Amazon FBA (Fulfillment by Amazon) offers incredible opportunities for sellers to scale their businesses by leveraging Amazon’s vast logistics network. However, the associated fees can significantly impact your profitability. While certain fees, like referral fees, are standard and non-negotiable, there are strategies you can implement to save on FBA fees and reinvest those savings back into your business.
In this blog, we’ll share strategies to reduce your Amazon costs, all based on our experience of working with 250+ brands. But before that, let’s learn about the different fees Amazon sellers must pay.
Understanding Amazon FBA Fees
Let’s talk about the different types of Fees and the factors influencing them.
1. Subscription Fees
Amazon offers two selling plans tailored to different seller needs: Individual Selling Plan and Professional Selling Plan.
- Individual Selling Plan: Ideal for small-scale sellers or those selling fewer than 40 items monthly. While there is no monthly subscription fee, Amazon charges $0.99 per item sold. However, this plan lacks advanced seller tools like bulk listings, detailed reports, or promotional features.
- Professional Selling Plan: Designed for high-volume sellers or those needing advanced tools. This plan costs $39.99 per month, regardless of sales volume. Professional sellers gain access to features like the Buy Box, promotional options, and third-party integration via Amazon APIs.
Choosing the right plan is essential for managing costs effectively. Sellers aiming to sell more than 40 items a month will find the Professional Plan more economical. Conversely, the Individual Plan suits sellers with lower sales volumes.
2. Referral Fees
Amazon deducts a referral fee for every product sold on its platform. This fee, calculated as a percentage of the total sale price (including shipping and gift-wrapping costs), varies by product category. Since each category has its own fee structure, reviewing the specific rates for your products is crucial to managing profitability.
3. Closing Fees for Media Products
Sellers in the Media category (books, DVDs, video games, etc.) incur an additional $1.80 closing fee per item sold. This charge is on top of the standard referral fees and applies exclusively to media-related items.
4. Fulfillment by Amazon (FBA) Fees
Participating in the FBA program simplifies logistics but involves several costs:
Fulfillment Fees: These fees cover Amazon’s services for picking, packing, shipping, and customer support. Charges depend on the item's size and weight, with categories like Small Standard Size, Large Standard Size, and Bulky Items.
Storage Fees: Sellers pay storage fees based on the cubic footage their inventory occupies in Amazon’s warehouses. The fee is calculated using the Storage Utilization Ratio, which compares your average daily inventory volume to your shipped volume over 13 weeks. Effective inventory management is key to minimizing these costs, especially for slow-moving items.
5. Shipping Costs for Merchant-Fulfilled Items
Sellers managing their own shipping (Merchant Fulfilled Network or MFN) must consider packaging, postage, and handling expenses. While Amazon provides shipping credits for certain categories (e.g., $3.99 for books), these may not fully cover shipping costs. Sellers are responsible for covering any shortfalls or, conversely, retain any surplus if shipping costs are lower than the credit.
For more information, check out our detailed guide on Amazon FBA fees.
6. Advertising Fees
Amazon offers multiple advertising options to help boost product visibility, each with associated costs:
- Sponsored Products: A pay-per-click (PPC) ad format where sellers bid on keywords, incurring charges for each click. Budgeting effectively is essential to avoid overspending.
- Sponsored Brands: This PPC format highlights a seller’s brand with custom headlines, logos, and product showcases, requiring strategic budgeting.
- Sponsored Display Ads: These ads target specific audiences on and off Amazon, offering broader reach but often at higher costs than other formats.
7. Returns and Refund Costs
As of June 1, 2024, Amazon introduced a returns processing fee for products (excluding apparel and shoes) with high return rates. This fee is determined by category-specific return thresholds and the size and weight of returned items. Monitoring return rates via Amazon’s FBA Returns tool is essential to manage costs and ensure compliance.
8. Optional Service Fees
Amazon provides optional services for added convenience, each incurring additional charges:
- Premium Account Services: Offers advanced account management and dedicated customer support for a higher monthly fee.
- Inventory Placement Service: Enables sellers to ship all inventory to a single fulfillment center, with fees based on item size and weight.
- Labeling and Preparation Fees: Amazon charges $0.55 per unit for applying FNSKU labels and additional preparation fees for tasks like bagging or bubble wrapping to meet FBA requirements.
