In this post, we are going to cover each and every cost associated with Amazon seller account. We will see how much it costs to sell on Amazon. We will map out each fee that’s associated with Amazon seller account so you can make an informed decision regarding your Amazon business.
Three types of fees exist for all the sellers on Amazon. These are as following:
- Amazon Sales Fees
- Seller Account Fees
- FBA Fees – (Fulfillment by Amazon)
1. Amazon Sales Fees
Each sale that you generate through the Amazon platform is automatically subject to Amazon Sales fees regardless of your seller account type (be it Individual or Professional). These seller fees vary according to the item category and price.
The referral fee ranges anywhere from 6% to 20% of the total sales price of your product. On average, it costs around 15% for most of the items. This fee depends on two factors:
- Sales Price
- Item Category
You can use Amazon’s Referral Fee calculator to determine how much you will have to pay on each product that you sell.
For example, products in the “handbags” category have a referral fee of 7.5% on each item you sell. However, if you were selling products in the “Headphones” category, you are going to have to pay 14% referral fee on each sale.
You can see that the referral fees change drastically depending on the category you are selling in. So, it is highly important to know what percentage of referral fees you will be paying on each sale. Keep these things in check along with other factors can lead to reduced Amazon fees.
Minimum Referral Fee
The minimum referral fee is only applied to a few categories and can be anywhere from $0 to $2. If your products fall in a category that has minimum referral fee, then you will only pay the minimum referral fee (or the actual referral fee) depending on whichever one is higher.
For example, If you are selling a headphone for $100 and the referral fee you have to pay is %14 in the Headphones category. It means that you have to pay $14 on each sale, but the minimum referral fee is $2 – since the minimum referral fee is lower than the referral fee, you have to pay the referral fee only. However, if the headphone you were selling was priced at $10 meaning the referral fee would be $1.4 then you will only pay minimum referral fee which is $2 and not the referral fee which is lower.
Variable Closing Fees:
This is just a flat rate fee applied to products that Amazon categorizes as “Media.” This fee is added on top of referral or minimum referral fee and ranges anywhere from $1.35 to $1.80. The Variable closing fee is applied to the following categories:
- Video Games
2. Amazon Seller Account Fees
Amazon provides you two different seller account types to choose from:
- Individual Seller account
- Professional Seller account
Selling as an individual comes with no monthly fees, however, you will have to pay a flat fee of $0.99 on each product that you sell.
Selling as a professional means that you need to shell out $39.99 per month, but you do not have to pay any fees on sales or products.
So, if you are going to sell more than 40 products per month (which you should), it’s logically better to opt for the Professional account because the more products you sell, the lower your costs.
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).
The Individual seller account has the following features and limitations:
- Allows you to sell up to 40 items per month
- No way to upload bulk product listings
- Only a few product categories are available for selling
- No option to offer gift wrapping
- No feature available to manage inventory at all
- $0.99 per sale additional fee
Professional Seller Account
If you are planning to sell more than 40 products per month, then you should be getting yourself an Amazon Professional seller account. You do have to pay a $39.99 monthly fee, but in return, you get a bunch of features that are suited for every type of business.
The Professional seller account offers the following features:
- Unlimited product listings and item sales
- Allows you to easily bulk upload product listings
- Integration with Order Management and other ecommerce platforms
- Inventory management and FBA (Fulfillment by Amazon)
- Gift wrapping is available
Differences between individual and professional account
Both the individual account and professional account cater to a different type of audience. However, to make things easier, we have compiled a list of all the differences between both these account, so you understand how each account suits you:
|Individual Account||Professional Account|
|Can sell up to 40 products per month||Unlimited number of product listings and sales|
|No ability to run promotions||Ability to run promotions|
|Restricted to selling on only one Amazon site||Ability to sell on multiple Amazon sites|
|No bulk product uploading feature||Bulk product upload feature|
|A limited number of categories to sell in||Unlimited amount of categories to sell in|
|No inventory management features||Ecommerce platform integration and inventory management available|
|Pay $0.99 on each sale||Pay $39.99 per month|
|Excluded from Buy Box||Access to Buy Box|
3. FBA (Fulfillment by Amazon)
Both Professional and Individual seller accounts have to ability to use FBA (Fulfillment by Amazon) to store, manage, and ship their products directly from Amazon’s warehouses.
FBA does add extra costs to your Amazon seller accounts, but when you consider the convenience, it does make sense. Before making a decision, let’s break down the FBA costs even further.
What are FBA fees?
Amazon FBA has two different types of fees that are bundled together:
Monthly Inventory Storage Fees: This is the cost that you have to incur for storing your inventory in Amazon’s warehouses.
Storing, Managing, Handling, and Shipping: Amazon manages your entire inventory from picking to shipping.
How does Amazon calculate FBA fees?
Amazon considers the size and weight of the products and packaging when calculating FBA fees. Amazon divides the FBA products into two types of weight categories.
Standard Size Products: These items should weight less than 20 lbs and should not exceed the dimensions (18″ x 14″ x 8″) when packed.
Oversize Products: All the products that exceed the standard-size factors.
Check out the FBA fees structure in the official table provided by Amazon. Keep in mind that you have to pay FBA fees on top of other costs associated with your Seller account.
Use Amazon’s FBA fee calculator to get the exact FBA costs for your products.
You also need to keep in mind that there are other factors associated with FBA that might reduce your profits even further like:
FBA Label Service: If you forget or do not label all your products then Amazon will do it for you, but it’s going to cost you $0.20 per product.
Long-term Storage: All the products that have been at Amazon’s warehouse for more than 180 days, additional fee per cubic foot is charged.
Check out our article to read more about Amazon FBA and how to start a business with Amazon FBA.
Amazon FBA Shipping Credits and Costs
If you don’t want Amazon to ship your products, instead you want to do it yourself then Amazon will still help you out by giving you Shipping credits. This credit may not always cover the entire shipping expense, but will definitely lower it a bit.
The type of products, the size, and the weight will affect how much you have to pay for shipping and how many shipping credits you get. For smaller items, you may even profit off of the shipping credits, but heavier products will often run up the costs and have you paying a bit from your own pocket.
It’s always a good idea to know beforehand how many shipping credits will Amazon provide you with before you can actually calculate your profits. Check the chart below to see the estimated credits for your item.
Amazon Seller Costs – Conclusion
amazon is definitely one of the best places for you to be selling online at the moment. Almost half of the online shopping activity is carried out at one of Amazon’s sites, so it’s definitely the place where you want to be promoting and selling your products.
However, before you actually begin your selling journey with Amazon, you need to understand the profitability and see how much it actually costs to sell on Amazon. The key factors that you should consider include:
- Which account do you have on Amazon – Individual or Professional?
- What are the types of products you want to sell?
- Whether you want to use FBA or ship products yourself?
Answering these questions should be quite easy now since we’ve laid out all the costs associated with each feature and account type in detail so you can make a well-informed decision.
Let us know what you think about this article. Also, tell us if you prefer selling on Amazon and why? Comment below.
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