Amazon FBA vs FBM: The Real Cost of Each Fulfillment Method

Every Amazon seller eventually has the same argument with themselves: "Should I keep paying FBA fees, or should I just ship it myself?"

We've helped hundreds of sellers run the numbers on this decision, and the answer is almost never straightforward. FBA costs more than most people think. FBM takes more work than most people expect. And the right choice depends entirely on what you're selling, how fast it moves, and how much your time is worth.

Let's break down the actual math instead of guessing.

FBA: What You're Actually Paying

FBA (Fulfillment by Amazon) means you ship your inventory to Amazon's warehouses, and they handle storage, picking, packing, and shipping when a customer orders. Sounds great until you add up all the fees.

The FBA Fee Stack

Referral Fee: 8-15% of the sale price depending on category. Most categories sit at 15%. This applies whether you use FBA or FBM, so it's not really part of this comparison, but sellers often forget to account for it when calculating margins.

FBA Fulfillment Fee: This is the per-unit fee Amazon charges to pick, pack, and ship your product. For 2026, here's what it looks like for standard-size items:

These fees went up again this year. A 1 lb product that cost $3.86 to fulfill in 2024 now costs $4.08. That doesn't sound like much, but spread it across 5,000 units per month and you're looking at an extra $1,100/month.

Monthly Storage Fee: Amazon charges per cubic foot per month to store your stuff in their warehouse.

• January - September: $0.87 per cubic foot
• October - December: $2.40 per cubic foot (nearly 3x the rate during peak season)

Aged Inventory Surcharge: If your products sit in Amazon's warehouse for over 181 days, you'll get hit with surcharges ranging from $0.50 to $6.90 per cubic foot per month. Over 365 days and the fees become brutal. This is where slow-moving inventory kills your margins.

Inbound Placement Fee: Introduced in 2024 and still catching sellers off guard. If you want to send all your inventory to a single fulfillment center, Amazon charges an extra per-unit fee. Otherwise they'll split your shipment across multiple warehouses, which costs you more in shipping to Amazon.

Real FBA Cost Example

Let's say you sell a kitchen gadget that retails for $29.99 on Amazon.

• Product cost: $8.00
• Referral fee (15%): $4.50
• FBA fulfillment fee (14 oz): $3.72
• Monthly storage (averages out to): $0.35/unit
• Inbound shipping to Amazon: $0.60/unit

Total cost per unit: $17.17 Your profit: $12.82 per sale (before advertising, returns, and other costs)

That's a 42.7% margin before you spend a dime on PPC.

FBM: What It Really Costs When You Ship Yourself

FBM (Fulfilled by Merchant) means you store the inventory and ship it directly to customers. No FBA fulfillment fees, no storage fees to Amazon. But your costs don't disappear — they just shift.

The FBM Cost Breakdown

Shipping cost: This is your biggest variable expense. Using discounted rates through a tool like ShipStation or Pirate Ship, that same 14 oz kitchen gadget ships via USPS Priority Mail for about $5.20-$7.80 depending on destination. Let's average it at $6.30.

Packaging materials: Boxes, poly mailers, bubble wrap, tape, labels. Budget $0.80-$1.50 per order. Call it $1.10 on average.

Labor: This is the one most FBM sellers underestimate. Picking, packing, printing labels, and dropping off packages takes time. Even if you're doing it yourself, your time has value. At a reasonable pace, you can pack about 20-30 orders per hour. If you value your time at $25/hour, that's roughly $0.85-$1.25 per order.

Storage: Whether it's a spare bedroom, a garage, or a rented storage unit, there's a cost. A 10x10 storage unit runs $100-$200/month depending on your area. If you're storing 500 units, that's $0.20-$0.40 per unit per month.

Shipping software: ShipStation starts at $9.99/month. Shippo is free with $0.05 per label. Pirate Ship is completely free. For 500 orders/month, this adds $0.02-$0.05 per order.

Real FBM Cost Example

Same kitchen gadget, $29.99 retail price.

• Product cost: $8.00
• Referral fee (15%): $4.50
• Shipping (USPS Priority, discounted): $6.30
• Packaging: $1.10
• Labor: $1.00
• Storage: $0.25/unit
• Software: $0.03

Total cost per unit: $21.18 Your profit: $8.81 per sale

Wait — that's less profit than FBA? In this example, yes. And that's the reality check a lot of people need.

Side-by-Side Comparison

When FBA Wins

Small, lightweight items with fast turnover. If your product is under 1 lb, sells consistently, and doesn't sit in the warehouse for months, FBA's fulfillment fees are hard to beat. You'd spend more in shipping alone on FBM.

You want the Prime badge. Let's be honest — Prime converts better. Products with the Prime badge see 20-30% higher conversion rates on average. That extra volume can more than offset the higher per-unit fees.

You don't have warehouse space or staff. If the alternative to FBA is packing orders on your kitchen table after your day job, FBA gives you your time back.

When FBM Wins

Large, heavy, or oversized items. FBA's oversize fees are punishing. A product that qualifies as "large oversize" can cost $25+ per unit in FBA fulfillment fees. If you can ship that same product via FedEx Ground for $14, FBM wins easily.

Slow-moving inventory. If your products take 3-6 months to sell, FBA's storage fees and aged inventory surcharges will eat you alive. FBM lets you store it in your own space at a fraction of the cost.

Customizable or made-to-order products. If each order requires personalization, kitting, or custom assembly, FBA can't do that.

You already have fulfillment infrastructure. If you're already shipping Shopify and eBay orders from a warehouse, adding Amazon FBM to that workflow is incremental cost, not a whole new operation.

The Hybrid Approach Most Smart Sellers Use

Here's what experienced Amazon sellers actually do: they use both.

Run your top 20% of products (the fast movers) through FBA. These are the items that sell within 30-60 days, weigh under 2 lbs, and benefit from the Prime badge. FBA makes perfect financial sense for these SKUs.

Move the rest — slow sellers, oversized items, seasonal products — to FBM. Store them yourself, ship them with discounted rates through ShipStation or ShipBob, and avoid the FBA fee stack on products where it doesn't make sense.

This hybrid model lets you get Prime exposure on your best products while keeping margins healthy on everything else. Some sellers report saving 15-20% on overall fulfillment costs by moving to a hybrid approach.

Making FBM Work: The Software Side

If you're going to do FBM seriously (not just five orders a week), you need shipping software. Copying tracking numbers manually into Amazon Seller Central gets old fast, and late shipments tank your seller metrics.

ShipStation connects directly to your Amazon Seller Central account, pulls in FBM orders, and lets you batch print labels. It compares rates across USPS, UPS, and FedEx so you're always picking the cheapest option per package.

ShipBob is worth considering if you want FBM without doing the fulfillment yourself. They act as a third-party warehouse — you send them inventory, they ship orders. You keep the FBM flexibility without the daily packing work.

Easyship is particularly useful if you sell internationally on Amazon. Their duty and tax calculations help you avoid surprise costs on cross-border FBM orders.

Running Your Own Numbers

The examples above use averages, and your situation will be different. Here's how to calculate it for your specific products:

1. Pull your FBA fee estimates from Amazon's Revenue Calculator (search "FBA Revenue Calculator" in Seller Central)
2. Get your actual discounted shipping rates from whatever software you'd use for FBM
3. Be honest about labor costs — even if it's your own time
4. Factor in return rates (FBA handles returns; FBM means you handle them)
5. Don't forget the Prime conversion advantage for FBA — a 25% bump in sales volume changes the math significantly

There's no universal right answer. But there is a right answer for each product in your catalog, and it's worth spending an hour with a spreadsheet to find it.