How Much Does It Cost to Sell on Amazon? - Guide to Amazon Seller Fees

Many companies want to increase their sales and make their brand a renowned name. Marketing and word-of-mouth are great ways to achieve this goal. However, these efforts may not yield the desired results. The easiest way to gain greater visibility and reach is to list company products on Amazon. As of now, there are over 9.7 million users worldwide on Amazon, with 1.9 million active. 58% of online sellers on Amazon make a profit within their first year.

Sure, listing products on Amazon can be profitable for companies. That said, sellers must pay a fee to list their products on Amazon. This amount is called the Amazon seller fees. Without proper guidance and knowledge, listing products on Amazon may not be fruitful. But it is hard to provide a ballpark figure for listing products on Amazon.

Selling on Amazon can be profitable for sellers despite the fees. How does it work? How can companies keep the costs low? We know you are curious to know more. This blog will dive into the costs of selling on Amazon and more. Without further ado, let’s get started.

What are Amazon Seller Fees?

In simple words, Amazon seller fees are the amount that sellers must pay to list and sell their products on the platform. These seller fees depend on many factors. These factors include the type of seller account and how the seller chooses to sell their products. Amazon offers two plans, namely individual and professional plans.

Individual Plan

The individual plan is the one where sellers pay a small fee for each product/unit sold. This plan costs $0.99/month. Sellers who sell fewer than 40 units a month can opt for this. However, this plan does not have any advanced features such as advertising. Features of the individual plan include the following:

• Zero monthly subscription
• No access to bulk listing tools or advanced reports
• No option to create listings in specialized/restricted categories
• Limited access to advertising and promotions
• Manual handling of pricing and listing tasks

Professional Plan

Sellers who sell large volumes of products can opt for the professional plan. The plan is available at $39.99/month. The plan has advanced tools and features for users. Below are the key features of the professional plan.

• Perfect for sellers who sell more than 40 units/products per month.
• Access to bulk listing tools, APIs, and custom sales reports.
• Allows users to sell in restricted categories.
• Eligible to run Amazon ads, promotions, and coupons.
• Custom shipping rates and automation options.

Amazon has many fees depending on sales volume and fulfillment type. Besides these costs, there are others, such as advertising and refund processing fees. It's a win-win situation for all. Sellers can reach a larger customer base while Amazon can run its business profitably. Startups and small businesses should opt for the individual plan. Enterprises and large businesses can choose the professional plan.

Types of Seller Fees on Amazon

Let’s understand the type of seller fees. Understanding the different types of seller fees is important for co-owners because it will give them an idea of the expenses they may have to incur.

Amazon Referral Fees

For every product that the seller manages to sell, Amazon charges a specific amount. This is a referral fee. Without Amazon, a seller would not come in contact with so many customers. Amazon makes this possible, and so it charges fees. 

The fees are a percentage of the sales. Depending on the product category, the fees may vary. Typically, Amazon charges 8% to 15% as fees for most items. Having said that, the fees can be as high as 45% for some categories. Below are referral rates for different products.

• Books - 15%
• Electronics - 8%
• Apparel - 17%
• Jewelry - 20%
• Grocery - 8% to 15%

In addition to these fees, Amazon may also charge extra for shipping and packing the product.

Amazon Closing Fees

Amazon charges a fixed amount for products sold under certain categories. These categories include the following:

• Books
• Music
• DVDs
• Games
• Software
• Gaming Accessories

Understand that the closing fees are over and above the referral fees. Amazon charges this amount because of the extra effort put in by its employees. These efforts include handling and processing these products. Amazon closing fees can range from $1.35 to $1.80 per unit/product.

Fulfillment By Amazon Fees

When sellers sell products on Amazon, they can have their orders fulfilled in two ways.

• Fulfillment By Amazon (FBA)

Amazon stores, packs, and ships the products.

• Fulfillment by Merchant (FBM)

The seller handles storage and handling tasks.

• FBA Fees

Fulfillment fees include the following:

1. Fulfillment Fee - This fee is based on the item's size and weight. For example, the fulfillment fee for a standard item under 1 lb is $3.22.
2. Storage Fee - The storage fee is the monthly expense for warehouse space. Storage fees are approximately $0.87 to $3.63 per cubic foot.

• FBM Fees

1. The seller handles shipping activities. Amazon will still charge referral fees.
2. No FBA or storage fees.

• FBA Monthly Storage Fees

1. When a seller’s products are stocked at Amazon’s warehouse, the latter charges a certain amount. Amazon charges this amount because the inventory takes up space.
2. The monthly storage fees depend on the space occupied by the inventory when it's fully packed and ready to be dispatched.
3. Generally, the storage cost is approximately $0.83 to $2.40 per cubic foot/month. This amount may increase during peak seasons or times (especially during October and December).
4. Surprisingly, the rate for storing large/oversized products is lower. It is around $0.53 to $1.20 per cubic foot. The reason for these lower rates is that such products are stored in places allotted to large consignments.

