As an Amazon seller, understanding and managing the various fees associated with selling on the platform is crucial for your success. To make the most profit as an amazon seller, you need an overview of Amazon seller fees, to help you make informed decisions about your ecommerce business.
Fees depend on factors such as the type of seller account you have, the product category and fulfillment method. We’ll be focusing on Amazon FBA (Fulfillment by Amazon), covering the most common fees to give you a clear understanding of what you can expect when selling on Amazon.
Amazon offers different types of fees, which include subscription fees, referral fees, and fulfillment fees. Subscription fees depend on the type of seller account, while referral fees and fulfillment fees are associated with each item you sell. Whether you’re a new seller or a seasoned ecommerce pro, being aware of these costs is vital in order to maintain a healthy profit margin.
Amazon Seller Account Types: Individual vs. Professional
As one of the world’s largest e-commerce platforms, Amazon allows entrepreneurs and businesses to sell their products to a massive customer base.
To start selling on Amazon, you must create a seller account. Amazon offers Individual and Professional seller accounts. While both account types have their benefits, understanding their differences is crucial to choose the one that’s right for you.
Individual Seller Account: Ideal for Casual Sellers
If you are just starting out or only plan to sell a few items per month, an individual seller account might be the right choice for you. This account type is geared towards casual sellers with no monthly subscription fees.
Per-Item Fee Structure
- Individual sellers pay a $0.99 per item fee for each item sold.
- No additional fees for listing items.
- Referral fees and variable closing fees still apply.
No Monthly Subscription Fees
Individual seller accounts have no monthly subscription fees, making it an ideal choice for sellers looking to test the waters prior to investing in a professional account.
Professional Seller Account: Perfect for Scaling Your Business
If you sell more than 40 items monthly or wish to access advanced selling tools, a professional seller account may be a better fit for your growing business.
Monthly Subscription Fees
- Professional sellers pay a $39.99 monthly subscription fee.
- Get access to bulk listing tools, customizable shipping rates, and other advanced features.
No Per-Item Fees
With a professional account, you can sell unlimited items without incurring a per-item fee, making it more cost-effective for high-volume sellers.
Deciding Which Account is Best for You
Choosing between an Individual and Professional Amazon seller account depends on your business needs and goals. Here are some factors to help you decide which account type is best for you:
If you plan to sell fewer than 40 items monthly, an Individual account may be more cost-effective. You will pay a per-item fee of $0.99 in addition to referral and closing fees, but you won’t have to pay a monthly subscription fee.
Monthly Subscription Fee
If you plan to sell more than 40 items monthly, a Professional account may be the better choice. You will pay a monthly subscription fee of $39.99, but you won’t have to pay the $0.99 per item fee.
Professional accounts offer additional features, such as access to Amazon’s advertising tools, bulk product listing and editing, and creating and managing promotions.
If you plan to grow your business over time, a Professional account may be more beneficial. It allows you to create your own brand and access Amazon’s brand registry program, which can help protect your intellectual property.
Amazon Sale-Related Fees: What to Expect
When you sell on Amazon, you’ll come across several fees directly related to your sales transactions. It’s essential to familiarize yourself and be prepared for them as they can impact your proﬁtability.
Referral Fees: Amazon’s Commission on Your Sales
Referral fees are Amazon’s commission for providing you with access to their large marketplace. These fees vary depending on the product category and are charged as a percentage of the item’s selling price, usually between 8% and 15%.
Minimum Referral Fees
There are instances where Amazon charges a minimum referral fee per item. This applies to certain product categories to ensure a minimum commission for Amazon, regardless of an item’s selling price.
Fees Charged for Seller-Fulfilled Items
When you fulfill orders yourself, you’re subject to fees for shipping and handling. These fees vary based on the shipping method, whether you’re using Amazon’s discounted shipping rates, and other factors.
Closing Fees for Media Category Items
Amazon charges an additional closing fee on media category items (books, music, videos, etc.) This fee is a ﬂat rate, typically around $1.80 per item.
Variable Closing Fees
Variable closing fees can come into play for non-media items in certain situations. These fees consider factors like product size, weight, and the shipping speed and can be influenced by your account type (individual or professional seller).
Amazon’s Cut on Shipping Revenue
When selling media items, Amazon will take a cut from your shipping revenue.
