Often Amazon FBA sellers starts the business, but they have no clue about the Amazon fees and selling cost associated selling in Amazon. It should come as no surprise that there are fees associated with selling on Amazon. The fees are a part of doing business. Amazon gives you access to their customers and all of the technology of their site.
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Many new Amazon FBA sellers may not realize you even get access to their warehouse as well. Amazon has the entire process covered from start to finish. This is why you shouldn’t be overly concerned when it comes to spending some of your profits on fees. Just factor them in as you would any other expense when it comes to operating your business.
Amazon Referral Fees:
Take a look at the chart below. Study the numbers and try to remember them. We’re going to talk about why you should consider these fees before selling items.
|Categories||Amazon deducts the greater of the applicable referral fee percentage or applicable per-item minimum referral fee.|
|Referral fee percentages||Applicable minimum referral fee (applied on a per-item basis unless otherwise noted)|
|Amazon Device Accessories||45%||$1.00|
|Baby Products (excluding Baby Apparel)||15%||$1.00|
|Camera and Photo¹||8%||$1.00|
|Cell Phone Devices*||8%||$1.00|
|Furniture & Decor||15%||$1.00|
|Home & Garden (including Pet Supplies)||15%||$1.00|
|Software & Computer/Video Games4||15%||—|
|Sports (excluding Sports Collectibles)||15%||$1.00|
|Tools & Home Improvement||15%, except 12% for base equipment power tools||$1.00|
|Toys & Games²||15%||$1.00|
|Unlocked Cell Phones||8%||$1.00|
|Video & DVD4||15%||—|
|Video Game Consoles4||8%||—|
|Categories Requiring Approval||Referral fee percentages||Applicable minimum referral fee|
|3D Printed Products||12%||—|
|Automotive & Powersports||12%, except 10% for tires and wheels products||$1.00|
|Clothing & Accessories||17%||$1.00|
|Collectible Coins||See Category Requirements for referral fees.|
|Entertainment Collectibles||See Category Requirements for referral fees.|
|Fine Art||See Category Requirements for referral fees.|
|Grocery & Gourmet Food**||15%||—|
|Health & Personal Care (including Personal Care Appliances)||15%||$1.00|
|Industrial & Scientific (including Food Service and Janitorial & Sanitation)||12%||$1.00|
|Luggage & Travel Accessories||15%||$1.00|
|Shoes, Handbags & Sunglasses||
|Sports Collectibles||See Category Requirements for referral fees.|
Credit: Jungle Scout
The first thing you should note is that there are two columns. The referral fee you pay is based on which is greater. Simply put, whichever number is higher, is the one Amazon will receive. You must bake this fee into the selling price of your item.
In essence, you’re passing along their fees to your customers. Don’t worry if this sounds bad. It’s something that all sellers have to do. You must pass along the fees or they’ll eat right into your profit.
You’ll notice that some referral fees are higher than others. Some don’t have a flat rate at all. Should you gravitate towards categories with lower referral fees? The answer to that question isn’t as simple as it may sound. It all goes back to volume. If you find an item that has quite a bit of volume and low competition, it might worth looking into. While the fees are important, they shouldn’t be the deciding factor if you get into a specific category or not.
Amazon Fulfillment Fees:
The chart below details Amazon’s Fulfillment Fees. Down below we’ll break down what all of this means.
Image Credit: Jungle Scout
The fees you just read about are for picking and packaging. Included in this is also shipping and handing. These are the fees that Amazon charges you to package your product and to ship it. This is one of the fundamental reasons why sellers chose Amazon’s FBA program. It’s because they handle all the packaging. They make sure that the item is packaged properly and gets to the customer safely.
Here’s a tip that will help you cut down on fulfillment fees: Try to sell items that are lightweight and can fit inside a shoebox. Small light items will be easier to ship. Keep in mind that your fees are based on the size and weight of your product. Items that are heavy and bulky will be more expensive to ship out.
This makes sense, because it costs Amazon more for packaging materials and heavier items are more expensive to ship.
Monthly Subscription Fees:
This is one of those areas that can be very confusing for new Amazon sellers. They get caught up in the concept of not liking to pay monthly fees for anything. It can be easy to get into the mindset that you only want to pay flat prices for everything.
This is why some people prefer to pay for a lifetime membership over a monthly subscription. The subscription fees aren’t too complicated and they aren’t a big hassle at all.
There are two types of plans for new sellers. The first one we’re going to talk about is the Individual plan. With this plan you only pay one dollar for every item that you sell. If you sell ten items per month, then you just pay $10 and that’s it.
The other is the Professional plan. You pay $39.99 and sell as many items as you want. You can sell a hundred items in a month and just pay this one flat rate. You don’t have to worry about going over any sort of limits. It’s just one flat rate and that’s it.
Something to Think About When It Comes to Monthly Subscription Fees:
The Professional plan is a good idea for anyone who sells less than forty items per month. But, you probably shouldn’t try to sell anything with such low volume. Remember, if you’re selling less than forty items, that’s almost one per day.
Unless you’re selling super high end stuff, it’s not even worth it really. You also have to pay storage fees on the stuff that doesn’t sell. We’ll talk about that next. If you have items that sell so few, then it’s time to move onto something else. You’ll never make enough for the venture to be worthwhile if selling fewer than forty items a month.