9. Miscellaneous Costs
Additional fees to consider include:
- Removal Fees: Amazon charges fees for removing unsellable or surplus inventory from their warehouses, with rates depending on the item's size tier.
By understanding and planning for these fees, sellers can make informed decisions to maximize their profitability on Amazon.
Now that you know the different fees on Amazon, here are actionable tips to help you reduce your FBA fees effectively.
Tested Tactics to Reduce Amazon FBA Fees
1. Streamline Product Packaging
FBA fees are influenced by the size and weight of your products. To reduce these fees:
- Use smaller, lighter packaging: Reevaluate your product dimensions and packaging. Optimized packaging can help reduce storage fees and shipping costs. For example, switching from bulky cardboard boxes to durable poly bags can save both space and weight.
- Redesign product dimensions: Products with slight reductions in dimensions can often fall into lower fee tiers. Consider folding or compacting your product to reduce overall dimensions where possible.
Additionally, monitor Amazon’s dimensional weight to ensure your packaging doesn’t exceed thresholds unnecessarily. Overlooked details like extra padding or unoptimized box shapes can contribute to inflated fees.
2. Bundle Products Strategically
Bundling complementary products can:
- Increase your average order value by offering more value to customers.
- Reduce per-unit fees by creating a single ASIN for multiple products.
For instance, instead of selling a kitchen tool individually, bundle it with a cleaning brush or storage pouch. Ensure your bundles align with customer needs to maximize appeal. When creating bundles, highlight the added convenience or cost savings in your product listing to encourage conversions. Review your market basket analysis report before making a decision.
Want to know more about bundle creation? Here’s our step-by-step guide to creating and utilizing Amazon Virtual Bundles to increase sales and revenue.
3. Optimize Inventory Management
Storage fees, especially during peak seasons, can eat into profits. To avoid overpaying:
- Monitor aged inventory: Use Amazon’s inventory age reports to identify slow-moving items. Create time-sensitive promotions or discounts to move these items quickly and free up storage space.
- Avoid long-term storage fees: Amazon imposes higher fees for inventory stored for over 365 days. Regularly evaluate your stock and consider running clearance sales for stagnant inventory.
- Monitor seasonal storage fees: Peak seasons (October to December) come with higher storage fees. Adjust your inventory restocking plans to avoid overstocking during these months. Tools like Amazon’s Restock Inventory feature can help.
Maintaining optimal stock levels based on accurate demand forecasting is key to reducing storage costs without risking stockouts. Here are 7 essential tips to enhance your inventory management on Amazon Seller Central.
4. Leverage the Amazon Brand Referral Bonus Program
If you drive external traffic to your Amazon listings, enroll in Amazon’s Brand Referral Bonus program. This program provides rebates on referral fees, which can offset your overall costs.
To maximize the benefits:
- Use social media platforms like Facebook or Instagram to create targeted ad campaigns directing traffic to your Amazon listing.
- Partner with influencers to drive external traffic, qualifying you for the bonus.
- Track your campaigns to measure ROI and ensure the program’s rebate is positively impacting your bottom line.
This strategy not only reduces fees but also boosts sales by bringing in a broader audience.
5. Audit Your FBA Fees Regularly
Amazon occasionally misclassifies product sizes or weights, leading to higher fees. Regularly auditing your FBA fee reports ensures:
- Accurate weight and dimension classification.
- Quick dispute resolution for miscalculated fees.
To streamline the audit process:
- Use third-party tools like SalesDuo BI Dashboard to automate fee audits and recover overcharges.
- Keep documentation ready, such as product dimensions and weights, to provide proof when filing disputes.
Auditing should be a regular practice to ensure you aren’t overpaying unnecessarily.
6. Consolidate Shipments
When sending inventory to FBA warehouses:
- Consolidate shipments: Sending larger shipments less frequently reduces inbound shipping costs.
- Leverage Amazon’s Partnered Carrier Program: This program provides significant discounts on shipping rates, especially for bulk shipments.
Carefully planning restocks to align with sales trends and using predictive analytics to estimate inventory needs can prevent frequent, smaller shipments that increase costs. Consolidation also reduces the environmental impact of your operations, which is a bonus for eco-conscious customers.