Shipping Credits and Costs
As a seller, you’re given a shipping credit when you sell an item. However, this credit may not always cover the entire cost of shipping, and you’ll need to cover any extra expenses.
Reimbursements for Shipping Expenses
Factors Affecting Shipping Costs
Shipping costs can be affected by the item’s size, weight, destination, and shipping method. It’s crucial to consider all these factors when determining how much to charge for shipping to maintain profitability.
Fulfillment by Amazon (FBA) Fees: What You Need to Know
Understanding FBA fees is crucial to effectively managing your costs and maintaining profitability. Let’s explore the various components of these fees and how they can impact your business.
FBA Inventory Storage Fees
Amazon charges you for storing your products in their fulfillment centers. Storage fees vary based on the size and weight of your items and the time of the year, with higher fees during peak seasons.
Monthly Inventory Storage Fees
These are assessed per cubic foot and vary depending on the month. For example, January to September usually have lower fees, while October to December rates are higher due to increased demand.
FBA Aged Inventory Surcharge (Previously Known as Long-Term Storage Fees)
Inventory in Amazon’s warehouses for more than 365 days is subject to an additional fee. This fee encourages sellers to keep inventory levels lean, minimizing storage costs and maintaining warehouse efficiency.
FBA Fulfillment Fees
Fulfillment fees are based on your items’ size, weight, and product category. These fees cover the costs of picking, packing, and shipping your products to the end customer, as well as customer service and returns handling.
Product Size Determines FBA Fees
Amazon classifies items as either standard or oversized. The size will determine the fees associated with fulfilling and storing your products. It’s essential to measure and categorize your items to prevent unexpected fees accurately.
Cost of Inbound Shipping for FBA
Inbound shipping is the cost of sending your products to Amazon’s fulfillment centers. While you’re responsible for these fees, using Amazon’s partnered carriers can provide significant discounts compared to standard shipping rates.
Additional FBA Fees
These may include fees for labeling, repackaging, or other services performed by Amazon on behalf of the seller, as well as fees for removing or disposing of items.
Removal and Disposal Order Fees
If you decide to remove or dispose of your inventory from Amazon’s fulfillment centers, you’ll incur removal or disposal order fees. These fees vary based on the size and weight of your items.
Rental Book Service Fees
Rental books have specific service fees that apply to standard FBA fees. These fees only apply to sellers participating in the textbook rental program.
Fulfillment by Merchant (FBM) Seller Fees
Fulfillment by Merchant (FBM) seller fees differ from Fulfillment by Amazon (FBA) fees for sellers who handle customer orders themselves. Let’s dive into FBM sellers’ fees, including returns processing fees and refund administration fees.
The Fees That FBM Sellers Pay
As an FBM seller, you need to consider several fees you must pay to be part of the Amazon marketplace:
- Amazon Referral Fees: These fees are charged as a percentage of the sale and vary depending on the product category
- Subscription Fee: Professional sellers pay a monthly subscription fee of $39.99, while individual sellers pay a per-item fee of $0.99
- Closing Fees: Media products have an additional closing fee, which is a fixed amount of $1.80 per item
Returns Processing Fee
Amazon charges FBM sellers a returns processing fee when dealing with product returns. This fee aims to cover the cost of services provided to sellers, such as handling, processing, and refunding returned items. It usually equals the referral fees paid for the initial purchase and gets deducted when processing returns.
Refund Administration Fees
As an FBM seller dealing with refunds, Amazon also charges refund administration fees. Depending on the situation, this fee is lower of either $5.00 or 20% of the original order referral fee.
By being aware of these FBM fees, you can strategically plan and navigate the Amazon marketplace while keeping costs in check.
Understanding the Cost of Selling on Amazon
When you become an Amazon seller, it’s crucial to understand the costs involved. This knowledge will enable you to price your products competitively and maximize your profits. Let’s review the basics of Amazon’s selling fees and break down the total cost.
The Question: Can I Sell on Amazon for Free?
While Amazon provides a platform for sellers to reach millions of customers, it’s important to realize that using this service comes with fees. There is no entirely free way to sell on Amazon, but understanding the fee structure can help you minimize expenses.
Breaking Down the Total Cost of Selling on Amazon
The costs associated with selling on Amazon can be broken down into two main categories: subscription and per-item fees. There are also additional fees depending on factors such as fulfillment method and category of the product.
