When selling on Amazon using Fulfillment by Amazon (FBA), accurately calculating storage fees is critical for ensuring profitability. These fees, which depend on your product’s dimensions, weight, and storage duration, can significantly impact your bottom line if not managed effectively. This guide provides a comprehensive understanding of Amazon FBA storage fees, how they are calculated, and actionable strategies to optimize these costs.
What Are Amazon FBA Storage Fees?
Amazon FBA storage fees are charges for storing your inventory in Amazon’s fulfillment centers. They are divided into two main categories:
- Monthly Storage Fees – Charged per cubic foot of storage space used, varying by time of year (higher fees from October to December due to peak holiday demand).
- Aged Inventory Fees – Long-term storage fees applied to inventory stored for over 365 days.
These fees ensure that sellers effectively manage their inventory levels and avoid unnecessary stockpile in Amazon’s warehouses.
How to Calculate Amazon FBA Storage Fees?
Monthly Inventory Storage Fees
The monthly inventory storage fee depends on your product’s size tier (standard-size or oversized), volume, and the time of year. Amazon provides specific rates per cubic foot.
Formula:
Storage Fee = Volume (cubic feet) × Storage Rate (per cubic foot)
Example: You have 100 units of a product, each measuring 12 x 10 x 6 inches.
- Calculate the volume of one unit: 12 × 10 × 6 = 720 cubic inches
- Convert cubic inches to cubic feet: 7201728 = 0.4167 cubic feet per unit
- Calculate the total volume: 0.4167 cubic feet / unit × 100 units = 41.67 cubic feet
- Apply the storage rate (e.g., $0.87 for standard-size items in off-peak months): 41.67 cubic feet × 0.87 = 36.25 USD / month
Aged Inventory Fees (Long-Term Storage Fees)
Long-term storage fees apply to inventory stored for more than 365 days. These are charged either per cubic foot or per unit, whichever is greater.
Formula:
Long-Term Fee= max (Volume (cubic feet) × Rate per cubic foot, Units × Per-unit Fee)
Example: You have 50 units stored for over a year, each with a volume of 0.5 cubic feet.
- Calculate by volume: 50 × 0.5 cubic feet × 6.90 = 172.50 USD
- Calculate by unit: 50 × 0.15 = 7.50 USD
- Compare the two:
The fee based on volume ($172.50) is greater, so this is the amount charged.
Additional FBA Fees That Can Affect Your Profitability
Understanding storage fees alone isn’t enough. Other FBA fees also play a significant role in profitability.
Fulfillment Fees
These cover picking, packing, and shipping orders. Fees vary based on size tier and weight.
Formula:
Fulfillment Fee = Units Sold × Rate (per unit)
Example: Selling 100 units of a 1-pound product at $3.04/unit: 100 × 3.04 = 304 USD
Referral Fees
Amazon charges a percentage of the selling price as a referral fee. Rates vary by category (usually 8%-15%).
Example: Selling a $100 electronic item at an 8% referral fee: 100 × 0.08 = 8 USD
What Factors Influence FBA Storage Fees?
Amazon FBA storage fees are determined by several variables, which can significantly impact your profitability. Understanding these factors can help you predict costs and avoid unexpected charges.
Product Size and Weight
Amazon categorizes inventory into size tiers, including standard-size and oversized items. The volume of each product (calculated as length × width × height) is a primary determinant of monthly storage fees. For oversized items, the fees are higher due to the additional space they occupy in fulfillment centers. Dimensional weight is another critical factor, especially for lighter but bulky items. Amazon calculates dimensional weight as the item’s volume in cubic inches divided by 139.
For example, if a product measures 24 × 12 × 8 inches, its dimensional weight would be: Dimensional Weight = (24 × 12 × 8) ÷ 139 = 16.55 lbs.
If this exceeds the item’s actual weight, the dimensional weight is used to determine storage costs.
Seasonal Variations
Amazon charges higher storage fees during the peak holiday season (October to December) due to increased demand for space. Standard-size items may see fees nearly triple during this period, so planning inventory carefully is crucial.