7. Focus on High-Margin Products
Evaluate your product portfolio and prioritize high-margin products that can absorb FBA fees more effectively. For low-margin products:
- Reassess whether they should remain in your catalog.
- Consider alternative fulfillment options like FBM (Fulfilled by Merchant) or SFP (Seller Fulfilled Prime).
By focusing on profitability metrics, you can ensure that your efforts yield higher returns despite FBA fees.
8. Choose the Right Fulfillment Option
While FBA offers many benefits, consider using FBM or SFP for specific SKUs:
- FBM: Ideal for oversized or slow-moving products that incur high storage fees.
- SFP: Allows you to maintain Prime eligibility while handling fulfillment yourself, providing flexibility for certain items.
Evaluate fulfillment options based on the unique needs of each SKU and adjust your strategy accordingly. This complete Amazon FBA guide by our ex-Amazon experts will help you understand more about the process better and more effectively.
9. Implement Cost-Saving Promotions
Running discount promotions or enrolling in Amazon’s Outlet Deals program can:
- Help move aged inventory quickly.
- Avoid long-term storage fees while boosting cash flow.
To maximize effectiveness:
- Pair promotions with advertising campaigns to reach a broader audience.
- Highlight time-limited deals to create urgency and drive faster sales.
Promotions not only clear excess inventory but also increase visibility for your brand.
10. Reduce Return Rates
Returns can significantly impact your profitability due to return processing fees. To minimize return rates:
- Enhance product descriptions: Clearly describe product dimensions, materials, and usage to manage customer expectations.
- Improve imagery: Include high-quality images and videos showing the product in use to minimize mismatched expectations.
- Monitor customer feedback: Regularly review feedback to identify and address recurring issues, such as sizing concerns or durability complaints.
A proactive approach to returns can improve customer satisfaction and reduce associated costs.
11. Leverage Amazon’s Small and Light Program
If your products are lightweight and low-cost, consider enrolling in the Small and Light program to benefit from reduced fees.
Eligibility criteria include:
- Products under 3 pounds.
- Products priced under $12.
This program is particularly effective for high-volume, low-cost items, as it significantly reduces per-unit fulfillment fees. Learn the most effective ways to use Amazon Seller Central FBA Small and Light Program from the detailed guide by our ex-Amazon experts and increase profitability like never before.
12. Utilize Returns and Restock Fee Recovery
If your products are returned in resellable condition, consider enrolling in Amazon’s refurbishment or liquidation programs. These options allow you to recover costs from returned items instead of absorbing the loss entirely.
Additionally:
- Use Amazon’s automated removal option to eliminate unsellable items and minimize storage costs.
- Monitor the status of returns regularly to identify opportunities for restocking fees.
If you are facing challenges in managing your Amazon inventory through the Fulfilled by Amazon (FBA) program, our expert guide on Amazon FBA Reimbursement has got you covered. It has all the answers you need to know to scale your Amazon business in 2025.
13. Use Tiered Product Categorization
Ensure your products are categorized correctly based on size and weight tiers. Misclassified products may incur unnecessary oversize fees. Regularly review your FBA inventory and remeasure product dimensions to avoid unnecessary charges.
Start Saving on Amazon FBA Fees with SalesDuo
Reducing Amazon FBA fees is not about eliminating them entirely but about implementing strategies to optimize costs. By focusing on product bundling, efficient packaging, inventory management, auditing fees, and leveraging specialized programs like Small and Light or Brand Referral Bonus, you can minimize your expenses and reinvest those savings into scaling your business. Remember, every dollar saved is a dollar earned!
SalesDuo is a renowned Amazon agency powered by a team of ex-Amazon experts and proprietary AI tools, dedicated to helping you scale your eCommerce business on Amazon, Walmart, and other leading platforms. Our data-driven, results-oriented strategies have proven to reduce costs and maximize sales for over 250 customers worldwide.
So why wait? Start incorporating these tips today and watch your profitability soar!
Book your 1:1 growth call with SalesDuo!
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About the Author
Giridhara Prasad is an Associate Director at SalesDuo and a startup enthusiast. With extensive expertise in e-commerce, this ex-Amazonian has been instrumental in driving success for businesses worldwide. Apart from his passion for creating innovative sales strategies and optimizing online retail experiences, Giri finds interest in watching and playing sports, including starting to play pickleball, traveling, and exploring political science, and philosophy.
