The most common reason a new FBA business fails is not bad products or bad ads. It is a margin calculation that left out three fees.
Amazon India charges for referral, fulfilment, storage, and a handful of situational extras. Individually none of them look alarming. Stacked on a ₹499 product they can take more than half the selling price.
This is every fee, what triggers it, and how to model your real margin before you place a purchase order.
The Four Fees Every FBA Order Pays
| Fee | Charged on | Typical range |
|---|---|---|
| Referral fee | Every sale, as a percentage of selling price | 2 to 17 percent by category |
| Fulfilment fee | Every FBA unit shipped, by size and weight | ₹27 to ₹180+ |
| Storage fee | Cubic feet occupied per month | ₹35 to ₹50 per cubic foot |
| Closing fee | Fixed amount per unit, by price band | ₹5 to ₹60 |
Everything else is conditional. These four are unavoidable.
Referral Fee: The Percentage Amazon Takes
This is Amazon's commission and it varies more by category than most sellers expect.
- Books, groceries: 2 to 6 percent
- Electronics, large appliances: 5 to 8 percent
- Home, kitchen, furniture: 10 to 15 percent
- Apparel, jewellery, beauty: 12 to 17 percent
Two things sellers get wrong here.
It is charged on the total price the customer pays, including any shipping charge you set, not on your net receipt.
Many categories have price-slab rates. Apparel below ₹500 might be 5 percent while apparel above ₹1000 is 17 percent. Pricing a product at ₹1,020 instead of ₹995 can cost you more in fees than the ₹25 gains you. Check the slab boundaries in the Amazon India fee schedule before setting a price.
Fulfilment Fee: Size and Weight Decide Everything
Amazon assigns each product a size tier, and the tier decides the fee. The tiers are based on the packed dimensions, not the product's dimensions.
| Size tier | Rough limits | Local fulfilment fee |
|---|---|---|
| Standard small | Under 500g, small box | ₹27 to ₹40 |
| Standard medium | 500g to 2kg | ₹50 to ₹75 |
| Standard large | 2kg to 12kg | ₹80 to ₹150 |
| Heavy and bulky | Over 12kg | ₹150+ with per-kg additions |
There is a second multiplier on top of the tier: distance. Amazon charges local, regional, and national rates. A unit shipped from a Delhi fulfilment centre to a Chennai customer costs meaningfully more than one shipped within the same state.
The practical consequence: if you sell nationally from a single fulfilment centre, budget for the national rate, not the local one. Sellers who model on local rates and then sell across India routinely find their fulfilment cost is 40 percent higher than planned.
This is also why lightweight products are the standard advice for first-time FBA sellers. It is not a preference. A 400g product and a 2.5kg product at the same selling price have completely different businesses underneath them.
Storage Fee: The One That Compounds
Storage is charged monthly on the cubic feet your inventory occupies, at roughly ₹35 to ₹50 per cubic foot depending on the month.
Two things make this fee dangerous rather than merely annoying.
October to December is charged at a premium. Amazon needs space for festive season volume, so storage rates rise sharply in Q4. Inventory that sat quietly all year suddenly costs multiples to hold.
Long-term storage surcharges apply after 365 days. Units that have not sold in a year attract an additional charge on top of the monthly rate.
The failure mode is predictable. A seller orders 1,000 units to get a better unit price from the supplier, sells 120 of them in the first three months, then pays storage on 880 units straight through the Q4 premium. The savings on the bulk order are gone by February.
Order 30 to 60 days of expected sales for a first shipment. The worse unit economics on a small order are cheaper than the storage on a wrong bet.
Closing Fee
A flat per-unit charge that varies by selling price band, usually ₹5 to ₹60. It is small, it is easy to forget, and on a ₹299 product it is a real percentage of your margin.
The Conditional Fees
These do not apply to every seller, but each one has surprised somebody.
Removal and disposal fees. Getting inventory out of a fulfilment centre costs per unit, whether you want it returned or destroyed. Dead stock is not free to walk away from.
Returns processing. In high-return categories, especially apparel, Amazon charges to process the return. Apparel return rates of 20 to 30 percent are normal, so model this as a running cost, not an exception.
Unplanned prep and labelling. If units arrive without correct FNSKU labels or adequate packaging, Amazon does the work and bills you for it, at a rate well above what it would cost you to do properly at source.
Advertising. Not technically an FBA fee, but no new listing ranks without it. Budget 10 to 15 percent of selling price for the first several months.
Working Out Your Real Margin
Here is the calculation done properly, on a ₹999 home and kitchen product weighing 600g.
Selling price ₹999
Referral fee (home and kitchen, ~13%) -₹130
Fulfilment fee (standard medium, national) -₹75
Closing fee -₹25
Storage (600g product, ~2 month turn) -₹8
Returns provision (~5% return rate) -₹20
Cost of goods -₹250
Inbound shipping to fulfilment centre -₹30
Advertising (12% of selling price) -₹120
Net profit per unit ₹341
Net margin 34%
Aim for 25 percent or better after everything above. Below 15 percent you cannot absorb a price war, a bad month of ad performance, or a returns spike, and all three will happen.
Note what the advertising line does. Take it out and the margin looks like 46 percent, which is the number most sellers put in their spreadsheet. Ads are not optional for a new listing, so leaving them out is not optimism, it is an error.
Use the Revenue Calculator, Then Check It
Amazon's FBA Revenue Calculator is free inside Seller Central and it is genuinely useful. Enter a product's dimensions, weight, and price and it returns referral and fulfilment estimates.
Two caveats. It does not know your cost of goods, your inbound shipping, your return rate, or your ad spend, so its net profit figure is not your net profit. And it defaults to assumptions about size tier that a real packed unit may not match.
Weigh and measure the packed unit, with its box and any padding, before trusting a tier estimate.
The Three Checks Before You Commit
- Weigh and measure the packed unit. Size tier is the largest single lever on fulfilment cost and it is decided by the box, not the product.
- Find the price-slab boundaries for your category. Then price just under one rather than just over.
- Model at the national fulfilment rate with advertising included. If it still clears 25 percent, the product works.
Thinking About Selling on Amazon India?
If you are still deciding whether FBA fits your product at all, start with our complete Amazon FBA guide for Indian sellers, which covers registration, sourcing, and launch.
Our ecommerce team runs margin modelling, listing setup, and FBA logistics for brands across Amazon.in. If you want a second pair of eyes on the numbers before you place a purchase order, get in touch.