Amazon charges sellers various fees that cut into profits. This comprehensive guide will explain the different types of Amazon seller fees, provide tips for reducing costs, and help sellers calculate their total fees when selling on Amazon.
Table of Contents
Types of Amazon Seller Fees
These are the main categories of fees charged by Amazon that make up the costs of selling on their platform:
Referral Fees
Amazon’s commission on each product sale. Ranges from 8-15% depending on product category.
Subscription Fees
Fixed monthly fee for professional seller accounts ($39.99). Some categories also have add-on subscriptions.
Fulfillment Fees
Fees for picking, packing and shipping FBA orders. Based on item size and weight.
Storage Fees
Monthly fees for inventory stored in Amazon FBA warehouses based on volume.
Advertising Fees
The cost of Amazon PPC ads. Based on clicks or impressions.
Reimbursement Fees
Deductions for customer refunds, chargebacks and returns.
Other Service Fees
Fees for optional services like product imaging, promotions and intelligence tools.
Understanding these major fee buckets allows sellers to accurately estimate Amazon costs.
Referral Fee Breakdown
Amazon’s referral fee is a percentage commission charged on the total sales price when a product sells. Here are key details on referral fees:
- Rate – Varies by product category between 8-15% of sale price. Some categories higher at 15-25%.
- Applies to – Total item selling price including shipping/taxes. Doesn’t include gift wrap fees.
- Calculated – Referral fee percentage based on product category assigned.
- When Charged – Deducted when order is placed by customer.
- Higher Rates – Books, DVDs, music CDs, video games, software and electronics carry 15% referral fees. Most other categories are 15%.
Amazon’s tiered referral fee structure helps cover their order fulfillment and platform costs. Check category rates closely.
Amazon Subscription Fees
All Amazon seller accounts have a monthly recurring fee:
- Individual plan – $0.99/month
- Professional plan – $39.99/month
A professional account is required to sell over 40 items a month. It includes benefits like bulk uploading listings and access to advanced reporting.
Some categories have additional monthly subscription fees for product listings, like:
- Books – $25/month for booksellers
- Toys & Games – $2.50/month
- Pet Supplies – $2.50/month
Keep subscription costs in mind when pricing and planning Amazon selling activities.
Amazon FBA Fees Breakdown
Selling on Amazon FBA incurs fees for fulfillment services:
FBA Pick & Pack Fees
- Charged per unit picked, packed and shipped from Amazon warehouse
- Varies based on product category and standard vs oversized
- Typically $1.50 to $3.00 per unit
FBA Weight Handling Fees
- Based on weight of shipment
- Charged if products are over standard size
- Ranges from $0.40 – $1.00 per lb
FBA Monthly Storage Fees
- Charged for space items take up in warehouse over long term
- Based on product size tier – small standard-size, large standard-size, oversize
- Fees range from $0.69 up to $2.40 per cubic foot
Compare FBA costs against your own fulfillment expenses to see if outsourcing logistics makes sense.
Advertising and Marketing Fees on Amazon
Promoting products through Amazon ads incurs fees:
Sponsored Products
- Cost per Click (CPC) – Typical bid $0.05 to $1.00
- Average Cost of Sale (ACoS) – Varies greatly by product margin
Sponsored Brands
- Cost per Thousand Impressions (CPM) – Avg $1 – $10
Amazon DSP / Display Ads
- CPM or CPC based on placement
- Ranges from $0.10 to $10+
Calculate ACoS goals based on product margins to determine profitable ad spend levels. Bid and budget accordingly.
Reimbursement Fees on Amazon
Certain situations cause Amazon to deduct reimbursement fees:
Refund Administration Fee
- $5.00 – $10.00 per return deducted
Chargeback Fee
- $15 fee per disputed credit card charge
Goodwill Policy Refunds
- Amazon provides refunds past return window at seller expense
Unplanned commits
- Reimburses Amazon costs if inventory sent in doesn’t match shipment plan
Reversals
- Deductions made if order cancellation results in fees assessed to Amazon
Work to minimize customer returns and chargebacks. Amazon aims to recoup costs from issues.
