Fees decide whether a good price makes a product worth buying. Count Amazon's fees at the price you expect when your stock sells, then the storage your order will pay while it sells, then your own costs. Skip any one and the profit you see is better than the one you'll get.
Fees on every sale
- Referral fee: Amazon's commission, a percent of the selling price that depends on the category, often 8% to 15%.
- Fulfillment fee: what Amazon charges to pick, pack and ship each unit, set by the package's size and weight. A heavier or bigger package costs more to ship, which is why the same price can mean very different profits.
- Holiday peak fee: an extra on each unit sold in Amazon's holiday window.
Because the referral fee is a percent, a price drop lowers your fees a little too, but never as much as it lowers the price.
Storage and holding
Amazon charges for every cubic foot your stock fills, every month it sits. For a standard size unit it is $0.78 a cubic foot a month from January to September and $2.40 from October to December. Stock older than 180 days pays an extra aged inventory charge, and a product kept too thin can pay a low inventory fee on each unit shipped.
This is why longer is not always better. An order that lasts 90 days pays storage on its last units for three months. Price the storage for the days your order will really sit, and buy enough stock to stay in stock, never more. A product whose storage eats its profit at every order size is one to pass on.
The PO Assistant's suggested quantity covers the days an order should last from your share of the listing's sales, and leaves storage to you. On a bulky product, or an order landing in October, it often pays to buy fewer cases than it suggests.
Your costs
Amazon's fees are only part of it. Your workspace keeps three costs of your own a unit, in Settings, on the Workspace tab, under Costs per unit:
- Prep per unit: labels, bags, bundling, or your prep center's fee.
- Shipping to Amazon per unit: your inbound freight divided by the units in a shipment.
- Monthly storage per unit: what one unit costs to store at Amazon for a month.
Grading counts them in every product's profit: catalogs you grade from now on use them, and a catalog you graded earlier picks them up when you refresh its Amazon data. An owner or admin can change them. A cost nobody set counts as $0, which flatters every profit, so set all three before you buy.
Some costs live only in your own books, so allow for them yourself:
- Supplier freight: the delivery charge on the order, spread over its units, unless the order is big enough to ship free.
- Card fees: what you pay to pay a supplier by card, as a percent.
- Returns: a percent of sales you expect back.
- Sales tax: if you pay tax on your purchases.
A worked example
A 1 lb jar of honey sells for $18.99 in the Grocery category. The referral fee is 15% of the price, $2.85, and the fulfillment fee is $4.10, so Amazon takes $6.95. It costs you $7.50, plus $0.60 prep and shipping and $0.15 of supplier freight a unit: $8.25 landed. Profit before storage is $3.79.
The jar fills about 0.05 cubic feet. Stock that lands in November and sells evenly over 45 days pays about $0.09 a unit of storage, so profit is $3.70. The same order landing in June pays about $0.03. A 90 day order landing in November pays about twice the storage a unit, which is why it pays to keep orders short going into the holidays.