Friday, July 12, 2024

Amazon Seller Fees Guide: What It Costs To Sell on Amazon in 2024

Amazon is the largest digital marketplace for third-party sellers, accounting for a whopping $513 billion in sales in 2023. With the massive profit that comes with your sales, Amazon charges you for your account, shipments, and various other seller services. It deducts the fee directly from your earnings regularly. Therefore, it is important to have a solid understanding of Amazon seller fees.

Furthermore, assessing and calculating Amazon seller fees can often be daunting for even the expert merchants on the platform. Therefore, if you don’t know about Amazon fees and the different types, then you are reading the right article. In this guide, We will explain the different types of Amazon seller fees in 2024 and suggest ways of saving on the fee.

  1. Amazon Sale-related Fees
  2. Amazon Seller Account Fees
  3. Amazon Fulfillment & Shipping Fees
  4. Miscellaneous Amazon Seller Fees
  5. How to Save on Amazon Selling Fees
  6. Wrapping Up – Be Strategic with Amazon Seller Fees

Amazon Sale-related Fees

Amazon sale-related fees are the amount that you have to pay when you successfully sell items on Amazon. It is mainly of two types: referral fees and closing fees. Additionally, you pay a third type of fee called the refund administration fee if your orders get returned.

The amount of these fees depends on your product category and sales price. Let’s take a closer look at each of these categories.

1. Referral Fees

All Amazon sellers (no matter which account they have) are charged a referral fee for every product they sell on the platform. Your item category and sale price are the two factors that determine the amount you pay as a referral fee. It is computed as a certain percentage of your item’s sale price, which mostly lies between 8% to 15%. Depending on the category of your product, this referral fee can even go up to 45% in some cases.

Amazon also allocates minimum referral fees to many different categories. If the products you sell on Amazon fall under that minimum referral fee category, you will pay the larger of the two fees depending on the price of your product. For instance, products in the grocery, accessories, art, media, video games, and consoles category do not have a referral minimum fee.

2. Closing Fees

Amazon products falling under the media category have an additional seller fee called the closing fee. It is charged at a flat rate of $1.80, applied on top of the referral fee for products in the following range:

  1. DVD
  2. Video
  3. Music
  4. Books
  5. Video game consoles

Item Category

Referral Fee Percentage

Minimum Amount (Referral fee)

Toys

15%

$0.30

Home and Kitchen

15%

$0.30

Furniture

-> 15% for the total sales price up to $200

-> 10% for the total sales price more than $200

$0.30

Footwear

15%

$0.30

Grocery

-> 8% for items with total sales price below or equivalent to $200

-> 15% for items with total sales price above $200

Clothing

-> 5% for items with total sales price up to $15

-> 10% for items with total sales price greater than $15 and equivalent to or less than $20

-> 17% for items with total sales price above $20

$0.30

Amazon Seller Account Fees

Sellers on Amazon can create two types of accounts: Individual and Professional. The Amazon seller fees structure and custom features of the two accounts are set according to the needs of the buyers and the sellers.

With both accounts, you can easily manage, list, and sell items on the marketplace by adjusting prices and receiving seller support services. Plus, you also get access to the Amazon Seller app and the revenue calculator.

Have a quick look at the fees of these accounts below:

Seller Account Type

Ideal for

Monthly Charges

Listing Charges

Individual Seller Account

Individual sellers or small-scale businesses

 –

$0.99 on every item sold

Professional Seller Account

Businesses

$39.99

Varies for every product category

Let us go through these account types to learn what they offer the sellers.

1. Individual Seller Account

An individual seller account is best for small-scale or occasional businesses on Amazon with low-volume sales. You can easily set up these accounts without any complications. Moreover, individual accounts are free to create and impose no monthly fees, but you give a $0.99 commission on every item you sell. Additionally, you need to pay referral fees and varying closing fees on each Amazon sale.

Individual seller accounts impose more restrictions than Professional seller accounts. As an individual seller, you are not allowed to take the following actions:

  1. Use Amazon’s paid advertising services
  2. Sell products that need approval
  3. Access detailed inventory reports
  4. Add other users to the account
  5. Adjust shipping rates
  6. Use advanced tools
  7. Upload bulk listings
  8. Run promotions
  9. Offer gift wrap

2. Professional Seller Account

Professional seller account is ideal for large-scale and high-volume businesses. You pay $39.99 every month to unlock premium features on top of referral fees and closing fees for each sale. Some of these features include:

  1. Bulk uploads
  2. Gift wrap service
  3. Special categories
  4. Unlimited product listings
  5. FBA inventory management
  6. Amazon advertising services and advanced tools

In addition to these features, Professional account sellers can join any of Amazon’s paid programs, like Amazon Customer Service, Currency Convertor, Ads, Lending, Strategic Account Services, etc.

Amazon Fulfillment & Shipping Fees

Amazon fulfillment and shipping fees depend on the items you sell and the fulfillment method used. With Amazon, sellers can fulfill their orders in the following ways:

1. Fulfillment by Amazon (FBA)

Under Fulfillment by Amazon (FBA), you deliver your products to Amazon, and Amazon itself stores, packs, and ships them to the customers. It has the highest fees on Amazon, but it provides customer service and offers a prime badge plus for maximum visibility in searches. Both Professional and Individual seller account users can use it for storing, packing, and shipping orders.

The different fees associated with FBA are as follows:

FBA Storage Fees

FBA storage fees vary with the size and category of the product. If it’s classified as a cautious product by Amazon, which requires extra care, the price will be higher compared to non-dangerous goods that are easy to handle.

Amazon also charges long-term storage fees for keeping your goods in the inventory. In case you hold products in the Amazon warehouse for more than 181 days, Amazon charges $0.50 per cubic foot for goods staying in the inventory in the range of 181-210 days and exceeds up to $690 per cubic foot for products aging over 365 days.