Amazon FBA Storage Fees:
Check out the chart below and stay tuned for our commentary.
There are so surprises here. You’re charged per cubic foot. Amazon has huge warehouses and they have plenty of space for sellers. This doesn’t mean you should have loads of merchandise sitting there. You’re paying for the privilege for your stuff to sit there. The more space you take, the higher your storage fees will be. This only makes sense since they can sell that space to someone else, if not you.
It will take you awhile to get the hang of knowing how many items you should keep stored at the warehouse. You should only have enough inventory to cover two months. Anything more than that and you’re paying way too much.
You could easy keep the stuff at your house or a rented storage facility. This will be much cheaper than paying Amazon to hold it for you. There will come a point when you’ll be able to time it almost perfectly and send more products when needed. This process is a little like learning how to dance and it’ll take some time before you know all the steps.
Increased Fees Due to the Holidays:
You’ll notice that the fees are higher in the months of October through December. This is due to the holidays. Amazon does huge business during this period of time. Jacking up the prices isn’t as terrible as it sounds. Every single square inch of their warehouse during the holidays is invaluable.
Some sellers make the bulk of their money during these three months. Everyone wants to take advantage of this extra business and there’s a price for doing so. Amazon would be stockpiled with stuff if they didn’t raise the prices during this crucial retail period.
The Reason You Shouldn’t be Alarmed by Amazon’s Fees:
Some will say that Amazon’s fees are nothing compared to what eBay charges. That’s not the best way of looking at it. Sure, you’re still selling and making money. But, it’s almost like comparing apples and oranges.
It’s natural for many sellers to compare the two. eBay is an auction site and the buying experience is totally different at Amazon. It’s not a fair comparison. That’s not to say an Amazon seller shouldn’t look into selling on eBay. It simply means that comparing eBay’s fee structure to Amazon’s is a little misleading. However, it is well worth pointing out that Amazon does have many benefits that eBay doesn’t.
Amazon Takes Care of Your Tax Information:
As a businessperson, you know how big of a headache this is. It’s an even bigger headache if you’re an eBay seller. Amazon gives you all the tax information that you need. They make paying the taxman a little less of a headache. You’ll still feel the pinch when it comes to opening up your wallet or purse. Though, crunching the numbers is one less headache that you have. This in itself is one of the reasons why many prefer to sell on Amazon over eBay.
Amazon Gives Sellers All the Information Needed to be Successful:
Every person who sells on Amazon can do so with knowledge of how well a particular item sells. You can look at specific items and know without a shadow of a doubt how many are being sold each month. This information is invaluable. It’s the very bedrock of your business.
Sure, you have access to this information without paying fees. That’s not the point. The point is, this information exists and can be used to make money. There is no other site on the internet where you can get this precise information. Anyone who knows how to make money online will tell you that information can make or break a business. Amazon makes sure you get everything that’s needed for success.
Amazon Gets a Lot of Traffic:
Currently Amazon is ranked 11 by Alexa. This means that it is the 11th most visited website in the entire world. Just let that sink in for a moment. You get to place your items for sale on a site that gets well over two billion visitors per month. It won’t be long until it gets three billion per month. It’s the 4th visited site in the United States.
What does all this mean? It means Amazon is crushing it when it comes to delivering potential customers to your products. It’s staggering to think that this little business selling books has turned into such an amazing thing. Everyone on the internet knows what Amazon is. Chances are, everyone you know has either purchased an item on Amazon, or has something in their house bought from there.
The absolutely most important thing about this traffic is that the people are primed to buy. Just think about the reason why you go to Amazon. It’s not for the same reason you visit Facebook. You go to Facebook to burn time or message friends.
People go to Amazon to spend money. They go there with the intent of buying something. This is what makes Amazon traffic pure gold. Where are you going to have exposure to a market like this? There isn’t a site on the internet right now that offers so many potential customers to the average person.
Amazon Takes Care of a Huge Chunk of the Work:
eBay sellers know all too well the headache of having to keep their entire inventory on hand. Those who sell items out of their home are constantly reminded of the hassle. Just think of all the trips to the post office you don’t have to make. The list goes on and on about what Amazon does for you.
You don’t have to package the items. Just like you don’t have to clean the area where your items are stored. There are so many little details that people overlook when it comes to selling on amazon. This is what your fees are paying for. They pay for someone else to maintain the warehouse and send your items off. This is work that you don’t have to do.
The Fees Are Just a Little Slice of the Pie:
Fees are only a worry of someone who can’t make money. That may sound harsh, but it’s true. You get quite a lot for the fees you pay Amazon. Those fees are the reason why you’re able to make money at such a great marketplace. It takes quite a bit to maintain the quality services that both sellers and buyers expect from Amazon. It costs money to do that. Sure, Amazon is making money. They aren’t doing all of this out of the kindness of their heart. We’re all in it for the money. Honest people shouldn’t have any problems admitting that.
You should already factor in the fees when pricing your items. If you do this, then it shouldn’t be a concern at all. You’re just passing them along to the consumer. We pay for all kinds of fees in our every day lives without knowing about it. This is just another example of that. There are many other things that come into play when you determine the prices of your products. If your margins are so razor thin that the fees are a concern, then it’s time to find new products to sell.