Selling on Amazon can be a great way to make money, but it’s important to know the costs involved. Amazon charges different fees depending on how much you sell and how you choose to run your business. These fees include a cost to have a selling account, a small percentage of each sale, and extra fees if you let Amazon handle the shipping. You can also pay for ads to help people find your products. Knowing these costs will help you plan better and make sure you’re making a profit while selling on Amazon.

Amazon Seller Fees Explained: How Much Does It Cost to Sell?

1. Amazon Seller Account Fees: Individual vs. Professional

When selling on Amazon, the first cost to consider is the account type, which determines how you’ll be charged for using the platform. Amazon offers two selling plans: Individual and Professional.

• Individual Selling Plan: This plan is ideal for sellers who are just starting or only plan to sell a few items each month. The individual plan has no monthly subscription fee. However, Amazon charges $0.99 per item sold in addition to other applicable fees like referral fees and shipping costs (if you fulfill orders yourself).
  Example: If you sell 20 items in a month at $15 each, you’ll pay $0.99 for every sale, totaling $19.80. This plan is good for sellers moving fewer than 40 items a month, as you’ll only pay fees when you make a sale.
• Professional Selling Plan: For sellers planning to sell more than 40 items a month, the Professional Selling Plan is a better option. It costs $39.99 per month, regardless of how much you sell, but you won’t pay the $0.99 per item fee. You’ll also have access to additional features, such as the ability to create promotions, sell in restricted categories, and access detailed sales reports.
  Example: If you sell 100 items in a month, you’d pay $39.99 total for the Professional Plan, instead of $99 in fees for the Individual Plan ($0.99 x 100). This plan is more cost-effective as your sales increase.

When choosing between the two plans, it’s essential to evaluate your sales volume. If you expect to sell more than 40 items monthly, the Professional Selling Plan is the better financial option.

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2. Referral Fees: A Percentage of Every Sale

Referral fees are the primary fees Amazon charges on each sale. Regardless of which selling plan you choose, Amazon takes a referral fee as a percentage of the selling price. The percentage varies by product category, generally ranging from 6% to 45%, but the typical range for most categories is 8% to 15%.

• How It Works: When you sell an item, Amazon deducts this fee from the total sale price. For example, if you sell a book for $20 and the referral fee is 15%, Amazon takes $3 from the sale, leaving you with $17 before other costs like shipping or fulfillment.
  Example of Fee Calculation: Let’s say you’re selling a set of kitchen utensils for $50. If the referral fee in the Kitchen category is 15%, Amazon will take $7.50 from that sale as its referral fee. You’ll then receive $42.50 before any fulfillment costs.
• Referral Fee by Category: Different product categories have varying referral fees. For instance, selling an item in the Electronics category might result in a referral fee of 8%, while selling in the Clothing & Accessories category could result in a referral fee of 15%. Some categories like Amazon Device Accessories have lower fees, while others like Collectible Coins might have higher fees.
  Example for Multiple Categories: If you sell a camera for $200 in the Electronics category, the referral fee is 8%, meaning Amazon takes $16. However, if you sell a piece of clothing for $30, with a 15% referral fee, Amazon takes $4.50.

Understanding referral fees is crucial for pricing your products effectively, as they will eat into your profit margins. Depending on the category, your referral fees can vary significantly, so be sure to research the specific rates for your products before listing them.

3. Fulfillment Options: FBA vs. FBM Costs

When selling on Amazon, you have two main fulfillment options: Fulfillment by Amazon (FBA) and Fulfillment by Merchant (FBM). Each comes with its own set of costs, and understanding them is crucial to choosing the best method for your business.

• Fulfillment by Amazon (FBA): FBA allows you to store your products in Amazon’s warehouses, and Amazon takes care of storage, packing, shipping, and customer service, including returns. While FBA saves you time and hassle, it comes with additional fees.
  The two main types of FBA fees are:
  • Fulfillment Fees: Charged per unit based on the weight and size of the product. The fee covers packing, shipping, and customer service.
  • Storage Fees: Charged per cubic foot of space used to store your inventory. There are higher fees during the holiday season (October through December).
• Example: Let’s say you’re selling a small item like a phone case that weighs less than 1 lb. If the fulfillment fee for this product is $2.50 per unit, and you sell 100 units, you’ll pay $250 in fulfillment fees. If you store 500 phone cases that take up 2 cubic feet of space for a month, and the storage fee is $0.87 per cubic foot, you’d pay $1.74 in storage fees that month.
  FBA is a great option if you want Amazon to handle logistics, but the costs can add up, especially if your products are large, slow-moving, or in storage for extended periods.
• Fulfillment by Merchant (FBM): With FBM, you’re responsible for storing, packing, and shipping your products directly to the customer. This means you avoid FBA’s fulfillment and storage fees, but you’ll need to cover your own shipping and handling costs, as well as provide customer service.
  Example: If you sell the same phone case for $10 and shipping costs you $4, your total cost per unit is $4. If you sell 100 units, your total shipping cost is $400. However, you won’t pay the $2.50 fulfillment fee per item like in FBA.
  Choosing Between FBA and FBM: FBA is ideal if you want to scale your business quickly, leverage Amazon’s Prime shipping, and not worry about logistics. However, if you can handle fulfillment efficiently and want to avoid additional fees, FBM may be a better option.
  Example Decision: For high-margin, fast-selling items, FBA may make more sense despite the costs. For slow-moving or heavy items where storage fees might add up, FBM could be a cost-effective solution.

