Many seller friends have complained to us that the classification of fees generated by Amazon Logistics is too extensive. This is a stage that Amazon sellers must go through in their growth process. This article will demonstrate how to calculate the monthly storage fees and long-term storage fees for a single product.
1. Amazon Inventory Storage Overage Fee
In fact, since July 1, 2018, to optimize inventory management and expedite the delivery of sellers' products to buyers, Amazon Fulfillment (hereafter referred to as FBA) adjusted the rules for Amazon Logistics storage limits:
If a seller's existing inventory exceeds the storage limit, in addition to the monthly inventory storage fee and long-term storage fee (if applicable), an additional "Inventory Storage Overage Fee" needs to be paid, which depends on the number of days the inventory exceeds the storage limit.
2. How do Amazon FBA storage fees work?
The inventory storage overage fee will be charged at a rate of $10 per cubic foot per month. It will be calculated based on the daily average volume of all space occupied by the seller's inventory over the storage limit at the fulfillment center.
Amazon will use the following formula to calculate an estimated monthly inventory storage overage fee:
Estimated Monthly Overage Fee = (Current Overage Value x Daily Overage Fee Rate x Remaining Chargeable Days in the Month) + Accrued Monthly Overage Fee
Current Overage Value = Current Usage - Current Limit
Daily Overage Fee Rate = $10 / Number of Days in the Month
Remaining Chargeable Days in the Month = Number of Days in the Current Month - Numerical Date + 1
Note: Amazon Logistics inventory storage limit standards are as follows:
Individual Account:
Has a fixed storage limit of 10 cubic feet, which does not change. There will be no increase in the storage limit for individual selling accounts.
Professional Account:
Amazon will conduct two assessments of the inventory performance scores. For sellers who maintain scores at or above the required threshold during any of the assessments, standard-size, oversized, and clothing and shoe products will have no storage capacity limits.
New sellers with less than 26 weeks of sales or sellers who do not have enough sales data to generate an inventory performance score in both assessment weeks will have no storage limits. Effective January 1, 2022, the inventory performance score threshold for storage limits is set at 400.
Professional accounts with storage limits for standard-size, oversized, clothing, or shoe products will still have at least 25 cubic feet of storage space.
3. Amazon Monthly Storage Fees
The monthly storage fee is an expense that many sellers tend to overlook, while the long-term storage fee is even less familiar.
Note: Length unit is in feet
Calculation Method: Length x Width x Height x Applicable Rate = Monthly Storage Fee
Long-Term Storage Fee
If a single product is stored in Amazon's inventory for more than 365 days, Amazon will charge the monthly storage fee and an additional monthly long-term storage fee.
The long-term storage fee is independent of seasons, hazardous materials, or standard sizes. It is $6.90 per cubic foot or $0.15 per item (whichever is higher).
Charging Standard
Calculation:
Length x Width x Height x 6.9 = Monthly Long-Term Storage Fee (if the individual long-term storage fee is lower than $0.15, it is calculated as $0.15)
Calculate how much storage fee is required for storing one product in Amazon's inventory for 24 months.
Product Volume: 0.45 feet * 0.4 feet * 0.4 feet = 0.071 cubic feet
Size Segment: Standard size
Product Attribute: Non-hazardous
Peak Season Monthly Storage Fee: 0.071 * 2.4 = $0.17 per month
Off-Peak Monthly Storage Fee: 0.071 * 0.83 = $0.06 per month
Long-Term Monthly Storage Fee: 0.071 * 6.9 = $0.49 per month
For 24 months, you need to pay monthly storage fees, which include 6 months of peak season, 18 months of off-peak season, and 12 months of long-term storage fees.
Total Storage Fee for 24 months = Peak Season $0.17 * 6 + Off-Peak $0.06 * 18 + Long-Term $0.49 * 12 = $7.98
Therefore, once a product enters its decline phase, it is highly unlikely that reducing prices or clearing inventory will revive its sales. Therefore, when this period approaches, it is advisable to clear the inventory to avoid redundant costs.
