A year ago, I wrote a blog about Amazon’s new fees and here I am again. Let’s hope it is not an annual event. I’ve updated this blog and my accompanying spreadsheet with the new information that takes effect on February 18, 2013.
Get a donut, a cocktail, or whatever you need to get through this. It’s number crunchy stuff but extremely important – the difference between success or failure as a seller (no pressure). I suggest that you create your own spreadsheet to help determine profit and to help you create your own “rules of acquisition” when scouting (yes, that was a Ferengi reference).
Amazon is implementing new fees later this month and the spreadsheet below shows some recent sales of mine with the new fees incorporated. If you have my book, the numbers in there are outdated, but you can use it as a foundation to create your own spreadsheet. Your expenses will likely be different from mine.
Here is a link to a bigger PDF of the spreadsheet below in case the numbers are hard to read. My Kindle blog readers may want to hop on your computer to print off this chart and then read the rest of the blog.
Amazon is incentivizing its sellers to ship smaller items. This is another way of saying that the fees on bigger items are going up – way up. In comparing these fees with the items I sell the most, I find that my “Pick & Pack” fees will actually go down on some items because “Oversize” has been redefined.
There are new tiers of sizes, new “Pick & Pack” fees for oversize items, and a higher weight handling fee of 5 cents or more per pound across the board. Other fees like storage are NOT affected.
If you sell apparel, watches, jewelry, shoes or luggage, there is now a returns processing fee. I’m not approved to sell in those categories. If you are, be sure to go to “Help” in Seller Central and read more about this particular fee.
Here are the new tier of sizes. Each has its own fees (see below for chart):
- Small Standard-Size (up to 15” X 12” X ¾” and no more than 14 oz.)
- Large Standard-Size (up to 18” X 14” X 8”, up to 20lbs)
- Small Oversize (up to 60” X 30”, up to 70 lbs)
- Medium Oversize (up to 108”X 22” [130” combined sides], up to 150 lbs)
- Large Oversize (108” X 57” [165” combined sides] to 150 lbs)
- Special Oversize (over 108”, over 150lbs, i.e. big screen TVs)
Please note that the weight handling fee is based on the outbound weight. That means your product, plus the box and packing materials. The “combined sides” is the total of the length plus width of your item or the two biggest sides.
Summary of Fee Changes
I’ll pull this all together in the spreadsheet further down. Here are the new fees. These do NOT include your $39.95 a month you pay to Amazon to be a Pro Seller.
|Pick and Pack||$1.00 for all Small Standard-Size and Large Standard-Size Media and Non-Media.$4 for Small Oversize.$5 for Medium Oversize.
$8 for Large Oversize.
$10 for Special Oversize (like TVs).
|Order Handling||$1.00 for Small and Large Standard-Size Non-Media only|
|Weight Handling Small Standard-Size Large Standard-Size
|$0.42 per pound for Small Standard-Size$0.46 for Media and Non-Media up to 1 lb
$0.76 for Media up to 2 lbs
$0.99 for Non-Media up to 2 lbs
$0.76 + $0.40/lb Media over 2 lbs
$0.99 +$0.38/lb Non-Media over 2 lbs
$0.99 up to 2 lbs
$0.99 + $0.38/lb above 2 lbs
$1.49 up to 2 lbs
$1.49 + $0.38 above 2 lbs
$60 up to 90lbs
$60 + $0.76/lb above 90 lbs
$120 up to 90lbs
$120 + $0.90/lb above 90 lbs
|Outbound Shipping Weight Calculation|
||Following industry practices, for all Units with a volume greater than 5,184 cu. in. (based on length x width x height), we will use the Dimensional Weight if the Dimensional Weight is greater than the Unit Weight. The Dimensional Weight is the volume of the Unit divided by 166.|
||The Packaging Weight (box and packing materials) will be 2 oz for Standard-Size Media, 4 oz for Standard-Size Non-Media and 1 lb. for Oversize products.|
||The weight value of the Unit (either Dimensional Weight or Unit Weight) plus the Packaging Weight will be rounded up to the nearest whole pound.|
*You can find dimensional measurements for every item you have in inventory inside your SellerCentral under “Inventory Amazon Fulfills.” The measurements are on the far right of the screen.
Where you will see the biggest increases are for large items like a white board where fees went from $31.53 to $130 under the new rules (yikes!). I imagine that FBA sellers will stop selling white boards immediately. If you’d like to see more examples on Amazon.com, login to Seller Central, go to “Help” and then search for “Fulfillment by Amazon Fee Changes.” Amazon gives examples at the bottom of that page.
My Expense Chart
In this chart below you see items that I sold recently. The fast scanners among you are noticing already that I only broke even on my CD. Let’s look at that.
The actual sales price is the price at which I SOLD my book. Amazon’s fees include the 15% commission, the new per-unit fee of $1, the new weight-based fee of 42 cents (Small Standard-Sized) and the variable closing fee of $1.35. Amazon will put 63 cents into my account on similar sales after February 18.
In the next section of the spreadsheet, I’ve included my other costs. Besides the out-of-pocket cost, I figured out what my average listing fee is per item based on the $39.99 cost from Amazon, Scan Power and other related programs, and then the actual number of items I sell per month. This fluctuates, but 20 cents is a good average for me after comparing several months’ worth.
