**How brutal are upcoming Long Term Storage Fees (LTSF)? What will this mean for slow selling books (and more)? A look at the numbers.**

In this article:

- The raw numbers on what FBA sellers will be charged each month for books of various sizes.

Two weeks ago,

Amazon will soon begin charging FBA sellers long term storage fees every month.Amazon long term storage fees will almost double.*All items will be charged a minimum of 50 cents per item, per month, if at an FBA warehouse longer than one year.*

In Part One, let’s unpack each of these one-by-one. In Part Two, we’ll do the raw math on what this translates to for books of various sizes.

**Part One: Each new Long Term Storage Fee, explained**

*Change #1: Long term storage fees (LTSF) will be charged each month.*

*Goes into effect: September.*

*Explanation:*

Until now (or rather, until September), the way it went was this:

- An
Amazon FBA seller buys a slow-selling book (either a book with low but nonetheless steady demand, or one that is a gamble and may never sell again). - Once that book has been at an FBA warehouse for >6 months, it will get hit with a long term storage fee (LTSF) the following February or August (LTSFs were imposed twice a year).
- If an item incurred a long term storage fee after six months, you had another six-month grace period before it was charged again.

The six-month gap between LTSF charges meant we had the luxury of being a little lazy with how we dealt with slow-selling

In an effort to get slow-selling inventory out of its FBA warehouses, *love* being lazy). The six-month grace period is now gone, and

Is this the end of long-tail books? No. Just the end of not understanding sales rank, and not knowing your numbers.

**Change #2: Long term storage fees (LTSF) will almost double.**

*Goes into effect: September.*

*Explanation:*

**For all inventory in an FBA warehouse six months to one year **

- Current LTSF, per cubic foot (6 to 12 months): $11.25 every six months.
- Current LTSF, per cubic foot (6 to 12 months, converted to a monthly rate): $1.88 / month.
- New LTSF, per cubic foot (6 to 12 months): $3.45 / month.

An increase of 84%.

**For all inventory in an FBA warehouse over one year**

- Current LTSF, per cubic foot (12+ months): $22.50 every six months.
- Current LTSF, per cubic foot (12+ months, converted to a monthly rate): $3.75 / month.
- New LTSF, per cubic foot (12+ months): $6.90 / month.

Also an increase of 84%.

**Change #3: For all items in inventory for over one year, there will be a monthly minimum LTSF of 50 cents.**

*Goes into effect: August 15th.*

*Explanation:*

If your first thought is “*How many books would have cost over 50 cents per month anyway?*” The answer is: Very few. In fact, this minimum increases the monthly LTSF for all but the hugest books.

Same trend at work here:

This is not the end of long-tail books, VHS tapes, and more. All the math needed to safeguard against losing money is pretty simple (and explained either below, or in an upcoming article) Those who dial in their numbers will emerge from this just fine. Those who decide that “math is too hard” will perish.

I don’t like FBA fees, but I love a good seller purge. So let the purge begin…

**Part Two: The Raw Math on Long Term Storage Fees (LTSFs)**

This is what you came for: The numbers.

You have a book. It’s average

Here’s how this section is going to go: Since size is what determines LTSFs, I’m going to take a sampling of 5 books at the various sizes you’ll commonly encounter (ending with a worst-case-scenario of a big huge textbook that doesn’t sell for two whole years).

Here are the book sizes we’ll cover:

- Mass market paperback.
- Trade paperback.
- Average hardcover.
- Average textbook.
- Super-huge textbook.

**5 scenarios for Long Term Storage fees**

*Disclaimer: For simplicity and ease of math, I did some light rounding of these figures.*

**Book Strata #1: Mass market paperback (romance novel sized)**

- ISBN: 1612680194
- Book Dimensions: 4.2 x 1.2 x 6.5 inches
- Cubic Inches: 33.
- Cubic Feet Translation: 1/52 of a cubic foot.
- Monthly LTSF 6 to 12 months: 7 cents / month.
- Monthly LTSF 12+ months: 50 cents / month.
- Total LTSF after one year in inventory: 42 cents
- Total monthly + LTSF after one year in inventory: 54 cents
- Total LTSF after two years in inventory: $6.54 cents
- Sales price needed to break even after 1 year: $6.50 (+cost of book)
- Sales price needed to break even after 2 years: $13.60 (+cost of book)

Analysis: Setting aside the fact that this is a small book, these long term storage fees don’t look so devastating when you consider you still break even after an entire year selling this at a miniscule price ($6.50).