Subscription fees: Amazon offers two selling plans, Individual and Professional. Individual sellers pay $0.99 per item sold, while Professional sellers pay a monthly subscription fee of $39.99. The choice depends on the volume of items you plan to sell.
Per-item fees: Amazon charges a referral fee for each item sold, based on a percentage of the product’s sale price. This fee varies by category, with most ranging from 8% to 45%.
Other fees, such as FBA fees for storing and shipping products through Amazon’s fulfillment centers, may also be incurred. These fees vary depending on the size and weight of the product, as well as the time of year.
Researching and understanding the fees associated with your specific product category and fulfillment method is crucial to accurately calculating your expenses and profit margins.
How to Limit Your Amazon Selling Fees
As an Amazon seller, you always want to stay competitive while maintaining healthy profit margins. Limiting Amazon selling fees is critical to optimizing your business. This section will discuss a few strategies to help you do just that.
Using the Amazon FBA Fee Calculator
Before listing a new product, estimating your potential selling fees is important. To do this, you can use the Amazon FBA Fee Calculator. Simply enter the product’s ASIN or name, your selling price, and shipping cost, and the calculator will display your estimated fees, helping you make informed decisions about your pricing strategy.
Remember that accurate estimations help you avoid surprise expenses and maintain profitability on each sale. Always check the calculator when adding a new product or changing your selling strategy.
Having a Professional Seller Account to Save on Fees
If you’re serious about your Amazon selling business, consider switching to a Professional Seller Account. While this account type has a monthly fee of $39.99, it eliminates the $0.99 per item fee that Individual Seller accounts have.
Calculate your monthly sales volume to determine if this is the right move for your business. Upgrading to a Professional Seller Account is a smart decision if you’re selling more than 40 items per month.
Another advantage of the Professional Seller Account is access to additional features, such as bulk listings and advanced sales reports, which can contribute to the overall efficiency of your business.
Keeping Your Inventory Moving Quickly to Avoid Long-Term Storage Fees
Amazon charges long-term storage fees when your inventory sits in their warehouses too long. To avoid these fees, keep your inventory moving quickly by implementing effective inventory management strategies.
First, monitor your inventory levels to avoid overstocking slow-selling items. Next, adjust your pricing and marketing strategies to encourage faster sales. Finally, consider running promotions or discounts to clear out stagnant inventory.
By keeping your inventory moving quickly, you’ll avoid long-term storage fees and improve your chances of earning the Buy Box and boosting your overall sales.
As an Amazon seller, understanding the various fees is essential for the success of your business. By now, you should have a clear idea of the costs involved and how they can affect your bottom line.
The key to thriving in the competitive Amazon marketplace is effectively managing these fees while offering high-quality products at competitive prices. Keep a close eye on your expenses and continuously optimize your listings, inventory, and fulfillment strategies.
Remember, the Amazon platform is constantly evolving, as are its seller fees and requirements. Stay informed and adapt to these changes to maintain a profitable and sustainable business. With dedication and strategic planning, you can maximize your online sales and achieve your eCommerce goals.
Frequently Asked Questions (FAQs)
Are There Any Hidden Fees I Should Be Aware Of?
There are no hidden fees; however, you should be aware of additional costs, such as FBA fees for sellers who use Amazon’s fulfillment services. Storage fees apply for storing products in Amazon’s warehouses, and fulfillment fees cover picking, packing, and shipping your items. These fees vary depending on the product’s size and weight.
How Can I Minimize My Amazon Selling Fees?
To minimize your fees, you can choose the right selling plan for your needs, optimize product pricing, and avoid long-term storage fees by carefully managing inventory levels. Additionally, consider using FBA alternatives or fulfilling orders in-house to reduce fulfillment fees, especially for products with lower profit margins.
What Are Some Strategies to Optimize My Profit Margins on Amazon?
Optimizing your profit margins on Amazon involves several strategies, such as:
- Sourcing cost-effective, high-quality products with good profit potential.
- Maximizing your product listing’s visibility with SEO and advertising.
- Refining your pricing strategy to stay competitive and maximize sales.
- Effectively managing inventory to avoid overstocking and reduce storage fees.
By developing and implementing these strategies, you can improve your overall profitability on Amazon and successfully grow your business.