You don't have to be great to start, but you have to start to be great.
A lot of sellers are fee shocked when they first realize the cost of doing business through FBA. The fees may seem high, but in comparison to any other viable business model, or a brick and mortar store, the fees are still very low entry level. Let's take a look at the fees.
If you're an individual seller (per item sold):
Order Handling - $1.00 for non media ($0 for media)
Pick & Pack - $1.02
Fixed Per Item Closing Fee - $0.99
Variable Closing Cost for MEDIA - $1.35
Weight Handling - $.046 to $2.00 for 1 to 3 lb. small / medium items
Referral Fee - 15% of Sale Price
Storage Fee - negligible (maybe a couple of cents per month)
Long Term Storage Fees - Only charged on items in warehouse longer than a year, and not on one offs.
Fulfillment by Amazon Fees
Oversized and heavier items are subject to higher weight handling fees. It's wise to run the numbers through the FBA calculator before making a buying decision.
More FBA Fee Details - Beware that the 15% isn't straight across the board. It depends on the category, pricing, etc.
That's a lot of estimating when you're in the store scanning. If the item is small and lightweight, then:
Estimate (rounded) - $5.50 + 15% for media items, and $6.50 + 15% for non media items
Example:
Media
Price: $12.00 - $5.50 = $6.50 - 15% = $5.52 - COGS = Profit
Non Media
Price: $12.00 - $6.50 = $5.50 - 15% = $4.67 - COGS = Profit
If the weight handling is lower, then your profit will be a little higher, but if the weight is higher, then it will cut into your profit (another reason to plug it into the FBA calculator). You probably realize by now that your COGS need to be super low in the above example. I wouldn't pay more than $2-3 to make that kind of profit, and as you can see it's a thin margin. Another reason to look for low cost items that can bring a high margin. And then there is rank to consider. But don't despair! There are profitable items out there. Keep scanning!
What about pro sellers? Pro sellers pay $39.99 per month. After you sell 40 items in a month, you can subtract $0.99 per item from your fees. You're paying $0.99 for the first 40 items either way (just ahead of time as a pro seller), but if you sell over 40 items, and you're not a pro seller, you're literally giving Amazon an extra $0.99 per item. For example, if you sell 80 items as an individual seller, you're paying Amazon $79.20 (+ additional fees and closing costs). If you're a pro seller, you pay Amazon $39.99, and that's it (+ the additional fees and closing costs).
The fees might seem hefty, but think of the cost of rent, utilities, and employees in a retail store! And the best part is that you don't have to store all of that stuff in your house, or deal with customer service. The benefits of FBA certainly outweigh the fees.
-Zig Ziglar
A lot of sellers are fee shocked when they first realize the cost of doing business through FBA. The fees may seem high, but in comparison to any other viable business model, or a brick and mortar store, the fees are still very low entry level. Let's take a look at the fees.
If you're an individual seller (per item sold):
Order Handling - $1.00 for non media ($0 for media)
Pick & Pack - $1.02
Fixed Per Item Closing Fee - $0.99
Variable Closing Cost for MEDIA - $1.35
Weight Handling - $.046 to $2.00 for 1 to 3 lb. small / medium items
Referral Fee - 15% of Sale Price
Storage Fee - negligible (maybe a couple of cents per month)
Long Term Storage Fees - Only charged on items in warehouse longer than a year, and not on one offs.
Fulfillment by Amazon Fees
Oversized and heavier items are subject to higher weight handling fees. It's wise to run the numbers through the FBA calculator before making a buying decision.
More FBA Fee Details - Beware that the 15% isn't straight across the board. It depends on the category, pricing, etc.
That's a lot of estimating when you're in the store scanning. If the item is small and lightweight, then:
Estimate (rounded) - $5.50 + 15% for media items, and $6.50 + 15% for non media items
Example:
Media
Price: $12.00 - $5.50 = $6.50 - 15% = $5.52 - COGS = Profit
Non Media
Price: $12.00 - $6.50 = $5.50 - 15% = $4.67 - COGS = Profit
If the weight handling is lower, then your profit will be a little higher, but if the weight is higher, then it will cut into your profit (another reason to plug it into the FBA calculator). You probably realize by now that your COGS need to be super low in the above example. I wouldn't pay more than $2-3 to make that kind of profit, and as you can see it's a thin margin. Another reason to look for low cost items that can bring a high margin. And then there is rank to consider. But don't despair! There are profitable items out there. Keep scanning!
What about pro sellers? Pro sellers pay $39.99 per month. After you sell 40 items in a month, you can subtract $0.99 per item from your fees. You're paying $0.99 for the first 40 items either way (just ahead of time as a pro seller), but if you sell over 40 items, and you're not a pro seller, you're literally giving Amazon an extra $0.99 per item. For example, if you sell 80 items as an individual seller, you're paying Amazon $79.20 (+ additional fees and closing costs). If you're a pro seller, you pay Amazon $39.99, and that's it (+ the additional fees and closing costs).
The fees might seem hefty, but think of the cost of rent, utilities, and employees in a retail store! And the best part is that you don't have to store all of that stuff in your house, or deal with customer service. The benefits of FBA certainly outweigh the fees.
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