There is a small price to pay for the advantage of having Amazon's customers be your customers. This price comes in the form of Amazon's referral fees, which Amazon charges based on a product's category, and price point of sale.
Referral fees will be automatically deducted from your revenue following a sale, and will likely differ per product. While referral fees are unavoidable when selling on Amazon, this guide will teach you everything you need to know about Amazon's fee schedule.
What are the different types of fees when selling on Amazon?
Something important to note is that referral fees are not the only type of fee that exists on Amazon. While referral fees exist across the board for products on Amazon, there may be additional fees depending on your account type, and fulfillment method. Let's break down the different types of fees you may encounter when selling on Amazon.
Amazon Account Fees:
When selling on Amazon, you may choose between two different account types; Professional ($39.99/month), or Individual (Free).
While an Individual account has no fixed monthly cost, Amazon charges $0.99 per item sold with this account type. Therefore, in addition to its benefits over an Individual account, the Professional tier would make most sense when selling 40 or more items in a month.
Amazon Fulfillment Fees:
Depending on your fulfillment method, your products may be subject to Amazon's fulfillment fee schedule. If you fulfill and ship your orders yourself, Amazon will not charge a fulfillment fee (only to the customer, in the form of a shipping credit to you). However, if you leverage Fulfillment by Amazon (FBA) for handling order logistics and offering Prime shipping, fulfillment fees will apply.
Fulfillment fees are defined by Amazon as a "fee per unit includes picking and packing your orders, shipping and handling, customer service, and product returns. Fees are based on the weights and dimensions of your product."
Fulfillment fees vary based on the item's dimensions, weight, and packaging weight, and are sorted into corresponding groups. The FBA Small and Light program offers the lowest fulfillment fees of any group, and is for items weighing less than 10 ounces (0.38 kg) while being no longer than 16 inches (41 cm) in length. Other groups include small/large standard, small/medium/large oversize, and special oversize. Amazon also has a slightly revised fulfillment fee schedule for apparel items, categorized to the same groups.
Amazon Referral Fees:
As mentioned, when selling on Amazon, referral fees are unavoidable. It is simply the price to pay for the nearly 200 million shoppers browsing Amazon listings each month.
Amazon's referral fee schedule includes 40 different categories of product. Some of these categories have a fixed referral fee structure, while others have different fee structures based on final sale point. Because referral fees are calculated based off of the sale price, Amazon referral fees will adjust for applied discounts and coupons.
According to Amazon, "for every item sold, sellers pay Amazon a percentage of the total price—including item price, shipping cost, and any gift-wrapping charges... The amount depends on the product category. Most referral fees are between 8% and 15%." In addition, the majority of categories include a Referral Fee Minimum, of no greater than $0.30.
You can view our massive Amazon Referral Fee schedule here.
Amazon FBA Storage Fees:
With the shear volume of inventory Amazon receives daily, fee structures exist for storing items to efficiently utilize warehouse space. FBA Storage Fees are currently grouped into two date ranges. Inventory storage between January and September will carry significantly lower storage fees than months October through December, where warehouse space runs scarce for the holidays.
According to Amazon, "inventory storage fees are charged monthly based on the daily average volume (measured in cubic feet) for the space your inventory occupies in Amazon fulfillment centers. The volume measurement is based on unit size when properly packaged and ready to ship."
Why Amazon Fees Exist:
Despite Amazon's product fees taking a healthy chunk out of your proceeds, these fees exist for a reason. Amazon is the go-to marketplace for hundreds of millions of customers, providing massive exposure to your listings. While Amazon's referral fees are unavoidable, consider it the cost of doing business - and the opportunity to showcase your products on a world stage.