Right now, selling on Amazon is the fastest way to get your products in front of thousands of shoppers. Better yet, leveraging FBA takes away the hassle of dealing with packing, postage or returns. Once you’re up and selling, you just need to keep enough inventory in stock to keep up demand.
Of course, Amazon is not going to let you sell on their thriving marketplace for free. Yet great margins are still achievable after taking Amazon fees into account.
Depending on the products you sell, there could be various fees you need to be aware of. Then there’s a bunch of variables that can quickly influence these costs significantly. It goes without saying you need to be clued up on these costs before diving in.
Whether you’re just getting started on Amazon, or just launching a new product, knowing these fees is essential for projecting profits.
There are three main costs that you need to be aware of:
1. Sales Related Fees
2. Amazon Seller Account Fees
3. Shipping Costs OR FBA Fees
We’ve collated everything you need to know about these Amazon Seller Fees, now let’s break it down:
Cost #1 – Sales Related Fees
For every sale you generate on Amazon, it may be subjected to 3 separate seller fees based the item’s category and your selling price.
Referral Fee (6-20% of Sale Price)
Whether you have an Individual or a Pro Seller account, everyone must pay a Referral Fee for each sale generated by Amazon. The two factors, which determine this fee, are:
- Product Category
- Selling Price
Most sellers end up paying around 15% of the sale price as a Referral Fee. To calculate your exact Referral Fee, check out Amazon’s Seller Fee Schedule.
Minimum Referral Fee ($0-$2)
A Minimum Referral Fee will be applied to certain categories. If your category has Minimum Referral Fee, you will pay the greater of these two fees (not both).
Variable Closing Fee – $1.80 (Media Categories)
If your products fall within the Media categories, you’ll need to pay an additional Variable Closing Fee. This flat $1.80 fee will be added on top of your Referral Fee. These Media categories include:
- Software/Video Games
- Games Console
You’ll always pay a Referral Fee for every sale you make
If your product is within specific categories, a Minimum Referal Fee will be applied. You’ll pay whichever fee is higher
If you are selling in the Media categories, you will pay a Referral Fee + a Variable Closing Fee
Cost #2 – Amazon Seller Account Fees (Individual & Pro)
There are two types of Amazon Seller Account you may choose from, Individual and Pro. The features and fee structures are targeted towards either low-volume sales for individuals or high-volume sales for professional merchants.
Here are more details about each account features and fees:
Amazon Individual Seller Accounts
As the name entails, this account is best suited to individuals and occasional business sellers. There’s very little set up required to sell using an Amazon Individual Seller Account and $0 monthly fees. But you will have a $0.99 fee added to every sale (on top of any other fees).
However, there are quite a few limitations when compared to Pro accounts:
- May only sell up to 40 units per month
- Cannot bulk upload product listings
- Can only sell products in specific categories
- Gift wrapping cannot be offered
- Inventory management is not an available feature
- Additional $0.99 fee per sale
Amazon Pro Merchant Accounts
Anyone planning on selling more than 40 units per month should be looking at getting an Amazon Pro Seller account. There’s a $39.99 per month fee to pay, but you’ll get lots more features suited for businesses including:
- Unlimited product listings and unit sales
- Ability to bulk upload product listings
- Integration with Order Management and E-commerce platforms
- Inventory management & FBA
- Gift wrapping is available
Individual Seller Account ($0) – Not planning on selling more than 40 units per month yet, want to keep start-up costs low.
Professional Seller Account ($39.99/month) – Everyone else, including most readers here.
Cost #3A – Shipping Credits and Costs
If you are planning on shipping orders yourself, Amazon will help you out by providing Shipping Credits. Yet this credit won’t always cover the whole shipping cost and may become an added expense.
The size, weight and type of products you sell will affect your shipping costs and how much Shipping Credit you will receive. For smaller, lightweight items you may even come out on top. But larger, heavy products will often still cost you a little to ship for every sale.
It’s vital to know exactly how much Shipping Credit Amazon will provide before you can calculate profitability. Check out this Amazon Shipping Credit Chart to estimate your credits:
These shipping costs are another factor encouraging Amazon sellers to start using Fulfillment by Amazon (FBA) to ship their goods.
If you’re going to ship your own products, Amazon Shipping Credits will affect profits
Smaller products are usually fine; larger products will need to be considered carefully
You should definitely also consider FBA as an alternative, as detailed before
Cost #3B – Fulfillment By Amazon (FBA) Fees
Both Individual and Professional Sellers can use FBA to stock, pick and ship their products from Amazon. Even though this introduces more fees, FBA costs are quite reasonable for most types of product.
When considering added convenience and potential for increased sales through Amazon Prime customers, FBA makes perfect sense. But before diving in let’s break down the fees.
What Do FBA Fees Cover?
Amazon FBA fees are actually two separate fees bundled together into one:
- Picking, Packing, Handling & Shipping – The entire inventory management process from packing to shipping.
- Monthly Inventory Storage Fees – The cost of holding your inventory in Amazon’s warehouses.
What Are FBA Fees Based On?
Size and weight are the primary factors for calculating FBA Fees. Don’t forget, this actually includes the packaging too. Amazon splits their FBA products into two different size categories:
- Standard-Size Products – Must weight less than 20 lbs and not exceed 18″ x 14″ x 8″ fully packaged
- Oversize Products – Any products that exceed the standard-size requirements
Take a look at the FBA fee tables from Amazon to start calculating potential costs. Remember, FBA Fees are paid on top of Referral Fees and Account Fees from previous sections.
Amazon even offers some helpful Product Examples for estimating FBA fees.
To get exact FBA costs, you can use the Amazon FBA fee calculator.
FBA is the preferred route for the majority of higher-volume sellers, but there are a couple of factors that can eat into profits if you were unaware:
- FBA Label Service – if you do not label your products with the correct barcode, Amazon will apply barcodes for a $0.20 per-item fee
- Longterm Storage Fees – for items that have been at fulfillment centers for more than 180 days, an additional fee is charged per cubic foot (not per item)
FBA fees are calculated based on product size and weight
Don’t forget about added potential costs for Labelling or Long-term Storage
Want To Make Life A Whole Lot Easier?
Use an Amazon FBA Profit Calculator
All these fees and costs are making your head spin? Don’t worry; you’re not the only one. That’s why we use this awesome FBA calculator. It takes a whole range of costs into account, including all these Amazon fees, to clearly calculate product profitability.
Use Amazon Accounting Software
Then we have our very own Fetcher, the best Amazon Accounting Software for Amazon. It’s super easy to use and will keep all your Amazon financials in check without you having to do anything. You’ll get a complete breakdown of costs, revenues and profits at a glance.
If you haven’t tried us already, get on a one-month free trial (no credit card required) and find out what you’ve been missing!
Amazon Seller Fees Summary
There are no questions about it, Amazon is the place to be selling right now. It’s estimated that almost half of all online shopping activity starts here, so you don’t want to miss out on the action.
But before you do, it’s essential to calculate profitability by after Amazon seller fees. Key factors include:
- Whether you have an Individual or Pro Seller account
- Which type of products you will sell and their Amazon categories
- Whether you will ship products yourself or use FBA
But there are easy ways to calculate and keep track on all these fees, using FBA Calculators and Automated Reporting for Expenses, Revenues and Profit. Now get out there and get selling!