I base my shipping estimate to the warehouse on a typical cost of 50 cents per pound that I get when I use Amazon’s UPS account. Again, this varies somewhat depending on which warehouse and how many total pounds of items I have in my shipment. More weight=less cost per pound.
For our purposes, I assumed that it would take around 8 weeks for these items to sell and that I would pay one month’s storage fee. Of course, that varies too, but I do try to turn my inventory quickly. Lastly, the “Miscellaneous Expenses” cover things like tape and boxes, labels for my Dymo, etc. I pulled together a year’s worth of expenses and then broke it out by the number of items I sold in a year to get this figure. Your number could be MUCH different than mine. Be sure to do this calculation thoroughly and don’t leave out any expenses.
In my case, for example, overhead like my cell phone, utilities, tax preparation costs, etc., are paid for out of my main business. My “day job” as it were. In your case, these may be new costs for you and you need to figure it into your overall profit and loss.
If you are just starting out, take the cost of the supplies you used in your first month and divide by the number of items you sent in to Amazon. So it might be one quarter of a roll of tape, 8 boxes, 300 labels, that kind of thing.
In the case of my CD, I decided to lower the cost and break even rather than pay the 50 cents to have it shipped back to me or disposed of by Amazon. It was sitting out there in storage and the value had changed significantly since I bought it. I didn’t think I’d ever sell it for much more than $4 after all. I’m just glad to clear it out.
With the coffeemaker, I sold it for less than my original list price, too. Luckily I had enough margin that I could lower my price and still make money. Ideally, I like to double my money after fees and expenses – like the diaper disposal sack – or better. You can see from my chart why I find books and media so appealing.
||2013 Amazon Fees|
|Rhinocerous & other Plays||Black Inventors||Biology||Johnny Carson||Jazz Age||Hulk Plush Doll||Diaper Disposal Sack||Cuisinart Coffee Maker|
|Paperback Book||Hardback Book||Textbook||VHS||Software/DVD/CD||Oversized Toy||Baby||Kitchen|
|Actual sales price||$7.99||$10.99||$35.00||$10.99||$4.00||$33.99||$9.99||$94.85|
|– Order Handling||$0.00||$0.00||$0.00||$0.00||$0.00||($1.00)||($1.00)||($1.00)|
|– FBA per-unit fee||($1.00)||($1.00)||($1.00)||($1.00)||($1.00)||($4.00)||($1.00)||($4.00)|
|– FBA weight-based fee||($0.46)||($0.76)||($3.76)||($0.46)||($0.42)||($0.99)||($0.42)||($4.03)|
|– Variable closing fee||($1.35)||($1.35)||($1.35)||($0.80)||($1.35)|
|– Subscription fees to Amazon, others, divided by average items sold per month||($0.20)||($0.20)||($0.20)||($0.20)||($0.20)||($0.20)||($0.20)||($0.20)|
|– Shipping estimate (to warehouse)||($0.25)||($0.50)||($2.50)||($0.25)||($0.25)||($0.50)||($0.12)||($5.00)|
|– 1 month storage fee||($0.025)||($0.035)||($0.060)||($0.020)||($0.020)||($0.050)||($0.025)||($0.44)|
|– Miscellanous expenses||($0.06)||($0.06)||($0.06)||($0.06)||($0.06)||($0.06)||($0.06)||($0.06)|
Rules of Acquisition
So now that I have a handle on my costs, I’ve set some “Rules of Acquisition” for myself. I talk more in my book about my rules of thumb. With the new fees, I’m not interested in paperback books unless I can sell them for at least $7. When I get to a book sale, I look at the price sheet and I subtract that cost from the “net” prices that Scan Power gives me.
Would I sell a book for $6.99? Possibly. My rule is a starting point. I would also look at other factors like ranking, whether or not there are a lot of FBA sellers, if Amazon is selling the book, is it heavy and so on.
You will create rules of your own as you go along. My friend Lynn, for example, refuses to buy anything big (i.e. over 18 inches), not only because of the extra fees, but because it is a hassle for her. She knows that her shipping and supplies go up with oversized items as well as weight fees and the oversize fees. I will buy big. I have a supply of boxes in bigger sizes for my toys, etc.
I don’t sell food right now and I avoid baby items that are most likely to be recalled like strollers, cribs, etc. That’s just me. Some folks I know are only selling toys or only selling books and media. There is no right or wrong to this – just personal preference and comfort level. The most important thing to do in this business is to ACT and to start scanning everything in your chosen categories.
Scan Power Scout
Speaking of scanning, Scan Power Scout is a great tool in that it will give you the net Amazon payout for items you scan – if there are other FBA sellers. If not, it gives you the net payout for New items. According to Chris Green, Scan Power, both Scout and online versions, will be current with the new fees. While this certainly makes it easier to scan quickly, when you hit an item without FBA sellers, you have to know how to figure it out yourself. In addition, even if you see the net payout and you are pleased with it, you want to be confident that other expenses won’t eat up your profits.
Your homework for this week if you’ve not already done it is to figure out your expenses, margins, minimums and personal “rules of acquisition” based on the new fees. In addition, how will the new fees affect your current inventory? It may be time to re-price or get rid of certain items – anyone selling white boards?