Other Potential Amazon Fees
Less common fees that may apply:
- Removal order fees – $0.50 per unit to return excess FBA inventory
- Disposal fees – $0.15 – $1 per unit fee if Amazon disposes of unsellable products.
- Long-term storage fees – For inventory stored over 1 year unused in FBA.
- Hazmat fees – If shipping hazardous materials requiring special handling.
- Label service fees – If purchasing shipping labels via Amazon.
- early Reviewer Program fees – For providing free products to select top reviewers.
Watch out for these situationally applicable fees that can occasionally surprise sellers.
How to Estimate Total Amazon Fees
Add up the major fee components to estimate your total fees:
1. Referral Fee
Sale Price x Category Referral Rate
2. FBA Fees (or third-party logistics costs if not using FBA)
Pick & pack per unit rate x estimated monthly units
Plus applicable weight handling
Plus monthly storage fees
3. Subscription Fees
Seller monthly plan fee
Any additive category monthly fees
4. Estimated Promotion Costs
Budget for advertising and discounts on Amazon
5. Processing Fees
Transaction, refund etc processing costs
Total Estimated Amazon Fees
Add up the above to determine the total fees you will pay Amazon per item and monthly. Compare to expected profits to confirm selling is worthwhile.
Ways to Reduce Amazon Fees
Some tips to help minimize Amazon fees:
- Optimize packaging to fit smaller FBA sizes
- Ship LTL freight to Amazon to reduce per order fees
- Only ship FBA inventory expected to sell within 6 months
- Run promotions sparingly to avoid excessive advertising costs
- Focus on higher margin items where fees are smaller percentage
- Leverage APN coupons and sponsored product credits
- Enroll in discounted shipping programs like Amazon Partnered Carrier
- Minimize returns through customer service, quality control
Careful planning and adjustment of logistics, promotions and product selection allows lowering overall selling costs.
Selling on Amazon FBA vs FBM Cost Comparison
Sellers weigh pros and cons of Fulfilled by Amazon (FBA) versus Fulfilled by Merchant (FBM). Cost differences include:
| Cost Factor | FBA | FBM |
|---|---|---|
| Referral Fee | Yes | Yes |
| Fulfillment Fees | Yes | No, but own labor/tools |
| Monthly Storage | Yes | No, but own warehouse |
| Pick & Pack | Yes | No, but own labor |
| Shipping | Discounted partner rates | Retail shipping rates |
| Customer Service | Amazon handles | Seller responsibility |
| Returns | Amazon processes | Seller processes |
FBA costs more initially but can drive sales growth by leveraging Amazon’s logistics and Prime eligibility. Compare granularly.
Ways Amazon Competes on Fees
Amazon faces competition from other ecommerce platforms. They attract sellers through:
- No listing fees – Unlike Etsy and eBay which charge per listing
- Low referral rates – Average 10% versus Etsy at 12% and eBay up to 30%
- Individual category pricing – Rates tailored by product type
- Volume discounts – Lower referral rates once over $1M in sales
- Bundled services – All-in-one platform vs a la carte costs
To sustain their market share, Amazon keeps fees competitive for the value provided compared to other sales channels.
Should I Increase Prices to Cover Amazon Fees?
Simply offsetting Amazon fees by uniformly raising prices can be risky. Instead:
- Maintain competitive pricing based on marketplace demand and your margins.
- Tweak pricing gradually in ways less obvious to buyers. Test responses.
- Reduce production costs if possible through negotiations with suppliers and efficiency gains.
- Shift focus to higher margin items and markets.
- Run promotions strategically when able to lower pricing.
- Absorb some costs during growth phase to fuel expansion. Raise once established.
Pricing should balance positioning, value perception, and profit goals.
