December 24, 2019
Whether you are just starting or scaling your Amazon product line, you should have a clear understanding of the relevant Amazon Seller Fees. This information is crucial for making important business decisions.
Fees depend on the kind of product you plan to sell on Amazon (similar to eBay). In addition to product-based fees, you also should take a look at variable costs. This can get quite tricky. For example, if you are focusing just on fixed costs, your variable costs might eat into your profit margin.
There are three main groups of Amazon Seller Fees that you need to be aware of when it comes to selling on Amazon:
What follows is a compilation of all the information you'll need regarding these three clusters of Amazon Seller Fees.
For every sale, Amazon will charge you with a referral fee. These Amazon seller fees depend on the per-unit price of the product you sold and that item's category.
It doesn't really matter whether you are a Pro or an Individual seller, you will have to pay an amazon referral fee for every sale.
There are two factors that determine the Amazon referral fee:
Generally, sellers usually pay an amazon referral fee close to 15% of the price of the products sold.
Minimum referral fees only apply to certain product categories and range from $0 to $2.
Amazon Seller Fees can also be different depending on whether you register for a Pro or Individual account.
Here's the breakdown of these two types of accounts and their fees:
The Amazon Individual Seller account is for beginner sellers or sellers who only make a few sales per month.
With an Individual Seller account, you won't have to pay a monthly Amazon Seller fee. In the event you make a sale, you pay $0.99 for every sale you make.
Main Drawback of Individual Seller
The main drawback of Amazon Individual Seller accounts is its limitations:
If you think that you're going to be moving more than 40 units every month, you definitely need to look at signing up for the Amazon Pro seller program. This account charges $39.99 per month but packs a lot more features.
Here are just some of the benefits you get with this type of seller account:
Please note: Even with an Amazon Pro Merchant account you still are responsible for paying Amazon Referral Fees (as noted above).
If you don't plan to use the Amazon FBA program and are thinking of shipping the orders you fulfill yourself, Amazon can assist you by giving you shipping credits. Keep in mind that while these credits do help, they may not always cover your entire shipping cost. In fact, for a lot of sellers who are unaware, these credits easily become an additional expense.
The key factors impacting your shipping fees and the amount of shipping credit Amazon will give you are the type, weight, and size of the products you plan to sell.
For smaller, more compact and lighter items, the shipping credit might actually be more than what you actually pay in shipping. However, if you are selling heavy or bulky products, you end up spending more on shipping for every unit you sell.
Given the shipping costs involved in direct sales and merchant fulfillment, more and more sellers on Amazon have switched over to Amazon's Fulfillment by Amazon (FBA) program to take care of their shipping needs.
What exactly do you get with the FBA system? First of all, you get peace of mind because you're no longer doing direct product fulfillment. Amazon takes care of that headache for you. Second, you may also get a sales boost because of Amazon primer buyers. But before you get too excited, take a look at the FBA fee breakdown below.
The FBA Amazon Seller Fees are actually made up of four different fees compiled into one:
This fee covers the management of your products at Amazon's FBA fulfillment centers. It takes care of everything, starting with packing all the way to shipping.
For the FBA system to work, you have to ship your inventory to your designated Amazon fulfillment center.
Amazon charges you for storing any inventory prior to the sale. You are getting charged by Amazon for any space your inventory takes in the company's warehouses.
The two key factors are the weight and the size of the products you are storing at Amazon's warehouses.
Amazon uses two separate size categories for FBA products. It categorizes all the products going into its warehouses into two broad categories.
Every month your product sits in Amazon's warehouses unsold, you will be charged the Amazon Seller Fees. It's also important to remember that these fees are charged on top of any account and referral fees you have to pay.
FBA Label Service
If you don't put the right barcode on your products, Amazon can do it for you. However, the company will charge you $0.20 per item processed. With a lot of inventory, this can add up quickly!
If your items stay at Amazon's fulfillment center for longer than 180 days or 6 months, you will also be charged an added fee, which is calculated on a cubic-foot basis. However, the good news is, you won't be charged per item, but based on warehouse space.
It is best to review the Amazon Seller Fees you are getting charged on a regular basis. You may start to see some areas where you can reduce costs or decrease your long term storage.