Amazon FBA Fees and Must Know Strategies

Amazon FBA fees are always an understandable concern when you're setting up online.

If you are looking at business models you may have some concerns about the fee structures that are attached when you begin to work with Amazon's program.

If you get into the wrong setup, it could cost you. It may also mean that you have to reset your product sales because of the wrong setup. That usually ends up costing more in the long run or may halt your venture.Finding the right formula for your product is the first step. Part of that formula is knowing the fees you are responsible for.

Why would you look at fees when parts of the program are set up through Amazon?

Just because you have a win-win partnership for storage and distribution, you still have to own the product. That means you are responsible for fee structures, branding and the success or failure of the product you sell.

Not planning out exactly what needs to be done first can lead to problems later on. It could cause loss of profit, not selling the right product or the inability to reach the goals you want with your business.

Instead, look at ways you can master every element of selling on Amazon. Learning about Amazon FBA allows you to plan your product sales wisely while learning how to make a profit.

When you are looking at what works for you, it is important to maximize your profit. When you are using a formula from another corporation, it may seem like there are areas where you might fall short.

Starting Your Calculations

It's important to look at structures such as Amazon FBA fees before you get started. It allows you to identify if this is the right model for you, how much you can make, and practical strategies that you need to take.

What these calculations are really about is getting financial freedom. It helps in identifying your goals, how much you can realistically make and what you need to achieve success as your next step.

As you compare different parts of the structure you can determine if it is right for you.

Why is this important?

It's not just the amount you need to pay Amazon if you use their services. It is related to your business setup and how you decide to make money.

I'm always interested in leveraging the best and most effective solutions for business. To do this, you need to know what the fee structures are, especially if you are interested in product selling on Amazon.

The importance of Amazon FBA fees is to compare this to your personal objectives of having or owning a business or products.

You need to know the business makeup that will help you to build a profitable business. You also need to understand exactly how the dynamics of e-commerce work so you are informed and prepared to take the best strategies and get the best results.

The “budget process” is something that every smart business owner looks at when they are beginning a business. When looking at Amazon FBA fees, you are adding it into the mix of how much you will spend when selling online.

Compare this to projections of selling offline. This way, you know exactly what you are getting in return.

The great part of working with Amazon is they have the capacity to use bulk pricing structures. The amount of storage space they have, drop shipping capacity and the expected growth is a win-win so you can focus on your product sales.

Keep this in perspective as you are looking at the Amazon FBA fees…

“Retailers are always wondering about what or even if they should be investing in technology. Let me put it this way, as you go through your budget process keep in mind that you are not going to out-invest Amazon.”

– Joe Dalton, Chief Products and Marketing Officer at PivotLink

Unlike drop shipping or independent formulas, the Amazon FBA fees have different calculations. This is why it is important to look at it closely and to determine what the outcome is for each sale you make.

To start, compare this.  Look at the fees from Amazon and how they add up. Then, look at what the same pricing would be for your own business. Not only do you want to look at fees for storage and shipping, but also relate this to the operations you plan on leveraging.

The combination of calculations will clarify exactly what you need to do to set up online and sell. The result is a setup that easily brings in more profit.

Identifying a budget process will help you to become more profitable while having ownership with the finances of your business. This is not only important for the outlook of your overall business but allows you to reach practical goals by using the right calculations.

Basic Calculations with Amazon FBA Fees

The main Amazon FBA fees are listed with their central services.

The great news is that Amazon has a partnership model that is competitive and works with your needs. You get to choose how much you pay based on how you set your business up.

If you're just starting out, look at the minimum you need for storage and shipping costs. As you grow, you can scale with Amazon taking care of every other part of your business.

There are three main costs to look at with Amazon.

1. Monthly Inventory Storage. You pay for the amount of space you take up with the Amazon warehouse. This is at a competitive price per cubic foot and is also divided by regular or oversize items.

2. Long-Term Storage. There are changing fees based on how long you use the space that Amazon has. Check out the fees per cubic foot to identify how much your product would cost. Also, keep in mind that the inventory pricing changes by season for selected items.

3. Minimum Fees. If you are looking at long-term storage, then be aware of minimum fees. Any items that have been in storage for over 365 days are charged by unit per month.

These fees are not set in stone. If you have a performance record that reaches a higher score, the fees change. This depends on your inventory management, then you get great bonuses with fees. If your score is lower, then there are limitations that come with the storage space you use.

Using an FBA Fees Calculator

Why do you need to go through calculations and a budget process?

