulfillment. Use their ASIN, price, and the presumptive amount they pay to ship an item to the Amazon warehouse. This can give you an insight into how to compete with them using a price reduction strategy.
Another way to use this tool is for comparison of FBA and FBL costs. It can be useful whether you are a beginner seller and decide which fulfillment option suits you best, or when you’ve been selling for some time fulfilling orders by yourself think about switching to FBA.
How accurate is this calculator?
As Amazon states themselves, their free FBA fee calculator tool cannot guarantee absolute accuracy. They advise using it just for estimation, since actual fees may differ from those evaluated by it. Also pay attention to selecting the right marketplace, because there may be different rules and fees in different countries.
There are countless third-party services and browser extensions for deep Amazon analytics. Paired with Amazon’s own tools they can provide you with a wider and more detailed array of financial and marketing data.