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4. Storage and Long-Term Fees for Amazon Sellers

Amazon charges storage fees for keeping inventory in its fulfillment centers, but if your products stay unsold for an extended period, you could also face long-term storage fees. Understanding how these fees work can help you avoid unnecessary costs.

• Monthly Inventory Storage Fees: Amazon charges storage fees based on the size and volume of your products, measured in cubic feet. These fees are higher during the holiday season (October to December) because of increased demand for warehouse space.
  Example: If you’re storing 10 cubic feet of inventory and the monthly fee is $0.87 per cubic foot, your storage cost for one month is $8.70. During the holiday season, the same space might cost you $2.40 per cubic foot, raising the total to $24.
  The longer your products sit in Amazon’s warehouse, the more these costs can eat into your profits. This is why it’s crucial to maintain a balance between stocking enough inventory and ensuring products sell quickly.
• Long-Term Storage Fees: In addition to monthly storage fees, Amazon imposes long-term storage fees for products stored in its fulfillment centers for over 365 days. These fees can be significant and are meant to encourage sellers to maintain fresh inventory.
  Example: Let’s say you have 100 units of a product that hasn’t sold in over a year. Amazon will charge you $6.90 per cubic foot (or $0.15 per unit, whichever is higher) in long-term storage fees. If those 100 units take up 5 cubic feet of space, you’d pay $34.50 in long-term fees. This is in addition to your regular monthly storage fees.
• Avoiding Long-Term Fees: To avoid these fees, many sellers use strategies like running promotions or discounts to move inventory that has been in storage for a long time. Another option is to remove the inventory before the 365-day mark. However, removing inventory also incurs a fee per unit.
  Example: If you decide to remove the 100 unsold units to avoid long-term storage fees, you’ll pay a removal fee, typically between $0.50 and $1.00 per unit depending on the size and weight of the product. If you pay $0.75 per unit, the total removal cost is $75, which might be cheaper than paying long-term storage fees over time.
  Best Practices:
  • Monitor Inventory: Use Amazon’s inventory reports to track the age of your products and take action before they reach the 365-day threshold.
  • Strategic Stocking: Try to forecast demand accurately to avoid overstocking slow-moving items that could incur long-term storage fees.
• Example of Impact: A seller with slow-moving inventory might have to choose between lowering prices to accelerate sales or incurring hefty storage and long-term fees. This decision can greatly affect profit margins.

5. Optional Costs: Advertising, Tools, and Other Services

In addition to the standard fees associated with selling on Amazon, there are optional costs you can incur if you choose to invest in advertising, use third-party tools, or subscribe to additional services. These extra expenses can help boost sales and efficiency but should be weighed carefully to ensure they align with your profit margins and business goals.

Amazon Advertising Costs

One of the most common optional costs for sellers is Amazon’s advertising service, known as Amazon Pay-Per-Click (PPC). Advertising helps you increase your product’s visibility by placing it higher in search results or displaying it on product pages. There are three main types of ads you can run:

1. Sponsored Products: These ads promote individual listings in Amazon’s search results and product pages. You only pay when a customer clicks on your ad (hence “pay-per-click”). The cost of a Sponsored Product ad depends on how competitive your chosen keywords are. More competitive keywords typically have a higher cost-per-click (CPC).
   Example: If you’re selling a fitness tracker and bid $0.50 per click on the keyword “fitness tracker,” you’ll pay $0.50 every time someone clicks on your ad. If 100 people click on your ad in a day, your ad spend would be $50.
2. Sponsored Brands: These ads promote your brand or a group of products. They appear at the top of search results and include a custom headline, logo, and multiple products.
   Example: If you run a Sponsored Brands campaign for your fitness product line, you can showcase multiple items like fitness trackers, smartwatches, and health monitors. Your CPC might be higher due to prime placement, with costs around $1 per click.
3. Sponsored Display: This ad type allows you to retarget customers who have viewed your products, ensuring they see your ads both on and off Amazon.
   Example: If a customer viewed your product but didn’t make a purchase, your Sponsored Display ad can show up on their Amazon homepage or on other websites, reminding them to complete the purchase.

