When you’re looking to get into selling on Amazon there are a lot of decisions to be made. What are you going to sell? How will you store your inventory? Keeping track of your products can be a real hassle for sellers and that is why a lot of people turn to the fulfilled by Amazon service option.
When you opt to be an FBA (Fulfilled by Amazon) seller, you set your own prices, but you keep your inventory in Amazon’s warehouses and they take care of the shipping. Customers trust Amazon to get them their packages quickly and efficiently so FBA can definitely benefit sellers like yourself.
No longer will you have to be concerned about packing and shipping things out in a timely manner, Amazon will do the work for you. Of course, there are fees associated with this service. There are many free calculators available so you can determine the profitability of the FBA way of selling. Here are 5 things you need to know about those FBA fee calculators.
1. Just An Estimate
While the fee calculators are wonderful tools to have at your disposal it is important to know that they are simply an estimate of what you will be charged to have your inventory items stored by Amazon. With so many of the fees varying based on time, weight and prep time needed to shrink wrap your items and add UPC labels.
Many calculators allow you to play with the variables for each item so you can always adjust your prices and factors accordingly to make sure you have budgeting accurately and that being an FBA seller will be profitable. A tip: always err on the side of the fees being more expensive so your profits aren’t negatively affected by larger than estimated fees.
Even if you believe the fees aren’t worth the hassle remember that they are just estimates and that have Amazon fulfill your orders takes a lot of the daily work off of your plate, giving you a better chance to choose new products and keep track of your sales. The fee calculator is only going to give you a fee estimation not a profit estimate as well.
2. There Are A Lot of Possible Fees
The FBA fees can be confusing when you just start out. Even if you’re an experienced seller, there are still fees that come up from time to time that you may not expect including fees for packages that are oversized and the extra fees shipping it to the special warehouse that accepts larger merchandise.
There are certain fees that are monthly and consistent. These fees will be easy for you to keep track of. There are other fees however that will special circumstances. Knowing how fees will eat into your gross profit is important to make sure you don’t lose money using the FBA services.
Taking some time to really understand each fee is important so you aren’t blindsided by a charge you weren’t expecting. Using the calculator options will give you the best indication of what is to come so you aren’t surprised.
3. Be Prepared
The only way to get an accurate fee calculation is to give it the most accurate information possible. That means you are going to want the ASIN (Amazon Standard Identification Number) handy, or you will waste time searching for products by name.
After you give the calculator the weight and other dimensions you will need to import the item price (both what you paid and the price you will sell it for) as well as your cost to ship it to Amazon in the first place.
With all this information you will be able to see the fees Amazon will charge, including the fees just to sell on their website, which is the referral fee, and you will be able to make a decision whether an option for an FBA agreement is the right choice for you.
You should know that either merchant fulfillment or FBA will incur the same referral fee. It will always be a specific percentage of the price of the item. For most item categories that will be 15% of the price or a $1 flat fee, but this can vary as well.
4. When To Use A Fee Calculator
The best time to use an FBA fee calculator is before you start buying inventory so that you can make buying decisions that will actually help you profit in a big way. There are still other circumstances that would warrant needing to know the fee calculations, however.
Definitely, use a fee calculator before investing in wholesale inventory, you don’t want to find out too late that it is going to cost you a more than you bargained for to keep the items stored in a warehouse. And you probably don’t have that kind of room at your home either, so check the fees out prior to purchasing.
5. All Systems Go
Once you have established how much profit you stand to earn by having products in the FBA system, it’s time to get to work and start putting your items up for sale on Amazon using their service. Send out your inventory to their warehouses and kiss all the shipping woes goodbye, Amazon is going to deal with those now.
Be sure to check in with the FBA calculator throughout the process, especially if you are running sales or specials in order to make sure that your return on investment is still where you want it to be. The can be some fluctuation with pricing and the different fees so being able to double-check occasionally can be beneficial.
If you’re even unsure that FBA is the correct option for you, often the calculators have an option to compare FBA vs. merchant fulfillment fees with just the click of a button, so you can always make the educated decision that is right for you and your business as an Amazon seller.
While an FBA calculator may be confusing the first time you use one over time you will gain more experience and familiarity with the system. These are user-friendly tools that can inform you of the very best business practices for you at any given time. Taking time to learn about FBA fees is well worth some initial hesitation at figuring out how to use the tool.
Once you know what kind of fees you will encounter as a seller you will understand how to turn the best profit you can. Selling on Amazon is a great way to make money, and using a fee calculator will help you decide how to best use Amazon fulfillment services.