Amazon Seller Fees Explained: Cost To Sell On Amazon in 2018

keith villanoAmazon Financials8 Comments

amazon seller fees explained

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 itemā€™s category and your selling price.

Referral FeeĀ (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:

Most sellers end up paying around 15% of the sale price as a Referral Fee. To calculate your exact Referral Fee, check outĀ Amazonā€™s Seller Fee Schedule.

Minimum Referral FeeĀ ($0-$2)

A Minimum Referral FeeĀ will be applied to certain categories.Ā 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. ThisĀ flat $1.80 fee will be added on top of your Referral Fee. These Media categories include:

  • DVD
  • Books
  • Music
  • Video
  • Software/Video Games
  • Games Console

Quick Summary:

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 IndividualĀ 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 anĀ Amazon IndividualĀ 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 onlyĀ sell products in specific categoriesĀ 
  • 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 anĀ Amazon Pro Seller account. There’s aĀ $39.99 per month feeĀ 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

Quick Summary:

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 calculateĀ 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.

Quick Summary:

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,Ā 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 FeesĀ 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)

Quick Summary:

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.Ā 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!

Author: keith villano

8 Comments on “Amazon Seller Fees Explained: Cost To Sell On Amazon in 2018”

  1. Very good post indeed!! Congrats !!. One question: I understand that the AMZ individual seller account does not allow to run PPC campaigns, is this correct?? If so, this account is kind of useless, as it will be very difficult ( or maybe impossible) to rank and therefore sell…

    1. Hi Ignazio,

      You are correct, you would need a Professional Seller account in order to run PPC campaigns. If you’re just starting out and testing the waters then an Individual account would be fine. If you plan on selling more than 40 items per month, a Professional account is definitely more cost effective.

      Hope this helps!
      Melissa

  2. Hi, thank you for the insightful article. I have few questions about FBA fees:

    You mentioned that Amazon FBA fees are actually two separate fees bundled together into one– I thought these 2 fees were charged separately. Am I wrong?

    Where can we find these storage charges on Amazon Central?

    I understand FBA fees do cover Amazon’s shipping to customer, but does it also cover customers’ return shipping? Or do we get additionally charged for this separately? Where do we find these charges on Amazon Central?

    1. Hi,

      The FBA fees bundle the picking/packing/shipping together, but you are right that the storage fee is charged separately. I’ll make sure we clarify this better! Shipping through FBA would cover return shipping, but is a potential extra cost for FBM sellers. You can also find more information on inventory storage fees here, and long-term storage fees here.

      Hope that helps clarify things for you.
      Melissa

    1. Hi Michael,

      You won’t have any fees up front, but do take into account that storage fees and all FBA-related fees will be billed monthly as soon as their warehouses receive your inventory.

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