Amazon Overhauls FBA Reimbursement Policy: Payouts Now Based on Manufacturing Cost
Amazon is changing FBA reimbursements for lost or damaged pre-order inventory from market-value-based calculations to manufacturing cost, effective March 10, 2025. Sellers can submit their own costs or accept Amazon's estimates.
Overview
Amazon is making a significant change to how it reimburses FBA sellers for lost or damaged inventory. Starting March 10, 2025, reimbursements for items lost or damaged before a customer order will be calculated based on the product's manufacturing cost rather than the previous method. This shift represents one of the most impactful policy changes for FBA sellers in recent years, directly affecting how much money sellers recover when Amazon loses or damages their products in fulfillment centers.
What's Changing
- New reimbursement basis — Amazon will now reimburse sellers based on the "manufacturing cost" of affected inventory, defined as the cost to source a product from a manufacturer, wholesaler, or reseller, or the cost to produce the item if you are the manufacturer.
- Excluded costs — The manufacturing cost definition specifically excludes shipping, handling, customs duties, and other ancillary costs, meaning sellers will not be reimbursed for these expenses when inventory is lost or damaged.
- Two cost-determination options — Sellers can either let Amazon estimate their manufacturing costs using comparable product data, or provide their own manufacturing costs directly through a new portal.
- Post-order reimbursements unchanged — For items lost or damaged after a customer order, Amazon will continue to reimburse based on the sales price of the original order minus applicable fees.
How Manufacturing Cost Is Determined
Amazon is giving sellers two paths for establishing the manufacturing cost used in reimbursement calculations. The first option is Amazon's own estimate, which the company says is based on a comprehensive evaluation of comparable products sold by Amazon itself, by other sellers on the marketplace, and through wholesale channels. This automated approach means Amazon will look at market data to determine what it believes a product costs to source.
The second option puts control in the seller's hands by allowing them to submit their own manufacturing costs directly. If a seller chooses not to provide their own figures, Amazon will automatically apply its estimate. Importantly, sellers can update and change their manufacturing costs at any time, so the initial Amazon estimate does not have to be permanent. A new dedicated page within Seller Central will allow sellers to view, manage, and update their manufacturing cost information.
Analysis & Recommendations
Why This Matters
This policy directly reduces how much money sellers recover when Amazon loses or damages their inventory. Most sellers will receive significantly lower reimbursements since payouts will reflect manufacturing cost rather than selling price, removing profit margins from the equation.
Key Takeaways
- FBA reimbursements for pre-order lost/damaged inventory will be based on manufacturing cost, not selling price, starting March 10, 2025
- Manufacturing cost excludes shipping, customs, and handling — only the direct sourcing or production cost counts
- Sellers can submit their own manufacturing costs or accept Amazon's automated estimates based on comparable product data
- Post-order reimbursements remain unchanged and will still be based on the original sale price minus fees
Recommended Actions
- →Gather invoices and purchase orders for all FBA products so you can submit accurate manufacturing costs as soon as the portal opens
- →Review your product catalog to identify high-margin items where the reimbursement reduction will be most significant and consider alternative fulfillment for those products
- →Monitor the new manufacturing cost page in Seller Central and verify that Amazon's estimates are reasonable — replace any inaccurate estimates with your actual costs
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