Amazon has helped thousands of businesses across the world leverage the opportunities that come with the eCommerce business and also helped them expand their markets.
Sellers can not only use the Amazon platform to sell their products and increase their market share, but they can also make use of many business solutions offered by Amazon to enhance their sales numbers.
If the nitty-gritty of processing and shipping orders yourself feels overwhelming, go for the Fulfillment by Amazon (FBA) shipping method as I have explained as a benefit here.
Through FBA, you can use Amazon’s world-class fulfillment centers, customer support, and other operational tools to scale your business faster than you ever could on your own.
If you work with FBA, you’ll store your inventory in Amazon’s fulfillment centers around the world. When a customer places an order, Amazon handles packaging and shipping the product to the customer.
If you’re selling on Amazon, or you intend to go into the Amazon business, profit margins are everything. As awesome as it would be, selling on Amazon isn’t as simple as uploading an item/description and watching the money roll in.
There are various fees involved, and we will break them down for you, so you know exactly how to budget for them, and this knowledge will help you to maximize your profits.
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The Different Types of Amazon Seller Fees You’ll Encounter
As said earlier, there are several fees associated with selling on Amazon, but we can generally categorise them into one of three different kinds. The FBA fulfillment fees shown below are the adjusted rates that are in effect.
1. Fees That Have to Do With Sales
No matter if you’re a casual (i.e. individual) or serious (i.e. professional) seller, you’ll have to give Amazon a fee each time you sell a product. The amount of the fee has to do with the product’s price and category, and it ranges from 6-20%.
And just to make it even more fun, there’s also something called the Variable Closing Fee, which you would pay on media items (e.g. music, books, DVDs, consoles, software/video games, and videos). This is a flat fee of $1.35-1.80 that’s added on top of the regular selling fee.
There’s also something called the Minimum Referral Fee, and this ranges from $0-2. You won’t have to pay both, just whichever is greater of the ‘regular’ referral fee or the minimum one.
For example, if the referral fee comes out to $1.69 and the minimum referral fee is $2, you would pay the $2 (and not the two added together, only the greater amount).
Changes for 2022
For the 2022, Amazon have made changes to the following category in terms of Referral Fees.
Shoes, Handbags & Sunglasses
Starting February 18, 2020, Amazon will reduce the referral fee percentage from 18% to 15% for Shoes, Handbags & Sunglasses products with a total sales price above $75.00.
Outdoor furniture
Starting February 18, 2020, Amazon will consolidate outdoor furniture products into the Furniture category, which will reduce the referral fee percentage from 15% to 10% on any portion of the total sales price above $200.00.
Personal care appliances
Starting February 18, 2020, Amazon will consolidate personal care appliances into the Health & Personal Care category, which will lower the referral fee percentage for personal care appliances from 15% to 8% for items with a total sales price of $10.00 or less. Items with a total sales price above $10.00 for that category will remain 15%.
Activewear
Starting on February 18, 2020, all activewear clothing will be charged the Clothing & Accessories category referral fee percentage of 17%.
Ring accessories
Starting February 18, 2020, Amazon will consolidate Ring accessories into the Amazon Device Accessories category, which has a referral fee percentage of 45%.
More official information about referral fees change for 2020 can be found here. (Seller Central Log-in required)
2. Fees That Have to Do With the Type of Account You Have
When you first sign up as a brand new seller, you must choose between 2 plans, Professional or Individual. Sales fees are also calculated differently depending on if you’re an individual or professional seller.
If you’re an individual seller, you pay $0.99 closing fee for every item you sell on the Amazon marketplace, but you do not pay a monthly fee.
And if you’re a professional seller, it’s the opposite. You pay a $39.99 monthly fee, but no individual fees on products themselves.
Typically, the tipping point between the two types of accounts is about 40 products per month. If you usually sell less than 40, stick with an individual account until your sales increase.
But if you find yourself regularly exceeding 40 items per month, then a professional account is probably more cost-effective.
3. Fees That Have to Do With Fulfillment by Amazon (FBA)
No matter which method you choose to ship your products, there’ll be a cost involved. If you use local shipping/courier companies because you want to ship yourself, you’ll have to pay them.
And if you want Amazon to take care of the shipping process, well, there’s a cost involved with that, too.
When it comes to FBA, you’re looking at two different types of fees.
