What Is Ordering Cost for FBA Sellers?
Ordering cost is the total fixed expense you incur every time you place a purchase order, regardless of how many units you order. For FBA sellers sourcing from Asia, ordering cost includes freight, quality inspection, customs brokerage, prep labor, FBA inbound shipping, and administrative overhead. It does not include the per-unit product cost, which is part of your landed cost.
Ordering cost matters because it is one of the two inputs to the Economic Order Quantity (EOQ) formula. Higher ordering costs push you toward larger, less frequent orders. Lower ordering costs let you order smaller quantities more often, reducing carrying cost. Getting this number right directly affects your cash flow and inventory efficiency.
Most FBA sellers significantly underestimate their ordering cost because they forget to include their own time, inspection fees, and Amazon's inbound placement fees. A realistic ordering cost for a single China-to-FBA shipment ranges from $800 to $2,000+ depending on shipment size and complexity.
Ordering Cost Formula
Per-order cost sums every fixed expense associated with placing and receiving one purchase order:
Ordering Cost Per Order = Freight + Inspection + Customs + Prep + Inbound Shipping + AdminTo calculate total annual ordering cost:
Annual Ordering Cost = (Annual Demand / Order Quantity) × Cost Per Order| Component | Typical Range | Notes |
|---|---|---|
| Sea freight + drayage | $800 - $2,500 | Per shipment, varies by volume and port |
| Quality inspection | $200 - $400 | Third-party inspection at factory |
| Customs brokerage + duties | $150 - $500 | Broker fee + entry processing |
| Prep labor or service | $0.50 - $2.00/unit | Labeling, poly-bagging, bundling |
| FBA inbound shipping | $100 - $400 | Partnered carrier or SPD rates |
| Admin time | $50 - $200 | PO creation, supplier comms, payment processing |
Worked Example: Ordering Cost Per Shipment
Shipment: 500 units of a standard-size product from Shenzhen to a US FBA warehouse.
Sea freight + drayage: $1,200
Quality inspection: $300
Customs brokerage + duties: $180
Prep service ($1.00/unit): $500
FBA inbound shipping (partnered carrier): $150
Admin time (3 hours at $50/hr): $150
Total ordering cost: $2,480
Per-unit ordering cost: $2,480 / 500 = $4.96
If you ordered 1,000 units instead, the fixed costs stay roughly the same (freight scales, but inspection, customs, and admin do not). Total might be $3,100, making per-unit ordering cost $3.10. This is why EOQ matters: doubling quantity cuts per-unit ordering cost by ~37% in this example.
FBA-Specific Ordering Cost Factors
Inbound placement fees. Amazon's inbound placement service fee adds $0.27-$1.58 per unit depending on size tier. If you do not pay this fee, Amazon splits your shipment across multiple fulfillment centers, which increases your shipping and logistics complexity but avoids the per-unit charge.
Prep service vs. self-prep. Outsourcing prep to a third-party service costs $0.50-$2.00 per unit but saves you time and warehouse space. Self-prep saves the per-unit fee but adds labor hours to your ordering cost. Factor your actual costs, not just the visible invoice.
Partnered carrier savings. Amazon's partnered carrier program offers discounted inbound shipping rates that can cut your per-shipment inbound cost by 30-50% compared to arranging your own LTL carrier.
Common Ordering Cost Mistakes
Ignoring admin time. Placing a PO involves supplier negotiation, payment coordination, shipment tracking, and receiving verification. This easily adds 3-5 hours per order. At $50-100/hour opportunity cost, that is $150-$500 per order that most sellers leave out of their EOQ calculations.
Not including inbound placement fees. Amazon's placement fee is a per-unit charge, but it is triggered by the act of sending a shipment. If you pay it, include it in your ordering cost model. If you split shipments to avoid it, include the extra shipping cost for multiple destinations.
Ordering too frequently. Placing 12 small orders per year instead of 4 larger ones can triple your total annual ordering cost. If your per-order cost is $2,000, that is $24,000/year vs. $8,000. Use EOQ to find the balance point between ordering cost and carrying cost.
Related Glossary Terms
The optimal order quantity that minimizes total ordering and carrying costs.
Read →The total per-unit cost to get product from factory to FBA.
Read →The direct cost of inventory sold during a period.
Read →Revenue minus all variable costs per unit.
Read →Units expected to sell during the replenishment lead time.
Read →Frequently Asked Questions
What is the difference between ordering cost and landed cost?
Ordering cost is the fixed expense per purchase order regardless of quantity: freight, inspection, customs brokerage, and admin time. Landed cost is the per-unit cost to get product to Amazon, including product cost, shipping, and duties allocated across all units in the shipment.
How does ordering cost affect EOQ?
Higher ordering costs push EOQ up, meaning you should order larger quantities less often. Lower ordering costs favor smaller, more frequent orders. The EOQ formula balances ordering cost against carrying cost to find the quantity that minimizes total annual inventory cost.
Should I include my time in ordering cost calculations?
Yes. PO creation, supplier communication, shipment coordination, and payment processing take hours per order. Value your time at your effective hourly rate or what you would pay a VA to handle it. Most sellers undercount $150-500 per order in admin cost.