A big area where many affiliates and those working on Amazon FBA fall short at is they go online expecting to make money.

And, you should.

What they don't look at is the other parts of a business that may cause them to not make as much as they originally calculated.

You don't want to fall into unrealistic expectations when it comes to Amazon FBA fees and the other calculations centered around the business.

Instead, look at the amount you will need to invest as you start selling products.

Here's a basic setup that allows you to identify the profit and loss based on fees.

The basic information in the screenshot above is your way of seeing how much profit you can make per sale.

We've added in some sample numbers for you to work with. Look at how many units are ordered and how many you have sold. The number left is how much you will have to pay per storage.

Then, add in your profit margin. Look at the retail price of each as well as the profit you have made from this, specifically by multiplying your sales by the cost per unit.

Estimate the FBA fees per unit. You then have your profit that can be deducted from the Amazon FBA fees. This shows exactly how much you will make and how much you are investing in the business setup you have.

Want to really know how much you are making or spending?

I always suggest that you look at your budget based on other upfront costs and fees that go into your business.

In my Online Business Mastery Accelerator courses, I talk a lot about different parts of the business you need to set up. If you aren't doing this yourself, then make sure you estimate the costs that are a part of the profit and loss.

Here are some things to include

• Landing Pages

• Photos / Graphic Design
  

• Samples of Products

• Advertising and Promotions

Bonuses are another calculation to make. If you do promotional giveaways or specials, calculate this into the costs as well.

There's one recommendation you want to look at with bonuses, especially if you are just starting. According to many marketing experts, bonuses can drive sales up by over 50%.

That means that they are a huge way to crush your Amazon FBA product. That also means you need to immediately start with a budget that allows you to give away certain items and add in bonuses.

If you don't add this into your mix, you may find limitations with your sales and won't get the traffic or response you want.

I've often promoted items without bonuses; however, I've personally found that when I have value-added additions, it drives more sales and the outcome is much more positive.

These are important parts of your business you want to factor in. You can project a certain budget based on your plans for growth. Creating a road map of exactly how you want to grow allows you to find the best ways to profit while selling products.

With the costs you calculate on top of the Amazon FBA fees breakdown, you will get to the heart of both your profit and loss.

How to Put Together Profit and Loss

After you've got the basics of costs put together, start calculating how much you are making.

If you haven't started yet, that's ok. You can use what are called projections to determine the profit you want to make. These are simply goals that allow you to forecast where you are going next.

Your profit and loss start by adding up the amount you will spend.

Amazon FBA fees have a great calculator on their site to determine how much you will spend per month based on your unit cost.

If you know how many units you will have, then estimate those fees from the chart above.

Go one step further.

Now, add in the amount you will spend on all of the other set up costs you will have and the inventory that is included. That gives you an idea of how much you will spend over a matter of time.

Look at how many units you have sold or want to sell. Multiply that by the amount per unit. That's the projection of how much you can make over a certain amount of time or your profit.

Take your profit and subtract it from the losses.

This is a great tool to determine your budget. It's also important because it helps you to cut back in areas you need to with your products or to grow when you are ready.

When you look at the Amazon FBA fees, you will notice it is determined by the units you have and the time. That means that you can cut back on the number of units you have to save money.

However, make sure you have enough overhead to meet the demand that is a part of your product sales.

Knowing your profit and loss can help you to determine exactly how to work with units and what to expect with the storage space you are using.

It also shows you exactly where to go with your next set of goals so you can maximize your results while remaining profitable.

Why Budget Processing Is Important

Why am I giving you information about budget processes? If you are selling a product on Amazon and are setting up passive income, you want to know how much you can make.

You also want to master every part of your online business. That means you need to be aware of the product flow and operational costs. This is something that will change how successful you are.

Why?

Business owners, whether they are selling online or in a brick and mortar store, need to know all the angles when it comes to calculations and processing.

The more knowledge you have, the more you can do. This is what empowers you to build a business that brings in millions in profit.

This means that the budget process becomes a central part of learning how to crush it with what you are making.

More important, if you don't have the units available because you have miscalculated costs, you are going to leave a negative mark on your products and customers associations with you. It's important, especially in the beginning, to build trust.

That's easy to do when you have the right calculations and are aware of the operational processes.

If you're just starting, then Amazon FBA fees are something you want to know.Let's look at this from a different perspective.

You don't want to be in a situation where you lose money because of long-term storage or because you haven't taken certain fees into account.

Here's a great example.

