Today I’m going to talk about size and the new fees that Amazon started this month. Get a donut, a cocktail, or whatever you need to get through this. It’s tough 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. You’ll see what I mean.
Amazon implemented new fees this month and the spreadsheet below shows some recent sales of mine with the new fees. If you have my book, the numbers in there are out-dated, but you can use the format to create your own spreadsheet.
Here is a link to a bigger PDF of the spreadsheet below in case the numbers are hard to read. My Kindle readers may want to hop on your computer to print off this chart and then read the rest of the blog.
One of the biggest changes is the new oversize fee of $6 for any item that is more than 18 inches in one of its dimensions. We’ll all need to carry small tape measures in our shopping kits now. Two weeks ago, I bought a bunch of stuffed animals. I wasn’t thinking about the new fees and was surprised when I got home that one of my Eeyore’s was oversized! Luckily, he was still worth it, but I was bummed to miss out on that $6 I used to get.
While size won’t normally be an issue with books (unless you have an enormous coffee table book), the new variable fees and higher weight-based fees could make your book more costly to you – textbooks in particular.
Summary of Fee Changes
I’ll pull this all together in the spreadsheet later. 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 Standard-Size Media and Non-Media Units priced under $25.00$6.00 for all Oversize Units|
|Weight Handling||$0.37 per pound based on the Outbound Shipping Weight|
|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.
How I Set it up
In this chart you see a paperback, a hardback, a textbook, a VHS tape, a software package, a game, a baby bottle and an appliance that I sold recently. The fast scanners among you are noticing already that I lost money on my paperback. 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 37 cents and the variable closing fee of $1.35. Amazon put 47 cents into my account.
In the next section, 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 $39.95 cost from Amazon 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, costs for things like FBA Power and FBA Scout, 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.
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.
Now when we look at my paperback, I’ve lost money. This is for two reasons: 1) the fees changed and I was stuck with low priced inventory that I need to clear out, and 2) I’ve added in the true cost of the sale.
My “minimum costs” is the sum of all the expenses except my out-of-pocket cost and my commission. You could choose to call this “overhead.” What it tells me is that I have to figure on this amount being taken out at a minimum from any paperback I sell – and then I need to figure in the cost of acquisition and commissions, etc. and add it in.
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 $5. When I get to a book sale, I look at the price sheet and I mentally add that price to my minimums.
For this particular book sale, I was paying 10 cents a paperback so I’d want to see $5.10 on my FBA Scout in order to consider buying it. And then 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, 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 fee, 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 $6 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.
Speaking of scanning, FBA 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. It is 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 – are you confident that other hidden fees 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”….and then start scouting!