There are many fees involved in working with Amazon as a seller. When it comes to selling on Amazon, nothing comes for free! Amazon charges you a fee for just about everything it does within the sale and delivery process. However, most sellers find that these fees are well worth it and allow them to focus more on scaling their business and less on the fulfilment side.
Fulfilment and processing of orders is really what takes up a lot of manual time in a physical products eCommerce business. Logistics is what Amazon does best and this allows you to focus on the rest of your business.
The following is a high-level list of Amazon Seller related fees that you will encounter while selling on Amazon. Also take a look at this handy infographic of Amazon Seller Fees.
As a seller, you pay a Referral Fee for each item sold. For most categories, this fee is a percentage of the price of your product when sold to a customer. Most are less than 15%, but some also have minimums. For example some categories have an Applicable Minimum Referral Fee. They average about $1.00. So if the percentage fee is less than $1.00, Amazon will just charge you the $1.00 as a Referral Fee. If the percentage is higher than $1.00, Amazon will charge you the higher amount.
FBA Fulfillment Fees
Fulfillment fees vary by category type and product size. For example, small items that are considered Standard Size and are 1lb or less have a $2.41 fulfillment fee. Large, items that are considered Oversized start at $8.13 fulfillment fee + $.38 per pound for any weight over 2lbs! So keep this in mind when pricing your items on Amazon. These fees can add up!
Variable Closing Fees
Some Media categories like; Books, DVD, Music, Software & Computer/Video Games, Video, Video Game Consoles, and Video Game Accessories come with a flat closing (selling) fee. The current closing fee for media items is $1.80 per item sold.
High Volume Listing Fees
This is for really high volume sellers. If you have 100K ASIN’s live on Amazon in a given month, you will be charged $.005 per ASIN. Most sellers never get to this point though.
Refund Administration Fee
This is the fee you pay to process a refund to a customer that has returned an item they purchased from you on Amazon. If you refund a customer for an item that was purchased from you on Amazon and that transaction has already settled (you received money and paid your referral fee), you will receive your original referral fee back, but you will then be assessed an administration fee which is the lesser of $5.00 or 20% of the original referral fee.
Professional and Individual Seller Fee
If you are a Professional Seller, you will be charged $39.95 per month. With the Professional Seller package there is no per item fee, generally the best choice if you are selling more than 40 items per month. If you are set up as an Individual Seller, there is no monthly fee, but you will be charged $1.00 per item sold.
Amazon charges you to store your inventory. It’s part of their business model. Amazon has warehouses all over the world, but typically has at least one if not many in each state in the US. Amazon charges monthly inventory storage fees and long term inventory storage fees.
Monthly inventory storage fees change by product-size tier and by time of year. October through December is the most expensive time of year for storing at Amazon. In fact, the storage frees in Oct, Nov and December are almost 3.5 times as expensive as they are the rest of the year, so plan accordingly!
If your products have been sitting in the Amazon warehouses for more than 180 days, you will be charged a Long Term Storage Fee. This fee is on top of the monthly storage fee. Amazon will alert you though, in plenty of time when you are about to be subject to long term storage fees. You can submit a removal order, or put them on deep discount to liquidate fast and avoid these fees.
Removal order fees
If your inventory is not selling or you have some other reason that you need inventory returned to you, you can process a removal request. Your options for removal are: Return, Dispose or Liquidate. Return sends the item back to you. Dispose, basically throws your item in the garbage and Liquidate sends your item to a retail liquidator where the items are resold at discount prices. Standard items are returned at $.50 per item, Disposal is $.15 per item and if you choose to liquidate, Amazon will charge you 10% of the proceeds
This is a great service that allows you to use Amazon as a dropshipping agent for you, utilizing the inventory you already have in Amazon warehouses. For example, if you sell one of your items on eBay or your own website and this item is currently stored at Amazon, you can create a Fulfillment order and Amazon will ship that item to your customer. Fees start per item at $5.85 which includes the box and cost of shipping.
As you can see, selling on Amazon comes with a LOT of fees. But most sellers feel they are well worth it. If you had to store, pick, pack and ship all of the orders you sell on Amazon, you would have no time to run your business! Price your products carefully and with enough margin to cover your Amazon fees and you will be in great shape. Happy Selling!