• FBA Long-Term Storage Fees

1. As per Amazon’s policies, sellers whose inventory remains unsold must take the required action. This action refers to selling the goods or taking them away from Amazon’s warehouse.
2. The seller whose inventory lies in the warehouse for more than 365 days must pay a long-term fee. In addition to the monthly storage fee, the seller will also have to pay a long-term fee.
3. Long-term fees can range anywhere from $6.90 to $0.15 per unit (whichever is more). Sellers will have to pay these fees monthly. Additionally, the cost will be calculated on a per-unit/volume basis (whichever is greater).
4. Every fortnight, Amazon will conduct a detailed inventory inspection. The inspection is to determine how old the inventory is. If the inventory is older than 365 days, the seller will have to pay a lump sum amount.

• Removal, Disposal, and Other Costs

1. Presently, Amazon charges a certain amount when customers decide to return their goods. If the product’s return rate is higher than normal (for the relevant category), a returns processing fee of $1.78/item or more will apply.
2. Furthermore, if a seller is not able to sell its inventory and it wants Amazon to handle the removal, it has to pay a fee starting at $1.04 per item.
3. Sellers must also remember that in the case of product returns, they will not get a refund for the fulfillment fees. To learn more about refund and return policies, companies must check the FBA returns page.

Additional Amazon Fees

Besides the fees mentioned above, sellers are subject to other Amazon fees. They are as below.

1. High-Volume Listing Fees

High-volume listing fees will apply to those sellers whose monthly catalog sales exceed 100,000 (product listings).

Cost hovers around $0.005 per active non-media ASIN per month. Over time, these costs add up, especially for businesses with large inventories.

2. Currency Converter for Seller Fees

Understanding the rates is easy for local sellers. What about international sellers, though? International sellers that get paid in currencies of other countries are subject to ACCS fees. Amazon charges this fee to convert the currency as per the seller’s country. The currency converter fee ranges from 0.75% to 1.5% of the amount.

The Amazon currency converter for seller fees covers 20 currencies over 19 Amazon stores across the world. Below are some tips to reduce conversion fees and increase profits.

• Know Your Conversion Rates

Sellers must always track Amazon’s currency exchange rate. They should also be aware of the prevailing rates elsewhere. A proper comparison will help get an accurate estimate.

• Frequency of Conversions

Usually, conversion fees for large transactions are cheaper than for smaller, frequent transactions. Reducing the frequency of payouts can reduce costs.

• Compare Alternatives

Instead of using Amazon’s service for payouts, consider alternatives such as PayPal, Stripe, Revolut, and others. They may offer better rates and charge lower fees. Compare the pros and cons and choose accordingly.

• Local Bank Accounts

Setting up a bank account in another geographical location (where the target market lies) can reduce conversion fees and other costs.

3. Textbook Rental Fees

Sellers who rent books from Amazon must pay a textbook rental fee. This fee includes many costs, including the rental book service fee, along with late charges. If the seller returns books in a damaged condition, Amazon may charge more. 

Sellers must understand these fees, plus their terms and conditions. Doing so will help set competitive textbook rental fees and avoid unpleasant surprises. The rental fee is $5.00 per book rented to a customer.

4. Refund Administration Fees

In the event that a customer returns a product, Amazon refunds the referral fee. However, it will retain a specific percentage and refund the rest. This can reduce the overall revenue for sellers. Refund administration fees can be 20% of the referral fee or $5 (whichever is lower). The fee can be significant for high-priced or premium products. Amazon tends to retain a higher percentage in such cases. Below are some tips to manage refund administration fees.

• Monitor Return Rates - Sellers must identify issues that customers face and know why they return goods. Now it is time to fix these issues. This will minimize returns.
• Enhanced Listings - Product descriptions must be precise, detailed, and accurate. Also, they should contain actual images. This will help sellers meet customer expectations.
• Quality Control - Sellers must make it a point to sell high-quality products. They should not list sub-standard products. This will reduce the chances of defects and returns.
• Customer Service - If customers have any concerns, sellers should address them immediately. This includes providing solutions or guiding them to service centers. This can minimize returns to a certain degree.
• Review Return Policies - Whenever a seller lists a product on Amazon, they should mention the return policies clearly. This will set the right customer expectations.
• Return Costs - Plan for return costs and create a pricing strategy accordingly. This tip is of greater importance for sellers who offer free return shipping.

5. Media and Special Category Fees

Some product categories have unique fee structures. Examples of such product categories include jewelry, watches, apparel, and shoes. Such products have a higher referral fee. They may also include additional charges for handling and verification. Below are some helpful tips to manage such fees.

• Get Complete Information - First and foremost, the seller must fully understand the fee structure for the relevant category.
• Ensure Proper Handling - Products like watches and jewelry are fragile and prone to damage. Hence, sellers must ensure that they are packed properly and handled carefully during transit. These measures will help them minimize product damage and returns.
• Verify Authenticity - Amazon has specific guidelines in place for products like watches and jewelry. Before listing products on Amazon. Sellers must verify their authenticity. Additionally, these products must have proper documentation and listing to ensure customer satisfaction.

