Amazon’s popularity and customer-focused approach make it an attractive platform for sellers. However, these benefits come at a cost due to several complex factors. The main fees sellers must consider include sale-related fees, seller account fees, shipping charges, and Amazon FBA fees. These costs can add up, so it’s crucial to understand each one to manage your business effectively.
The typical seller pays roughly 15% of the product’s selling price in sale-related fees ranging from 6% to 45%. Monthly account costs range from USD 0.99 to USD 39.99 (Rs 83-3,340), plus any additional cost. You’ll also need to fulfill and ship your orders, which might be expensive depending on the products you sell and the fulfillment method you use.
To help you make the most of your Amazon business, it’s crucial to get a clear picture of these fees and how they affect your bottom line. Here’s an overview of the fees you can expect when selling on Amazon.
Amazon Sale-Related Fees
When selling things on Amazon, there are three sorts of Amazon seller fees to consider: referral fees, minimum referral fees, and closing costs.
These charges depend on the category of your products and their selling price. Since each category has different fee rates, understanding your exact costs is essential to effectively manage your pricing and profits.
1. Referral Fees
Every item sold on Amazon attracts a referral fee paid by all Amazon sellers (including Individual and Professional accounts). Your product category and selling price are the two factors that influence your referral fee.
Referral fees are based on a percentage of the selling price of your goods. The average referral fee paid by most merchants is around 8%-15%. However, depending on the categories in which your products fall, these fees can range from 6% to 45%.
2. Minimum Referral Fees
Some Amazon categories have a Minimum Referral Fee. If you sell in a category with a minimum referral fee, you’ll pay the higher of the two fees, whichever is higher, but never both. The minimum referral fee typically starts at 2% and varies depending on the product category. Understanding which categories this applies to helps you manage costs and set prices more effectively.
3. Closing Fees
Amazon charges an additional fee for products sold under its media categories. This fee is the Closing Fee, and it’s a Rs 5 (USD 0.06), which is added to the Referral Fees for items in any media category, including:
- Books
- DVD
- Music
- Software and computer/video games
- Video
- Video game consoles.
4. Weight Handling Fees
You must pay weight handling fees to ship or deliver your orders. These start at Rs 29 per item (USD 0.35) and can change depending on the product size and the delivery distance.
5. Removal Order Fees
You’ll need to pay removal order fees whenever you request to remove an item from an Amazon fulfillment center. The fee depends on the product’s size and weight.
6. Returns Processing Fees
You’ll be charged returns processing fees if a customer returns a product eligible for free return shipping. These fees match the fulfillment fees for that product.
7. Unplanned Service Fees
Proper packing, labelling, and barcoding are required when storing products in Amazon’s fulfillment center. If this isn’t done beforehand, Amazon will handle these tasks and charge you unplanned service fees. This ensures your items are ready for shipping.
8. Other Fees
Some additional fees may apply depending on the fulfillment channel or optional services you choose. These are only charged if you use specific programmes or services, so checking what applies to your setup is a good idea.
Amazon Seller Account Fees
Amazon offers two types of Amazon Seller Accounts.
Individual Seller Account
The Individual Seller Account is ideal for starting or having a small product range. There’s no monthly subscription fee, so the amount deducted is Rs 83 (USD 0.99) for each item sold. It’s a cost-effective option for beginners selling in small volumes.
Professional Seller Account
The Professional Seller Account is better suited for high-volume sellers or those looking to grow. This plan costs Rs 3,340 (USD 39.99) monthly but doesn’t charge a fee per item sold. You also get added perks, like advanced selling tools, bulk listing options, detailed reports, and the flexibility to set shipping rates.
The fees and features of each type are geared toward the specific selling needs along with the differences in fees; each type of account offers features that accommodate small or large sellers’ particular needs of low-volume individuals and high-volume business sellers.
Which Account Is Best for You?
If you’re transferring to Amazon from another eCommerce platform, the Professional Seller account is the best option; the Individual Seller account is far more limited and requires more hands-on supervision.
