EP22: Q&A Session – FBA Fees Explained: What Is The Referral Fee And What Are FBA Fees.


Warning the following podcast has been classified
as insanely lucrative listener discretion is advised because if you do that you’re going
to be within the weight and the dimensional sizes that Amazon allows where they don’t
start charging you excessive fees your attention please listening to the am/pm podcast may
cause recurring revenue streams and unfair unfair advantages over your competitors other
side effects may include fatter wallets fired bosses and longer vacations listen at your
own risk here’s your host seven-figure entrepreneur and online marketing madman Manny Coats hello
everybody and welcome to the am/pm podcast my name is Manny Coats and I’ll be your host
and this is the show where we discussed how to generate recurring revenue streams that
come in 24 hours per day during the a.m. and the p.m. hence the name of the show as a matter
of fact I was just at the dentist and while I was at the dentist guess what guys I was
making money how cool is that pretty cool I think so today we’re going to be doing a
Q&A I am here with Guillermo my awesome sidekick the mastermind behind so much of what we do
how you doing Gui I’m doing well Manny thank you awesome awesome so we’re going to do things
a little bit differently today we’re going to be taking questions that people have sent
in at ampmpodcast.com we have a section where you can either leave a voicemail or write
your questions and we’ve kind of filtered through them and wanted to be very focused
have kind of a very focused episode on a specific topic so Gui has pulled some questions together
and we’re going to be going over those so give what is going to be the subject of today’s
podcast well today is all about FBA fees I have three questions like that for you okay
all right great great so three questions should be able to hopefully get through these efficiently
and quickly yes I’m sure I’m ready when you are sweet so let’s go ahead and get started
the first question comes in from Louie or Louise it says hey Manny thank you for the
information you’re putting out on the podcast great stuff I’ve gone through a few products
and I’m considering one in particular but I’m confused about the FBA fees can you please
go over the fees amazon charges Thanks okay great question and and this is actually a
tricky area for most people that are starting out because when you first look at all of
the fees that the listings of all the fees there’s a lot of little little chunks here
and there right so I think there’s two main fees that we’ve got to consider here the first
one is the referral fee and the second one is the FBA fee was he I don’t have the question
in front of me Gui was he asking about the FBA fee or the referral fee or both it says
FBA fees but I definitely think we should go over both okay so let’s talk about the
referral fee the referral fee is nice and easy that is a fee that amazon charges you
no matter what this is going to be as long as you’re using FBA they’re going to charge
you fifteen percent of whatever your product is being sold for and the fifteen percent
does vary on just a few categories like video game consoles and industrial and scientific
products but typically it’s fifteen percent a few things personal computers as well I
think it’s six percent so just check into your listing and see what they are but overall
most of them are fifteen percent and they have a minimum the minimum is one dollar but
you’re probably never going to be that low so fifteen percent so if you’re selling a
product for thirty dollars fifteen percent of that is four dollars and fifty cents that’s
going to be your Amazon referral fee does that make sense yep Cool cool okay so now
the FBA fees this is where it gets a little bit more tricky because the FBA fees are based
not on the product price or what you’re selling for it’s based on the product itself that
dimensions the weight and Amazon actually handling that whole order for you and sending
it out so the way it works is there’s an order and handling fee okay and that’s a dollar
and then they have a pick and pack fee which is a dollar six I believe was the the last
time I saw it I Amazon fees by the way guys change on a regular basis they they put a
I think they just did an update a couple weeks ago on some of their pricing one of them was
the weight handling so the weight handling is typically just to make things nice and
easy about a buck so you’re looking at roughly i would say three dollars three dollars is
what your FBA fees are going to be but that changes based off of weights and dimensions
and how big things are so we’ve talked about this before and in the podcast where we say
you know try to keep your products under a pound or two and try to get them to fit inside
something the size of about a shoe box okay because if you’d do that you’re going to be
within the weight and the dimensional sizes that Amazon allows where they don’t start
charging you excessive fees because you know you went over weight or you exceeded the dimensions
the size of the particular product now Gui do you have I don’t have it in front of me
do you have the actual dimensions or do we want to talk about that or do you think that’ll
confuse people I think when we started throwing out numbers it gets confusing but basically
if you can visualize the size of a shoe box that’s gonna where you want to be at so if
you want to go into the specifics we’ll make sure to throw in the the link where you can
go and see the specific measurements but let’s let’s keep it with the fewest number as possible
yeah yeah so a shoe box I think a lot of people a lot of podcasters do this Scott is one of
the guys that that I remember first mentioning a shoe box but we have a lot of different
products sizes some things come in boxes some come in bags if you can squeeze it into a
shoe size type box then you’re pretty good now this is considered the large standard
size that’s what what Amazon calls it and the fees are based on that now the weight
can go up to 20 pounds okay so you could actually order a 15-pound product it’s going to go
up per pound but the the package itself can go up to 20 pounds meaning you’re not going
to go into a different size which then drastically increases the cost but there’s a couple issues
with this the first one is if you’re ordering a 15 if your products are 15 pounds and you’re
ordering them from let’s say China and you’re bringing them into the states you’re going
to get killed on the fees right on the actual shipping rates right the amount that it costs
