Amazon Seller Fees Breakdown to Become a Six-Figure Seller
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.
Costs of Selling on Amazon
There are three main groups of Amazon Seller Fees that you need to be aware of when it comes to selling on Amazon:
- Amazon Referral Fees: Depends on sales category
- Seller Account-Related Fees: Individual Seller, Amazon Pro Merchant Accounts
- FBA Fees or Shipping Costs: Amazon FBA Fees, Monthly Storage Fees, Label Service, Long Term Storage Fees
What follows is a compilation of all the information you'll need regarding these three clusters of Amazon Seller Fees.
1. Amazon Referral Fees
For every sale, Amazon will charge you 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:
- Category of the product you sold
- Price of the unit sold
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.
2. Account-related Amazon Seller Fees
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:
a. Individual Seller
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.
The main drawback of Amazon Individual Seller accounts is its limitations:
- Only can move a maximum of 40 items per month
- Cannot upload your product listings in bulk
- Only can sell certain products in a limited range of categories
- No gift-wrapped customer purchases.
- Do not have access to Amazon's inventory management features
- Must pay $0.99 Amazon Seller Fees on top of every sale
b. Amazon Pro Merchant Accounts
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:
- You can sell as many units as you want
- No limit to the number of products you can list
- You can upload your product listings in bulk
- Your account is integrated with major e-commerce and order management platforms
- You can use this account with the Amazon FBA program
- Your customers get access to gift-wrapping
Please note: Even with an Amazon Pro Merchant account you still are responsible for paying Amazon Referral Fees (as noted above).
3. Shipping Costs and Credits
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.
a. Amazon FBA (Fulfillment by Amazon) Fees
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.
Monthly Storage Fees for Your Inventory
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.
- Standard Sized Units are products that weigh below 20 pounds. Their packaged dimensions do not exceed 18"x14"x8".
- Oversized Products: This is a catchall category for all other products that exceed the dimensions and weight of standard-sized products. Look at the FBA table from Amazon below to get a clear and realistic impression of your potential costs.
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!
Long-Term Storage Fees
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.
Remember . . .
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.