Getting Approved for Amazon Fee Waivers
Amazon grants fee waivers in limited circumstances:
- Severe weather – Natural disasters that prohibit MFN/FBM fulfillment
- Personal emergencies – Family death/illness, medical reasons
- System errors – Glitches incorrectly charging fees
Steps to request waivers:
- Contact Seller Support explaining situation and requesting relief
- Provide documentation supporting circumstances
- Explain steps taken to attempt resolving issue
- If denied initially, politely appeal again emphasizing it being a one-time request
Fee waivers are evaluated case-by-case. Well-documented special cases sometimes receive one-time waivers or courtesies as a customer retention policy. But don’t expect ongoing broad relief. The standard fees are the cost of tapping Amazon’s platform and logistics.
Tips for New Amazon Sellers on Fees
Keep these tips in mind when budgeting for fees as a new Amazon seller:
- Carefully review the Selling on Amazon fee schedule and plan accordingly. There are no surprises.
- Factor fees into pricing – don’t just tack on post-sale or the perceived value will be too high.
- Focus on higher margin products and markets to allow sufficient profit cushion.
- Use the Amazon Revenue Calculator to estimate exactly how much Amazon will collect in fees per unit sale.
- Don’t neglect accounting. Rigorously categorize and track every cost and fee.
- Automate and streamline fulfillment to control labor and logistics costs.
- Start small while optimizing inventory and sales process before committing major capital.
Understanding Amazon’s fees structure and planning accordingly allows maximizing profits from the start.
Should I Raise My Amazon Prices to Cover Fees?
Raising prices across the board simply to offset fees is not advisable:
- Could negatively impact competitiveness and sales velocity
- Erodes perceived value if buyers notice uniform higher pricing
- Amazon may interpret as price gouging if done suddenly or drastically
Instead, consider:
- Finding ways to tighten production costs through supplier negotiations and efficiencies
- Focusing on higher margin items where fees are lower percentage of price
- Making modest incremental price increases over time
- Running strategic promotions to lower pricing periodically
- Accepting slightly lower margins temporarily while establishing presence and volume
Amazon fees are the cost of accessing Amazon’s platform and Prime buyer base. Absorb and adapt rather than attempting to push the burden directly onto buyers.
Amazon Fee Calculator Tools
These free tools help estimate your Amazon fees:
- Amazon Revenue Calculator – Official estimator showing fees for specific products
- SellerApp Fee Calculator – Estimates fees for different product categories and fulfillment methods
- Jungle Scout FBA Calculator – Breaks down FBA fees based on dimensions and weight
- Fetchmark FBA Calculator – Estimates total FBA fees including storage and long-term storage
Use these resources when initially evaluating products and product types to ensure adequate margins.
Conclusion
Key takeaways for understanding and managing Amazon seller fees:
- Referral, subscription, FBA and advertising are the major fee components
- Fees vary based on product category, size tier and logistics method
- Tools and revenue calculators help estimate total fees
- Lower costs through volume discounts, optimization and higher margins
- Compare FBA against own fulfillment costs to determine best option
- Monitor for periodic fee changes announced by Amazon
- Adjust pricing gradually based on competitive demand rather than offsetting fees
Accurately factoring in the fees involved with selling on Amazon allows maintaining profitability. Use this guide to minimize the impact of fees on your bottom line.
Amazon Seller Fee FAQs
Here are answers to some frequently asked questions about Amazon fees:
Do I pay Amazon fees if I don’t sell anything in a month?
Yes, the monthly recurring subscription fee for a professional seller account is charged regardless of sales activity. Any additional category fees are also assessed monthly.
Does Amazon charge fees for unsold FBA inventory that needs to be returned?
Yes, Amazon charges removal order fees and may also charge disposal fees if inventory is unsellable and needs to be disposed of rather than returned.
Can I estimate my total Amazon fees before listing a product?
Yes, use Amazon’s revenue calculator or other fee estimation tools to input your product details and projected price to get an accurate fee estimate before listing.
Do I have to pay Amazon fees if I refund a customer?
Yes, even when issuing refunds you are still responsible for the original Amazon referral fee percentage charged on the order. Amazon deducts their fees on the sale even if later refunded.
Can I deduct Amazon fees on my taxes as an expense?
Yes, seller fees incurred on Amazon can be deducted from your business’s taxable income as ordinary and necessary business expenses. Keep detailed records of all Amazon fees.