6. Lithium Battery Fees

For products like lithium batteries, Amazon charges a per-unit fee. This is because they have to incur significant costs to safely handle and ship them. Depending on the battery size, specifications, and other factors, the fees may vary. Sellers must understand the following points to understand these fees.

• Understand Regulations - Shipping regulations are different for lithium batteries. Sellers must be aware of them before listing them on the website. Moreover, when shipping with popular carriers like FedEx, sellers must ensure adequate compliance and adherence to shipping regulations.
• Battery Classification - Does the product contain lithium-ion or lithium-metal? Sellers must be clear about this. The fees and shipping rules differ in each scenario.
• Proper Packaging - Lithium batteries must be packed in a particular way to prevent damage. Hence, it is important that sellers follow the established standards concerning lithium batteries. This includes using the right packaging materials to reduce damage during transit.
• Accurate Labeling - Lithium batteries must carry the appropriate hazard warnings. These warnings will educate carriers and others on how to handle them. Inadequate handling may result in delays and costly fines.
• Certified Suppliers - Sellers must obtain batteries from reputed suppliers. These suppliers must have proper certification and documentation. Following certification and documentation rules makes shipping smooth and stress-free.
• Alternative Fulfillment Methods - Sellers looking for alternative fulfillment methods should consider Amazon’s FBA expert service. The service manages complex shipping needs and assigns consignments to different partners across Amazon’s vast network.

5 Tips to Determine the Fees for Selling on Amazon

Below are some tips to determine the fees a seller may have to pay.

Determine the Selling Plan

• Sellers who sell fewer than 40 units per month don’t require advanced features. If the sellers have more than 40 units, have many SKUs, or require promotional tools, a professional plan is the best option. It is advisable to add this cost to the monthly overheads.

Fee Types

• Understand the major types of fees that Amazon charges from sellers. These fee types include referral, fulfillment, closing, and storage fees. Other fees include refund administration, high-volume listing, and aged inventory surcharges.

Amazon Fee Calculator

• Amazon FBA Revenue Calculator - Allows sellers to compare fulfillment by Amazon costs and fulfillment by merchant costs.
• Amazon Seller Fee Calculator - This calculator is available for every country’s marketplace.
• All that sellers need to enter are details such as product price, shipping costs, category, and fulfillment method. Once they enter these details, they will get a quick breakdown of the fees.

Category Fee Schedule

• Each product category has a different referral percentage and minimum fee. Sellers can check Amazon’s Seller Central fee schedule to learn about the latest rates.

Consider Additional Costs

Besides fulfillment, sellers must also consider other fees, including the following costs:

• Product Sourcing Costs
• Shipping to Amazon (FBA)
• Packaging
• Returns and Refunds
• Advertising (Amazon PPC)

How to Minimize Seller Fees and Increase Profits

Minimizing seller fees can help sellers increase their profit margins. The secret lies in understanding the fees, making the right decisions, and staying informed of the latest updates. Below are some ways in which sellers can minimize fees and increase profits.

• Choose the right plan based on your sales volume.
• Compare FBA and FBM to achieve the perfect balance of cost and convenience.
• Optimize product size and weight to reduce fulfillment fees.
• Reduce listing fees by bundling products smartly. The higher the average order value, the lower the fees.
• Storing inventory for a long time will compel Amazon to levy long-term storage fees. Keeping your inventory fresh will help prevent these fees.
• Amazon Fee Calculators - Using Amazon fee calculators helps sellers estimate costs before listing. This will help them set profitable prices.
• Promotion Strategies - Wise use of coupons and discounts is advisable. It should not cut into margins.
• Listing in the Right Categories - Listing products in the right categories helps sellers avoid unnecessary or higher category fees.
• Regular Review Fee Updates - Amazon updates its fee structure and posts the information on its website. Checking it regularly will help sellers stay updated with the changes.

Wrap Up..

Selling on Amazon is not rocket science. It may sound challenging at first, but over time it becomes simpler. Sellers must understand the applicable fees and use the tips and tricks mentioned above. This will help them keep Amazon seller fees to a minimum and increase their profit margins.

Many small and emerging companies may be tempted to ditch their plans to sell on Amazon. They may find it more profitable to sell products elsewhere or through traditional channels. These companies must understand that this is the era of online shopping. Selling on Amazon gives them a huge platform and a chance to reach more customers. Building a custom website is the answer, but it involves plenty of groundwork.

Along with having a complete knowledge of online selling, using tried and tested techniques also helps achieve success. Many companies have even leveraged advanced technologies such as AI, ML, automation, and data analytics to scale to new heights. Are you a seller who wants to sell on Amazon and make the most of it? Consider partnering with a full-service Amazon agency with proven expertise and comprehensive knowledge.