Inventory Turnover and Sales Velocity
Fast-moving inventory incurs lower storage fees as it spends less time in fulfillment centers. Conversely, slow-moving items can accumulate costs, especially if they qualify for long-term storage fees (assessed for inventory stored over 365 days).
Return Rates
Returned products not only reduce sales but may also increase storage fees if the inventory re-enters Amazon’s warehouses. Effective quality control and customer service can help minimize return rates.
Product Category
Certain categories, such as hazardous materials, may incur additional handling or storage fees. Sellers need to account for these charges when evaluating product viability.
How to Optimize FBA Storage Costs?
Minimizing storage fees requires proactive management and strategic adjustments. These strategies can help you reduce costs while maintaining efficient operations.
Optimize Packaging
Smaller packaging reduces the overall dimensions of your products, potentially moving them to a lower size tier. Use compact, efficient designs and consider bundling items where applicable to save space.
Improve Inventory Management
Regularly monitor inventory levels to avoid overstocking. Use inventory management software to predict demand accurately, ensuring timely restocking without exceeding necessary levels.
Remove Slow-Moving Inventory
Identify products with low sales velocity and take action to reduce their storage duration. Options include running promotions, creating discounts, or using Amazon’s Automated Removal settings to dispose of unsold items before long-term storage fees apply.
For example, if 50 units of a product are nearing the 365-day mark and cost $6.90 per cubic foot in long-term fees, clearing them out can save significant costs. A $5 discount per unit may be a more economical choice.
Leverage FBA Fee Rebates and Credits
Amazon occasionally offers programs that credit storage fees for specific actions, like participating in the Amazon Vine Program or Fulfilled by Amazon Small and Light Program. Take advantage of these opportunities to reduce expenses.
Consider Third-Party Logistics (3PL)
For products with low turnover, using a 3PL provider for storage and fulfillment may be more cost-effective. Calculate the total cost of 3PL services compared to FBA fees to determine the better option for your business.
What Tools You Can Use to Calculate FBA Storage Fees Accurately?
Accurate calculation of FBA fees is essential for profitability. Amazon provides several tools, and third-party solutions can supplement these with added features.
Amazon FBA Revenue Calculator
This tool allows sellers to input product details and estimate storage fees, referral fees, and fulfillment costs. To use it:
- Access the calculator through Amazon Seller Central.
- Enter the product’s size, weight, and selling price.
- Review the breakdown of fees to understand potential costs.
For example, if a product with a volume of 0.5 cubic feet is stored during the peak season, the calculator will display the higher seasonal storage fee of $2.40 per cubic foot, totaling $1.20 per unit monthly.
Fee Preview Report
Amazon generates a Fee Preview Report for active listings, displaying current storage fees for each product. This report is useful for monitoring ongoing costs and identifying items with higher-than-expected charges.
Third-Party Tools
Applications like the Seller Assistant App or Jungle Scout provide comprehensive insights into FBA fees, including storage costs, fulfillment charges, and profitability estimates. These tools often feature additional analytics, such as sales trends and inventory recommendations, to aid in decision-making.
For instance, the Seller Assistant App allows sellers to evaluate whether a product would be more profitable using FBA or Fulfillment by Merchant (FBM).
Spreadsheet-Based Calculations
For sellers who prefer manual methods, spreadsheets can help calculate fees. Include columns for product dimensions, selling price, and storage duration, and apply Amazon’s rate tables to estimate costs.
By leveraging these tools, sellers can confidently plan their inventory and pricing strategies, ensuring maximum profitability while managing FBA storage fees effectively.
FAQs
How are FBA storage fees different during peak seasons?
During peak seasons (October-December), storage fees for standard-size items rise from $0.87 to $2.40 per cubic foot.
Can I avoid long-term storage fees entirely?
Yes. Remove aged inventory or sell it before the 365-day mark to avoid long-term fees.
What happens if I don’t pay FBA storage fees?
Unpaid fees can lead to account suspension and the disposal of your inventory. Regularly review your account statements to ensure fees are paid.
Are storage fees refundable?
No, FBA storage fees are non-refundable, even if you remove or sell your inventory mid-month.