More businesses are selling on Amazon — and for good reason.
With 2018 net sales of 232.89, the online retailer reaches a global audience through Amazon Marketplace, its digital shopping network that merchants can’t afford to ignore.
But selling your wares on Amazon comes with a cost. We’ll go over the various merchant charges, including:
- Individual seller fees
- Professional seller fees
- Seller account monthly fees
- Referral fees
- Shipping costs
- Fulfillment by Amazon (FBA) fees
Amazon Marketplace Seller Accounts
Amazon offers two types of seller accounts: an individual selling plan and a professional one.
Amazon’s Individual Seller Account
Geared toward low-volume sellers, the individual plan requires little setup and doesn’t have a monthly fee. However, the individual seller account has the following restrictions:
- You can make up to 40 sales a month.
- You can’t access the inventory management feature.
- You’ll need to create listings manually on the Amazon Seller Central dashboard and can’t use the bulk upload feature.
- You can only list on the 20-plus open categories that don’t require approval from Amazon.
- You cannot offer the gift-wrap option at checkout.
Amazon Professional Seller Account
Designed for businesses and high-volume sellers, the professional account offers various volume-selling features, including:
- Unlimited product listings.
- No listing fee per item.
- Bulk product uploads.
- Integration with popular e-commerce, inventory-management and order-management software.
- Access to FBA inventory management software.
- The ability to offer the gift-wrap option.
How Much Does It Cost to Sell on Amazon?
Here’s an overview of the cost of selling on Amazon to help you choose the right plan to optimize your profits:
Amazon Seller Account Fees
The two types of seller accounts have different fee structures that cater to the needs of different sales volume:
Amazon Individual Seller Fees
The individual seller account doesn’t have a monthly fee, but there’s a 99-cent listing fee per item that will be taken from your payout when a product is sold.
Amazon Professional Seller Fees
The professional seller account has a $39.99 monthly fee but no listing fee for individual items. There also is a variable closing fee, the percentage of which varies by category (e.g., 15% for books, 8% for consumer electronics, 15% for office products and 15% for toys).
Amazon Marketplace Referral Fees
Amazon charges a referral fee on each item sold, the amount of which depends on the product category. The referral fee is calculated as a percentage of the total sales price, excluding tax, delivery or gift-wrapping charges.
Most product categories have a referral fee that ranges from 6% to 15%, with a minimum of 30 cents. Sellers need to pay the referral fee or the per-item minimum referral fee, whichever one is greater.
Amazon Marketplace Variable Closing Fees
Amazon charges an additional variable closing fee for products sold under the media categories. This flat $1.80 fee is added on top of the referral fees for items such as books, DVDs, music, software, video games and video-game consoles.
Amazon Marketplace Shipping Costs
For some categories, you can set your shipping rate and for others, you’ll get a shipping credit from Amazon if you’re shipping the items yourself.
Here’s what you need to know:
Amazon Shipping Rate
For items in some categories, you can set your shipping rate in three ways:
- Item/weight-based shipping: Amazon will apply a flat per-shipment rate, plus the appropriate per-weight or per-item shipping rate for the order.
- Price-banded shipping: you can set up ranges (or bands) of order prices, each of which corresponds to a shipping rate. The appropriate shipping cost will be applied to the order based on the total purchase value.
- Weight-tired shipping: qualified sellers can create tiers by order weight for freight shipping. Amazon identifies the weight tier for the entire order and applies the flat per-shipment rate to the purchase.
In addition, you can offer free shipping to help attract more shoppers and increase sales. No matter how you set up your shipping fee, make sure it’s accounted for in the total cost to stay profitable.
Amazon Shipping Credit
For certain products, Amazon will give you a flat shipping credit on every sale to cover the shipping cost. For books, music, video games, etc., you’ll get a $3.99 shipping credit. As for other products, it’s $4.49 plus 50 cents a pound when buyers choose the “domestic standard” shipping method.
It’s important to find out if the shipping credit can cover the actual shipping cost of the particular product you’re selling. Otherwise, the overage can impact your margins. You can automate the process and use shipping software to help select the best shipping method and maximize your profits.
Fulfillment by Amazon (FBA) Fees
FBA is available to both individual and professional sellers in which Amazon stores, packs and ships your products. While there are fees associated with the service, FBA products are Prime-eligible and have a better chance of winning the Buy Box — making it a good investment for many merchants.
FBA fees are calculated based on product size and weight. There are two categories: standard-size products and oversize items. Here are the fees you need to take into account when calculating the cost of selling on Amazon if you use this service:
FBA Fulfillment Fees
This per-unit fee covers picking and packing your orders, shipping and handling, customer service, and product returns processing.
The fee starts at $2.41 for small standard-size items that are 10 ounces or less and goes up to $137.32
(plus 91 cents a pound above the first 90 pounds) for oversize products. There’s also an additional 40-cent-a-unit fee for clothing items and an 11-cent-a-unit fee for items containing lithium batteries.
FBA Monthly Inventory Storage Fees
This per-cubic-foot fee is charged for all units stored in an Amazon fulfillment center. It’s based on the daily average volume in a calendar month. It varies by the product size tier and the time of year.
From January through September, the FBA storage fee is 69 cents per cubic foot for standard-size and 48 cents per cubic foot for oversize products. From October to December, it’s $2.40 per cubic foot for standard-size and $1.20 per cubic foot for oversize items.
The FBA storage fee for products sold through the FBA dangerous goods program is higher for both standard-size and oversize items. In addition, units that have been stored in an Amazon fulfillment center for over 365 days will incur a long-term storage fee of $6.90 per cubic foot or a 15 cents per unit, whichever is greater.
Amazon FBA offers a fee calculator to help sellers navigate the fee structure and take all the Amazon FBA seller fees into account when pricing products.
Here are some examples of how FBA fees are calculated:
- A piece of apparel with a dimension of 8.5″ x 6″ x 1″ and a shipping weight of 1 pound is considered a large standard item. The shipping fee is $3.28, plus there’s a per-unit clothing fee of 40 cents. Therefore, the per-unit FBA fulfillment fee is $3.68.
- A piece of furniture with a dimension of 25″ x 8″ x 6″ and a shipping weight of 9 pounds is a small oversized item. The shipping fee is $8.26 for the first 2 pounds and 38 cents a pound above the first 2 pounds. The total shipping cost is $10.92 per unit.
- A 50-pound product that measures 54″ x 33″ x 7″ is a large oversized item. The shipping cost is $75.78.
Other FBA Fulfillment Options
FBA also offer specialized services designed to help sellers grow their businesses with minimum upfront investment.
- Multi-Channel Fulfillment, which enables you to sell from your own or third-party websites. FBA will take care of the picking, packing, and shipping.
- Small and Light, which offers reduced fulfillment costs on qualified items, so you can lower the cost of fulfilling orders for low-cost, small and lightweight FBA inventory.
- Subscribe and Save, which allows you to offer discounts and free shipping on eligible FBA products for repeat customers to generate more recurring revenues.
A Final Word on Amazon Marketplace Costs
Selling on Amazon Marketplace can help you increase brand exposure, be discovered by more customers, tap into Amazon’s global reach and generate more sales.
While the fees associated with selling on Amazon might seem complex at first glance, it’s worth taking the time to understand the various costs so you can structure your pricing to stay competitive and earn more profits.