**Book strata #2: Standard paperback**

- ISBN: 0316346624
- Product Dimensions: 5.5 x 1 x 8.5 inches
- Cubic Inches: 47
- Cubic Feet Translation: 1/38 of a cubic foot.
- Monthly LTSF 6 to 12 months: 9 cents / month.
- Monthly LTSF 12+ months: 50 cents / month.
- Total LTSF after one year in inventory: 54 cents
- Total monthly + LTSF after one year in inventory: 78 cents
- Total LTSF after two years in inventory: $6.78 cents
- Sales price needed to break even after 1 year: $6.80 (+cost of book)
- Sales price needed to break even after 2 years: $13.90 (+cost of book)

Analysis: Again, because you rarely bring a book into your inventory not expecting it to sell anytime in the next year, in the event an average paperback book does not sell in one year, you only need to sell a book you paid $1 for for $7.80 (+the cost of the book) to break even. Not terribly daunting. No one wants to only break even, but it’s ok for this to happen (or even to lose money) on a certain percentage of your inventory, knowing you’ll make it up in aggregate.

**Book strata #3: Standard hardcover**

- ISBN: 0393244660
- Product Dimensions:
- Cubic Inches: 63
- Cubic Feet Translation: 1/27 of a cubic foot.
- Monthly LTSF 6 to 12 months: 13 cents / month.
- Monthly LTSF 12+ months: 50 cents / month.
- Total LTSF after one year in inventory: 78 cents
- Total monthly + LTSF after one year in inventory: $1.02
- Total LTSF after two years in inventory: $7.02
- Sales price needed to break even after 1 year: $8.90 (+cost of book)
- Sales price needed to break even after 2 years: $16 (+cost of book)

Analysis: This is around the range we need to start getting serious about setting a minimum price we expect to list this for before bringing a long-tail book of this size into our inventory. Let’s say your standard minimum price for a book was $11. Then let’s say you picked up a book this size, and it had FBA offers around $11. So far so good. But then let’s say this book was ranked 3 million. Now you have to consider this book might sit a a warehouse for awhile, and you’ll have to answer the question: At what price is it worth it the potential LTSFs to bring this book into my inventory?

To settle this question, in an upcoming article I’ll break down some sample pricing guidelines at various sales ranks.

**Book strata #4: Medium textbook **

**ISBN: 013281465X****Product Dimensions:**- Cubic Inches: 78
- Cubic Feet Translation: 1/22 of a cubic foot.
- Monthly LTSF 6 to 12 months: 16 cents / month.
- Monthly LTSF 12+ months: 50 cents / month.
- Total LTSF after one year in inventory: 96 cents
- Total monthly + LTSF after one year in inventory: $1.32
- Total LTSF after two years in inventory: $7.32
- Sales price needed to break even after 1 year: $10.15 (+cost of book)
- Sales price needed to break even after 2 years: $17.20 (+cost of book)

Analysis: This is a decent-sized 600 page textbook. And even at this size, the storage fee is only 16 cents a month from six to 12 months. This definitely adds up, but doesn’t feel so menacing for a book in decent demand that you’re selling for $15+.

It gets considerably more serious after the one-year mark.

**Book strata #5: Mega-huge monster textbook**

- ISBN: 0134093410
- Product Dimensions: 9.2 x 2 x 11 inches
- Cubic Inches: 202
- Cubic Feet Translation: 1/9 of a cubic foot.
- Monthly LTSF 6 to 12 months: 38 cents / month.
- Monthly LTSF 12+ months: 77 cents / month.
- Total LTSF after one year in inventory: $2.28 cents
- Total monthly + LTSF after one year in inventory: $2.70
- Total LTSF after two years in inventory: $11.94
- Sales price needed to break even after 1 year: $13.60 (+cost of book)
- Sales price needed to break even after 2 years: $24.50 (+cost of book)

Analysis: Redundant reminder here, but this is a *huge* textbook, and pretty close to a worst-case-scenario. Presumably books this size already have an average selling price of over $15 for you, so you’re already covered here.