• Setting a Budget: When running ads, you can set a daily or campaign budget to control costs. For example, you might set a daily budget of $10 for your Sponsored Product campaign, ensuring you don’t exceed $300 per month.

Third-Party Tools

Many Amazon sellers use third-party tools to streamline their operations and gain an edge over competitors. While these tools can be invaluable, they come with added costs. Common types of third-party tools include:

1. Product Research Tools: Tools like Jungle Scout and Helium 10 help you identify profitable products, analyze competitors, and forecast sales trends. Subscriptions typically range from $29 to $99+ per month, depending on the features you need.
   Example: If you subscribe to Jungle Scout’s basic plan for $49 per month, you’ll gain access to product research data, keyword research, and listing optimization tools. Over the course of a year, this tool could cost you around $588, but it may help you identify profitable products and increase sales.
2. Inventory Management Tools: These tools help you manage stock levels, avoid running out of inventory, and streamline fulfillment processes. Popular tools like Sellics or Zoho Inventory charge around $19 to $100+ per month, depending on your sales volume.
   Example: A small seller might use Zoho Inventory’s $39 per month plan, allowing them to track up to 1,500 orders per month. As your business scales, higher-tier plans with more features can increase costs but also save time and effort in managing inventory manually.
3. Repricing Tools: These tools automatically adjust your product prices based on competitor activity to help you stay competitive without manually changing prices. The cost of repricing software usually starts around $25 per month.
   Example: Using a repricer like RepricerExpress, you might pay $55 per month for a mid-level plan that manages 5,000 listings. This tool can automatically adjust your prices to ensure you remain competitive in winning the Buy Box, potentially increasing your sales.

Other Services

There are additional optional services you might consider, depending on your business goals:

• Amazon Brand Registry: Registering your brand on Amazon provides additional benefits like enhanced brand protection, access to A+ Content, and the ability to run Sponsored Brands ads. Brand Registry itself doesn’t have a direct cost, but it requires a registered trademark, which can cost $225 to $400+ through the U.S. Patent and Trademark Office.
  Example: If you’re selling custom-designed kitchen tools and want to protect your brand, registering a trademark and enrolling in Brand Registry can prevent counterfeiters from selling under your name. While the initial cost is significant, it can help secure long-term brand integrity.
• Amazon Premium Services: Amazon offers various premium services like Amazon Lending, which provides loans to help sellers grow their business. Loan terms and interest rates vary depending on your business’s size and financials.
  Example: If you receive a $10,000 loan offer from Amazon Lending to invest in additional inventory for the holiday season, you might pay 10% interest over 12 months, making the total repayment amount $11,000. This is an optional cost but can be useful if you’re looking to scale quickly.

Evaluating the ROI

When considering optional costs like advertising, tools, and services, it’s essential to evaluate your return on investment (ROI). While these expenses can help boost your business, they can also erode profit margins if not managed wisely.

• Example of ROI: Let’s say you spend $200 per month on Amazon PPC ads and generate $2,000 in sales as a result. If your profit margin is 20%, you make $400 in profit. After subtracting your ad spend, you’re left with $200. In this case, the advertising investment was worth it, as it led to increased visibility and sales.

Optional costs like advertising, third-party tools, and services can greatly benefit your Amazon business if used strategically. However, it’s essential to continuously monitor these expenses to ensure they’re delivering a positive ROI and not eating into your profits unnecessarily.

FAQ

1. What are the basic fees to sell on Amazon?

• Amazon offers two types of accounts: Individual (costs $0.99 per sale) and Professional ($39.99 per month, no per-sale fee). Choose the Individual plan if you sell fewer than 40 items a month, and the Professional plan for higher volumes.

2. What are referral fees?

• Referral fees are the percentage Amazon takes from each sale. These usually range from 6% to 15%, depending on the product category. For example, selling a $100 item with a 10% referral fee means Amazon takes $10.

3. Are there extra fees if Amazon handles shipping (FBA)?

• Yes, if you use Fulfillment by Amazon (FBA), you’ll pay additional fees for storage and fulfillment. These fees depend on the size and weight of your items, and how long they stay in Amazon’s warehouse.

4. Are there any optional costs?

• You can choose to spend extra on advertising to boost your product’s visibility. Advertising costs are flexible, based on your budget. Other tools for product research or inventory management can also add to your monthly costs.

5. How do I calculate my total cost to sell?

• To figure out the total, add up the selling plan fee, referral fees, and any fulfillment or optional costs like advertising.