FBA Fulfillment and Shipping Fees

FBA handles picking, storing, packaging, and delivering your orders, including returns. Normally, the cost depends on the size, weight, and category of the product, starting from $3.22 per unit and exceeding up to $200 for bulky orders.

The products under $10 fall in the low-price FBA category with a lower fulfillment fee. Plus, the shipping fees increase during peak season and holidays.

Miscellaneous FBA Fees

On top of the two main charges, sellers using the FBA method need to pay additional fees, which vary with the size, weight, and nature of the product. This includes labeling fees, stock removal fees, return processing fees, return processing fees, and FBA prep service fees.

In a nutshell, FBA charges the sellers for different services it offers. Calculating these costs while considering all the nitty-gritty details can be overwhelming for beginners and even expert sellers with high-volume sales.

If you are looking for a quick solution, Amazon FBA Calculator by VOC is an incredible and free tool to compute all the FBA charges upfront. You only need to enter your data, and it will prepare the final report, which can be exported easily.

2. Fulfillment by Merchant (FBM)

In Fulfillment by Merchant (FBM), sellers store, pack, and ship all their orders, bearing all the involved costs. Although this fulfillment method has minimum Amazon fees and requirements, the seller has to consider the costs of storage, boxes, packaging, shipping, and even the staff hired for these operations. Moreover, the products under FBM don’t qualify for the Prime badge, limiting their visibility.

Talking about FBM fees, sellers are responsible for paying all costs related to the storage, shipment, and packaging of the goods.

3. Seller-fulfilled Prime (SFP)

With SFP, the sellers store, pack, and ship products on their own while offering prime shipping services. Your products must meet the requirements for Amazon’s prime packaging and delivery.

Talking about SFP fees, Amazon charges 2% on every SFP order on top of the shipping and fulfillment costs for the Prime badge display. Under this method, you have to maintain free shipping for all your orders and return all your items under 50 lbs free of cost.

Miscellaneous Amazon Seller Fees

In addition to the standard shipping and selling costs on Amazon, various miscellaneous charges apply to the products based on different factors.

Here’s a list of miscellaneous Amazon seller fees:

1. Amazon Currency Converter for Sellers Fees

If you are selling products to customers in the US while you are not based in the US, Amazon Currency Converter can be used for disbursements. Its fees lie between $0.75% to $1.50% based on the total amount generated in one year.

2. Refurbished Items

Most refurbished items on Amazon don’t have any fee, but it may apply to some product conditions.

3. High-Volume Listing Fee

Sellers with an extensive inventory having 100,000 or more listed products need to pay an additional amount of 0.005 cents each month per product.

4. Textbook Rental Fees

Amazon charges a $5 rental fee on each textbook, which is deducted on sale.

5. Repackaging Service Fee

If a returned product needs to be repackaged by Amazon, it may apply a fee depending on the case.

How to Save on Amazon Selling Fees

Although Amazon applies different types of charges for selling products through the platform, you can still use some ways to reduce Amazon selling fees. We have compiled a list of practical measures you can take to save on these charges.

Here’s a list of ways to reduce Amazon referral, FBA, and storage fees:

1. How to Reduce Amazon Referral Fees?

Amazon referral fees have fixed rates based on different product categories. It charges a flat 15% on most product categories, with a lower or higher rate for some groups. For example, the referral fee on consumer electronics is 8%, whereas it’s 45% on Amazon device accessories.

To lower the referral fee, you can miscategorize your products intentionally and creatively. However, this can negatively impact your SEO ranking on Amazon and can lead to product removal.

2. How to Reduce Amazon FBA Fulfillment Fees?

Sellers often underestimate costs for the FBA fulfillment method. The three most common cases are:

  1. Miscalculating the size of the product
  2. Ignoring the packing weight that Amazon adds to the product
  3. Applying the wrong dimensions for the weight

Basically, Amazon has categorized products based on their size. It applies different shipping rates depending on their size and dimensions. Therefore, it is important to verify the measurements once you send items to Amazon because it often makes mistakes. If any discrepancy is reported, contact Amazon and discuss it.

Amazon also adds a packing weight to each product, which is 0.25 lbs for standard-size items and 1 lbs for oversized items. Sellers mostly don’t realize these charges and end up paying more due to negligence.

3. How to Reduce Amazon Storage Fees?

Amazon storage fees vary with the size of the product and the season. It charges 300% peak rates from October to December. Another important factor to note is that Amazon’s storage fees can cost 100% to 800% more than those of third-party logistics providers, particularly during peak times.

Therefore, try to minimize your storage fees by optimizing inventory management, consolidating shipments, and utilizing Amazon’s Fulfilled by Amazon (FBA) inventory placement services. In addition, regularly review and adjust your storage strategies based on demand and seasonality. Moreover, you can also consider utilizing third-party logistics providers or exploring alternative storage solutions for off-peak periods to further reduce costs.

4. How to Reduce Inbound FBA Fees?

Amazon takes a significant amount when you drop your items at its FBA warehouse. If you use a third-party logistics provider, you pay an inbound shipping fee plus the handling fee. Therefore, it is better to deliver items to the Amazon FBA warehouse directly to avoid additional costs.

Wrapping Up – Be Strategic with Amazon Seller Fees

Amazon is a high-income marketplace for e-commerce. But, like all commercial platforms, Amazon’s perks come with a significant cost. Therefore, it is important for sellers to pay attention to Amazon seller fees to avoid slimming their profits unintentionally. To wrap up, ensure you have a solid understanding of Amazon seller fees and continuously look for strategic ways to reduce those charges.