What this basically means is: When you bring a huge textbook into your inventory, and it doesn’t sell in six months, just keep an eye on it. Even with a textbook this size (two inches thick!), the fee is only 38 cents a month. Painful, but rarely lethal.

*(Sidenote: This should not dissuade you from buying textbooks. “Textbooks only sell two months out of the year” is a huge myth. Textbooks sell year-round, so just stay on top of your repricing.)*

Also note that *except* this one. This means that the 50 cent minimum will apply to all but the biggest books.

**Wow, that was a long one**

You guys, this was a majorly words-dense and numbers-dense article. But we made it. And I seriously hope you have a more sober take on new long term storage fees.

Now that you’re armed with the raw numbers, in the next article I’m going into practical steps on dealing with LTSFs, including sample buying criteria (and more).

Knowing your numbers is going to be everything starting in September. I hope this article serves as a useful cheat sheet.

-Peter Valley

PS: In the next two articles in this 5-part series, I’ll be covering:

- A practical approach to dealing with new FBA selling fees.
- Practical buying standards to mitigate against long term storage fees.

Watch your inbox for those.

Hi, I don’t see FBA fees or inbound shipping included in your break even calculations. What am I missing? Thanks.

Shipping costs are variable. You can round up and assume 50 cents per book to play it safe.

It may not be the end of the FBA World for lazy sellers, but it might be.

Thanks so much Peter! I really appreciate this. Great information!

So here’s a question for you and the other commentors. What method do you use now, or if you don’t what do you plan to do in the future to keep track of your inventory and it’s age and be reminded to adjust prices, or recall/destroy inventory?

For me right now I just check my LTSF fees pending as we approach february and August.

For the future I might try to take advantage of Inventorylab’s reminder feature when I set up my shipments.

An excel spreadsheet would probably be the best option, but like Peter I’m a bit lazy.

I just use the inventory health report personally.

I will be interested to see what your new strategy will be in light of the recent changes. I phased out $10 dollar books almost a year before the latest changes, and my minimum has been creeping up in the last year. My new minimum buy price is $13 for softcovers, and $14 for hardbacks, based on a $1 buy price, and 50 cents outbound shipping. The only time I deviate is on a very low sales rank book in good condition, and then only $1 less in potential sales listing price, or if the price is significantly lower than $1. Enough books will end up in the $10-11 range whether you plan on it or not, and the higher price books will yield more net profit. Bigger softcovers, or heavier books, I have to see a potential sales price of $15 or greater, textbooks, $20 or greater. On a side note, I have seen many instances where books are not categorized correctly as small standard, or in their appropriate large standard tier, and those mistakes are almost always in Amazon’s favor, which is another factor to consider, in my opinion. I don’t expect every one to agree with me. Each has to do what is right for their own business.

I’ll definitely get all into this in one of the next two articles. Awesome insights.

Still a bit confusing Peter. Maybe you would be willing to illustrate an example using my suggestion below.

If this book stayed in your inv. for 12 months your total LTSF would equal (fill in blank) plus FBA fees, in-shipping cost and raw cost, would equal a total cost of (fill in blank). You would then be able to determine if you priced this book at (fill in blank) your breakeven selling cost more clearly. Then Peter, show the same formula above if the book remained in your inv. for 24 months.

Thank you.

Wish I could provide a formula that simple, but LTSFs are determined by the size of the book.

Am I missing something? To break even the sales price will need to be higher than the LTSF (+ cost of book) because of shipping costs and FBA seller fees. Using Rich Dad, Poor Dad as an example, $6.50 is what you need to break even after FBA fees, shipping costs, and cost of book are accounted for. Selling the book at $6.50 (+ cost of book) will result in a loss of a few dollars.

Storage costs after one year is 54 cents. The payout after a $6.50 selling price is about 55 cents.

Hi Peter,

It was a long article but it was very practical and helpful! Please keep me on your email list so I can read the whole series of articles your putting together.

I would highly recommend everyone read these!

Thanks for all you do!

Phil