Amazon FBA Prep Cost Calculator

Written out

Prep cost per unit is whatever has to happen to a unit between arriving from the supplier and being acceptable to a fulfilment centre: labelling, poly bagging, bubble wrapping, bundling, and any suffocation warnings or expiry labelling the category requires.

Cost = materials + labour per unit, or the per-unit rate charged by a prep service if outsourced.

It is a small number that is almost always left out of a landed cost model, and on a cheap product it is not small as a percentage.

In practice

The $29.99 product needing an FNSKU label and a poly bag: materials around $0.06, labour at 20 seconds a unit and $22 an hour is $0.12. Total $0.18 a unit.

A prep service charging $0.55 a unit for the same work costs $0.37 more, or $370 on a 1,000-unit shipment.

Against that, doing it yourself on 3,000 units is roughly 17 hours of work. Whether $1,110 of prep service fees beats 17 hours depends entirely on what else those hours would produce.

Where the supplier can apply the labels and bagging at origin, which many will for a few cents a unit, both options are usually beaten.

The limitations

Prep requirements vary by category and change. Suffocation warnings, expiry date labelling, sets and bundles, and fragile item requirements each carry their own rules, and non-compliant inventory can be refused or charged an unplanned prep fee at the fulfilment centre.

Amazon's own prep service exists and is generally the most expensive option per unit, which makes it a fallback rather than a plan.

Putting it to use

Get the supplier to prep at origin wherever possible. It is nearly always the cheapest route and it removes a handling step from your side of the chain entirely.

Then include the prep cost in landed cost rather than treating it as an overhead. On a $8.50 product an unmodelled $0.18 is 2% of cost, and on a cheaper product it is considerably more.

Where prep becomes a real constraint

For bundles and multipacks the prep is the product, the units have to be combined, labelled as a single SKU and packaged so they arrive together. That is meaningful labour and it cannot be skipped.

It is also where the economics of multipacks get decided. A three-pack that raises the price point enough to fix the FBA fee problem only works if the prep cost of assembling it is well below the fee saved, and at $0.50 a bundle it usually is.

The practical arrangement for a seller doing this at volume is to have the supplier assemble and label the multipack at origin as a single unit, which converts a recurring domestic labour cost into a one-off specification change. Sellers who assemble bundles domestically at scale are usually doing so because nobody asked the supplier.

Prep requirements are checked on receipt, and non-compliant inventory attracts an unplanned prep fee at Amazon's own rates plus a delay in check-in. Confirming the requirement for the specific category before the first shipment is considerably cheaper than discovering it on a container's worth of stock.