FBA Fulfillment Fees
This is what Amazon charges you to pack and ship the product (and all the service stuff in between, like customer support and returns). This fee is further subcategorised into:
- Standard Sized Items: Anywhere from $2.41 for an item under a pound to $4.71 if the item is over 2lbs (plus an extra $0.38 for each pound over 2lbs)
- Oversized Items: If the item is big but weighs under a pound, you start at $8.18 and $0.38 for every extra pound over 2lbs, for medium oversize, it will be $9.44, and for large oversize, it is $73.18 and $0.79 for every extra pound over 2lbs. Furthermore, if the item is a special oversized product over 2lbs, then your fees will be $137.32 and $0.91 for ever pound over 90lbs
- Lithium Batteries and Related: If your item is lithium batteries or contains/sold with your item, then an additional $0.11 per unit fee will be applied.
For more info about theFBA fulfillment fees changes for 2022, check it out here. (Seller Central Log-in required)
FBA Fulfillment Fees for Clothing
A $0.40 per unit surcharge for clothing items will be eliminated and the above table fee structure will be charged for clothing & accessories category.
FBA Fulfillment Fees for Small and Light
On February 18, 2020, the following FBA Small and Light program fee changes will take effect, unless otherwise noted:
- Amazon will consolidate order handling, pick & pack, and weight handling fees into a single per-unit fulfillment fee by weight.
- Amazon will start charging $0.10 per unit for Small and Light items in the optional FBA Label Service.
- Amazon will eliminate long-term storage fees for Small and Light units that have been in a fulfillment center for 181 to 365 days.
- Amazon will discontinue Small and Light-specific long-term storage fee rates. Effective February 15, all standard FBA storage fees will apply to Small and Light, which will reduce the per unit fee from $0.50 to $0.15.
- Amazon are aligning Small and Light removal and disposal order fees to the same changes being made for standard FBA.
More info can be found here. (Seller Central log-in required)
FBA Storage Fees
Each month, you pay Amazon a monthly inventory storage fee based on how many cubic feet your stock uses at a fulfillment centre, as well as the volume of your inventory in the facility. Just like fulfillment fees, storage fees are divided into:
- Standard Size: $0.75/cubic foot (January-September) or $2.40/cubic foot (October-December).
- Oversize: $0.48/cubic foot (January-September) or $1.20/cubic foot (October-December).
- Small and Light: $0.15 per unit or $6.90 per cubic foot whichever is greater for items more than 365 days. Items stored between 181 to 365 days do not incur long-tern storage fees
More info can be found here. (Seller Central Log-in required)
How To Use Amazon Fee Calculator To Calculate Your Amazon FBA Fee
Calculating the exact Amazon FBA fee can be extremely confusing and new sellers often drastically underestimate the true cost of Amazon fulfillment.
To help make the math easier, Amazon provides a handy FBA calculator which can be found here
To use the calculator, you must first do a search on Amazon and find an item that closely resembles what you are trying to sell. Copy and paste the product’s ASIN into the calculator to begin.
Amazon will then use the dimensions and weight of this item to help calculate your fulfillment costs.
Once you’ve chosen a similar item, enter in your selling price and product costs and hit calculate. Amazon’s calculator will then output the approximate cost of Amazon fulfillment using FBA.
To sum up, in my opinion, FBA is a must-have service for products listed on Amazon. Being able to guarantee fast shipping (that’s often free for the customer) is key to conversion on Amazon.
Using Amazon’s warehouses for your Amazon sales makes a lot of sense. Now that you know exactly how much you’ll be spending in Amazon seller fees, you’re more than equipped to set your rules for maximum profitability.
To get an accurate idea of how much profit you’ll net, use an Amazon fee calculator.
The benefits of using the Amazon Fulfillment Service for your Amazon business is enormous. Your business will run more smoothly, and you will save time and cut costs in your own workplace.
Your customers will be impressed as they will have the Amazon customer service and delivery options available to them when they buy your products.
This means you will generate more sales and improve your customer satisfaction. Most top sellers on Amazon find success with the FBA service, reporting increased sales, especially for those products that are listed on Amazon.
If you enroll in the FBA program, you can automate order fulfillment by taking advantage of Amazon’s advanced shipping and fulfillment services and earn more sales from Amazon’s coveted prime customers.
Stop packing, and start selling!