When Tatiana first started selling on Amazon FBA, she picked products that she thought would sell. She did this with very little money, allowing her to cut down on overhead costs.

However, after a few months, those products didn't do as well on Amazon and dove in profits. If she continued to maintain the warehouse storage space and other fees, it meant a loss from what she had made.

With the budget process, she was able to change direction and find out how to effectively maximize her profit.

You can learn more about that in this video with Tatiana, explaining more about this process.

You'll see from these examples that there was a need to differentiate exactly what you are selling.

You need to know what you are going to itemize, how much it is going to cost, what the manufacturing prices will be and how this will process. Included in that mix is the Amazon FBA fees and how that factors into your ability to sell online.

What's so great about this example is that the Amazon FBA fees were calculated in combination with everything else. The branding, customer demand, product efficiency and the representation of the product.

That all comes as a package. That means you want to be accountable for every calculation. That's what helps you to reach success.

Getting Into Business Planning

The Amazon FBA fees 2018 not only equates to the general budget process you need to identify. Your decision to get into the FBA program and build this as a business dives deeper into the business planning you need to do.

Why can't you just find a product you like and begin to sell it?

Ultimately, you may or may not profit by using this as a tactic. You need a strategy, commitment and need to find something you are absolutely passionate about selling.

If not, you will find that it is harder and harder to be able to succeed with the products you decide to sell online.

Tie this back into the budget for a second. Amazon FBA fees have a different pricing equation based on what you sell. That's because the products will take up more room in their storage.

A t-shirt and clothing is a different price than furniture, such as a baby cot or electronics.

That means you need to think about the products you are selling and equate this into the fees that are going to start adding into your budget.

What that also means is that you need to be clear about the products you are selling. Look at everything that is a part of the products you are considering for sale.

Amazon is basing their fee structure on types of products as well as units. For you, this means you need to look at a bigger picture.

Be strategic when you are working with the fee structure of Amazon. Use it as a road map of what you need to set up. Not just for the fees. Let it parallel with everything else you are putting together for your business.

Use this checklist to identify if the product you are looking at is going to work for you.

1. The product trends. You need to make sure there is a demand for what you are selling. Others need to have an interest in your product and you need to find exactly what is going to work for you. Look at the trends before you decide to set your Amazon FBA up.

2. Do you love what you want to sell? You are the face and representation of your product. If you don't have a passion for what you are selling, then it is important to re-look the product.

Is what you are selling something you would tell others about in a conversation? If you don't absolutely love and connect to what you are going to promote – don't do it. Those products will ultimately lead to burn out and a negative pattern that will cause you to lose business instead of building it.

Remember, advertising and promotions always follow the Amazon FBA that you are a part of. That means you have to formulate content and information to others that show what your product does. Make sure you want to endorse what it has to offer.

3. Look at your bigger picture. When you start working with FBA, you not only sell one product. There are many that begin to sell several products and expand this out.

For instance, many that are on Amazon will have hundreds of smaller products they offer, allowing them to sell millions online and work with this process. However, it's important to identify your brand and message first. Align this with the products you want to sell.

4. Know your competitors. A great reference point to look at with Amazon is who your competitors are. Understand how many products are out there that are like yours. Look at how much they sell, who they sell to and how they represent the products. Then, decide if you have a place to sell online with the competition that is out there.

Knowing your competitors doesn't mean you have to try to take their product lines or move into a straight line of fire with them. Just understand what they are doing and analyze how it may or may not fit into your business.

5. Set realistic goals. If you are looking at products, go through a stage of setting up and identify how long it will take for you to build your business. You want to move from point A to point B with identifiable steps, allowing you to achieve what you are doing every step of the way.

With the goals you set, make sure you include the details about how you will sell on Amazon. It's important to know the calculations and steps that allow you to meet every goal you want.

For more about that, check out my blog on How to Sell on Amazon FBA.

Ready To Set Up?

Take this advice and pull all the pieces together.

You will find that information such as the Amazon FBA fees allow you to pivot into new opportunities and possibilities.

It's your structure and strategy that allows you to move into successful sales of products. Go through the process and understand exactly what you need to do to magnify your success and products.

If you're serious about selling on Amazon and have products that you want to promote, then you must absolutely follow these guidelines.

When you look closely at the budget, your product and the relationship to marketing, you will find a complete package that helps you to set up for success.

This is exactly how you can move into a completely new level of making money online. You'll find that these simple tips and guidelines are designed to help you get results and to enjoy a passive income while promoting products you love.