If you’re just selling things on Amazon, an Individual Seller account can help you get started with no upfront charges. Registering for an Individual Seller account is free, and you’ll only be charged fees if your products sell. Amazon deducts its fee from your payment, so you don’t have to pay anything out of pocket.
Shipping Credits & Costs
These charges are not seller fees but can cost you money if you’re not careful. When you ship Amazon orders, Amazon provides a shipping credit to help cover your shipping expenses. However, the credit is often less than what you pay for shipping.
Since shipping costs vary based on the size and weight of your products, it’s possible to spend much more on shipping than what Amazon reimburses. To avoid losing your profits, it’s essential to calculate how much Amazon will credit you for each product and compare it with your shipping expenses.
Fulfillment by Amazon (FBA) Fees
During the latest reported period, 82% of Amazon sellers used Fulfillment by Amazon (FBA). FBA may store, pack, and distribute Amazon products for individual and professional sellers. Of course, Amazon charges fees for this, but many Amazon sellers find the FBA rates highly affordable for specific items. It also relieves you of time-consuming daily order packing and shipping responsibilities and makes your items Prime-eligible.
FBA fees, on the other hand, vary depending on the size and weight of the product. Before you sign up for FBA, you should understand the overall fees you’ll pay to store and ship your products, just like any other aspect of selling on Amazon.
FBA Fees by Service
Amazon’s FBA fees are straightforward: one price covers selection, packaging, and shipping, while the other covers inventory holding. FBA costs cover everything from boxes to packaging to returns handling if your customers return things to Amazon.
You’ll come across two types of FBA fees:
- Pick, pack, and weight handling fees: This is the total cost of your order from start to finish, including shipping.
- The expense of holding your merchandise in Amazon’s warehouse on a monthly basis.
Product Size Determines FBA Fees
The size of the merchandise you’re storing and transporting determines your FBA expenses. Any packaging for your goods, such as shoe boxes, blister packs, or retail packaging, is included in the size. FBA items are divided into two sizes by Amazon.
- Standard-sized items must weigh less than 20 pounds and measure no more than 18′′x14′′x8′′ when fully packaged.
- Products that are too big, i.e. oversized items, are those that weigh more than 20 pounds and/or measure more than 18′′x14′′x8′′. The oversized items further have 2 categories:
- Large bulky items are bigger than standard-sized products, with a shipping weight of up to 50 pounds and dimensions not exceeding 59 inches on the longest side, 33 inches on the median and shortest sides, and a total length of up to 130 inches.
- Extra-large items exceed 50 pounds in either unit weight or dimensional weight, with the longest side over 59 inches, the median and shortest sides over 33 inches, and a length of up to 130 inches. This category is divided into four sub-tiers, with shipping weights ranging from 0 to 50 pounds to over 150 pounds.
FBA Inventory Storage Fees
Amazon FBA storage fees include monthly inventory and long-term storage fees, determined by the size of your product and how long it stays in the fulfillment centers.
Seasonal fluctuations majorly affect storage fees, with costs rising during peak times. This makes it crucial to manage your inventory effectively to avoid unnecessary charges.
Bottom Line
Amazon achieved nearly USD 575 billion in net sales revenue globally in 2023, solidifying its position as one of the world’s most valuable brands. Its vast reach and influence across markets continue to drive impressive growth.
In Q2 2024, Amazon’s total net sales hit almost USD 148 billion, surpassing the USD 134 billion recorded in Q2 2023, reflecting significant year-over-year growth.
On every item you sell on Amazon, the difference between profit and loss might be razor-thin, so it’s critical that you understand the fees and prices. If you keep this information in mind, you’ll be able to identify successful products and succeed in this massive, ever-growing industry.
You can also partner with Shiprocket to help streamline your logistics and shipping processes, making managing costs easier and ensuring timely deliveries. With features like automated shipping, multi-carrier options, AI-powered tools for enhanced tracking, and warehousing solutions, Shiprocket simplifies the operational side of your business, allowing you to focus on growth and customer satisfaction.