you to actually get the product into the USA or wherever it is that you’re at is going
to be very very expensive and it’s going to kill your profit margins the other thing is
that amazon i believe they give you it’s what a dollar i think it was like a dollar twenty
four or something like that for up to two pounds and then after every pound what is
it Gui is it like 40-something cents per pound do you remember what it was I don’t remember
off the top of my head you’re always the one that’s looking at the other fees man let me
look at it I can I can it up yeah it’s I know what we said we weren’t going to throw around
numbers too much but just so you know it’s yeah it’s 2 pounds as a dollar twenty four
okay that’s what Amazon is going to charge you for the weight handling and then they
charge you 41 cents for every pound above that so if you’re at what is it 12 pounds
you’re going to be spending an extra four dollars and ten cents on top of the dollar
twenty four so you’re your weight has just gone up by what five hundred percent your
weight fees so it’s just crazy so try to keep everything below that two pounds try to keep
it dimensionally within the size of a shoe box or so and you should be fine did we answer
the question you think Gui was there anything else I think I think we’re all good all right
cool I don’t want to get into too many details we can start talking about what oversized
packages are and the dimensions for example the large standard size I’m just to throw
it out real quick is 18 inches by 14 inches by 8 inches so those numbers are confusing
right but if you think about it 18 inches by 14 by eight that’s like a very large shoe
box you know something that a basketball player would use to put their shoes in but you know
if you visualize a shoe box that makes it nice and simple you don’t have to go out and
measure everything yeah yeah I think that’s good so I have a question without a without
a name on it and I think we kinda just covered it it says Manny I’m confused are fulfillment
fees based on the cost of the product are fulfillment fees based on the cost of the
product yeah so I think we just kind of went over that but if you want to re-emphasize
yeah yeah so remember the referral fee is the one that is based on the cost of the product
the FBA fees are based on the dimensions and the weight of the product so so no no matter
what your price whatever you’re selling your product at doesn’t adjust the the FBA fees
good now Alex has sent in a question says I have a product that i sell for twenty nine
dollars and I want to reduce the price down to nineteen dollars to drive up sales for
a short time are my FBA fees calculated on the original price of the product or the new
sales price I’ll be lowering it to thanks for the podcast and I look forward to your
answer awesome thanks for the question Alex so again this is a the first two questions
kinda covered this your FBA fees are based on the product itself not the price of the
product so what you’re referring to is the referral fee and the referral fee does change
and this was actually one of the questions that I had when I first started out was you
know if I sell something for if I put an MSRP of sixty dollars right for the product and
then I immediately start selling it for half that price I’m selling it for thirty dollars
so that when you go to Amazon there’s a big slash through the original price and then
it says you know you’re the sale price is thirty dollars you’re saving thirty dollars
you’re saving fifty percent it looks really cool and it generates sales but I was curious
i’m like man am i going to be paying fees off of the original $60 amount because i might
actually be hosing myself right so the question or the answer to your question is no you’re
going to be paying only on the sales the sales portion of it so if you’re selling it if you’re
going from twenty nine dollars down the $19 your referral fee is going to be based off
of that nineteen dollars so rounding that up to twenty dollars your referral fee is
going to roughly be three dollars versus if you were at what was yet thirty dollars right
29 going down to 19 yeah so you’re you’re right around 450 for a referral fee and you’re
going to go down to about three dollars so you’re going to save a dollar fifty roughly
per unit that you sell when you do that in terms of the referral fee yeah does that answer
the question now you have to decide obviously you know when you that’s a big drop you’re
dropping a ten dollar amount so even though you’re saving a dollar fifty your drop in
10 dollar so you’re losing what 8.50 in total I guess additional profit so I’m assuming
you’re doing this just to build up your BSR and you know try to get your get those sales
going so that you can get your organic search terms to move up to onto the first page if
that’s I assume that’s what you’re doing yeah it looks it looks like he or she it say Alex
is it’s just bringing it up just to increase the sales temporarily so I imagine it’s going
to be a short-term promotion but it definitely is going to take… yeah so those are great
questions that are is that it was it those three questions yeah that’s all we have for
now I always look forward to getting those questions in the on the website i looks like
some of our listeners are shy we haven’t gotten that many all your questions but you can actually
record your question we’ll play here on the podcast that’d be great so I look forward
to getting more questions yeah yeah and if you guys like this just kind of process the
Q&A let us know we’ll do more of these typically when people leave questions what we’ve done
is we’ve incorporated them right into a show without asking the question we’ll just start
talking about a subject that people are asking about but if you have specific questions and
you like this Q&A format we’ll continue to do this right Gui absolutely so yeah please
leave your questions and also if you like this give us a review on iTunes we haven’t
had that many reviews actually i think it’s it’s been under i just a couple of handfuls
so it would really be helpful if you could do that we would very much appreciate it yes
please do so so that being said we are finished with this episode let’s go on to the second
episode or the next episode of Q&A we’ll talk to you guys then alright see you guys take
care you’ve been listening to the am/pm podcast hosted by Manny Coats for more information
insider tools and to get the resources mentioned in this episode visit ampmpodcast.com

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