Amazon FBA (Fulfilled by Amazon) lets you store your products in Amazon's warehouses and have them picked, packed, and shipped by Amazon. In exchange, you pay fees that can quietly consume most of your margin if you have not modeled them carefully before listing.
The Two Core FBA Fees
Every FBA sale involves two categories of fees on top of the cost of your product.
Referral fee: Amazon's cut of the sale price. It ranges from 6% to 45% depending on category, with most categories landing between 8% and 15%. This fee is charged on the total selling price including any shipping charged to the buyer.
FBA fulfillment fee: Charged per unit shipped, based on size tier and weight. For a small standard item (under 1 lb), expect roughly $3.00–$4.50. For larger or heavier items the fee climbs quickly.
Size Tiers Matter
Amazon classifies products into size tiers that determine which fulfillment fee schedule applies:
- Small standard: up to 15" × 12" × 0.75", under 1 lb
- Large standard: up to 18" × 14" × 8", under 20 lb
- Large bulky: up to 59" × 33" × 33", under 50 lb
- Extra-large: anything beyond large bulky
Products that cross into a larger tier can see fulfillment fees double or triple. Packaging dimensions affect your tier, so consider packaging design as part of your unit economics analysis.
Other Fees to Model
Beyond referral and fulfillment fees, FBA sellers commonly encounter:
- Monthly storage fees: Charged per cubic foot. Standard rates apply January through September; October through December (Q4) rates are roughly 2.5x higher. Products sitting in fulfillment centers for more than 365 days trigger long-term storage fees.
- Inbound placement service fee: Amazon may charge to split and distribute your inventory across fulfillment centers.
- Returns processing fee: Charged when customers return certain product categories.
- Closing fees: Applied to media products (books, DVDs, video games) at a flat $1.80 per sale.
The FBA Profit Formula
A simple model for each unit:
Net profit = Sale price − Referral fee − FBA fulfillment fee − Cost of goods − Inbound shipping − Storage allocation
If your net profit is thin or negative at your current price point, you have three levers: lower your product cost, raise your price, or reduce the size/weight tier.
What Makes a Good FBA Product?
A common benchmark is a minimum 30% net margin after all Amazon fees and COGS. That buffer absorbs advertising spend (Amazon PPC), returns, and storage costs without wiping out profit. Products with strong margin tend to be:
- Lightweight and compact (lower fulfillment fees)
- Priced between $20–$70 (referral fee is less painful; customer returns are less common)
- Not highly seasonal (avoids Q4 storage surcharges on slow-moving inventory)
Checking Your Numbers Before You Source
Run the math before you commit to inventory. Model the worst case: your sale price is 10–15% lower than you expect (due to competition), and your sell-through rate is slower than planned (increasing storage costs). If the product is still profitable under those conditions, it has a reasonable margin of safety.