Becoming an Amazon seller lets you tap into the platform’s 300 million customers. Also, opting in to the company’s FBA program gives you access to its many benefits that go beyond fulfillment. However, joining this circle means you’ll have to contend with Amazon’s multitude of fees.
In this guide, we’ll help you navigate through them, share some ways to minimize the charges you incur, and introduce a few tools to monitor your expenses easily.
We’ll first discuss the core fees every Amazon seller will incur throughout their time on the platform. It’s important to note each one is charged once your customer’s order ships.
Amazon automatically deducts a referral fee percentage, which is calculated based on your item’s total sales price. The total sales price, or the full amount your buyer pays, includes:
Take note, however, that it excludes taxes calculated via Amazon’s tax calculation services.
Depending on the product category, referral fee rates can range from 3% to 45%. Oftentimes, a $0.30 or $2.00 per unit minimum also applies:
Let’s say you sold something under the Amazon Device Accessories category for $50.00 at $5.00 shipping and $1.00 gift wrapping. Your total sales price is $56.00 with a $25.20 referral fee. As a result, you’ll be paid $30.80 while Amazon keeps the rest.
Meanwhile, if you sell an order with a referral fee that’s less than the minimum, you’ll have to pay $0.30.
You pay a fixed rate of $0.99 for every sold item, charged once your customer’s order is shipped. For example, selling three items earns you a $2.97 fee.
You pay a flat $39.99 per month, which Amazon bills starting from the date of your subscription and on the same day for subsequent months.
So, if you enroll on the 15th of the month, you’ll always be charged on the 15th. But if you cancel on the 15th, you’ll be charged for that entire month before it stops.
Amazon also charges a flat rate of $1.80 per media item you sell in addition to any other applicable fees. Closing fees pertain to the following categories:
For those who sign up for FBA, you’ll incur the following charges in addition to Amazon’s core seller fees.
FBA’s fulfillment fees are the primary expenses you sustain as a member of the program. They’re charged per unit once your customer’s orders are shipped, and they vary based on your item’s product category, size, and weight.
Here’s a step-by-step guide for determining your expenses.
Since Amazon handles rates according to its various product categories, before starting your computations, make sure you:
Product size tier is a measurement category based on your items:
Determine these measurements first, then use the table below. Select the row where its values are not exceeded by your item’s weight or dimensions. Also, to find the girth, add the shortest and median sides and multiply the result by two.
*Use unit weight for standard-size products that weigh 0.75 lbs or less and special oversize products. Use the larger measurement between single unit weight or dimensional weight for all other products.
This is your item’s rounded weight. It’s calculated using either your product’s unit weight or dimensional weight, and determining which one to include is based on your product’s size tier:
*To find dimensional weight, calculate your item’s volume (length x width x height) and divide it by 139. For oversized items, assume a minimum width and height of 2 inches.
Imagine you sold a mobile device case with these specifications:
This item would fall under Most products, the Small standard size tier, and the 6 oz or less shipping weight. Your resulting fee for that unit would be $2.92.
Let’s say your customer ordered a television — which is considered a Non-dangerous good — with these characteristics:
The above specifications mean the TV would fall under the Large oversize tier and the 150 lb or less shipping weight. Since it doesn’t exceed 90 lb, the resulting per-unit fulfillment would be $82.58.
These are charges for the space your inventory occupies in Amazon’s fulfillment centers. Your monthly inventory storage fees, which are typically billed between the 7th and 15th day of the month following when the fees were incurred, are based on:
If your inventory is classified as dangerous goods, your fees will be assessed differently.
Amazon uses this formula to calculate your fee per product: Average daily units x volume per unit x applicable rate.
So, imagine your product has these characteristics:
Your calculation will be 3 average daily units x 20 cubic feet per unit x $1.20 per cubic foot in October, which totals to $72.00 in monthly storage fees.
You incur these charges in addition to the previously mentioned monthly fee if you have any inventory sitting in Amazon’s fulfillment centers for more than 365 days. Long-term storage fees are calculated per unit stored and are based on whichever is greater: volume ($6.90 per cubic foot) or a flat rate ($0.15 per unit).
We’ll use the toy example. Here’s how you get the applicable cubic-foot fee:
The applicable per-unit fee is simply the $0.15 flat rate. Then, Amazon will bill the larger of the two values. The same principle applies for the book example.
Every 15th of the month, Amazon assesses your long-term storage fees through an inventory snapshot. They’re also usually charged between the 18th and the 22nd.
FBA also computes your inventory age on a first-in, first-out basis. So, if you sell or remove an item, no matter which unit it was, it’s deducted from your inventory that’s been in Amazon’s fulfillment network the longest.
These are charged when you request Amazon to dispose of items in your FBA inventory that are stored in its fulfillment centers. Your FBA disposal order fee depends on your product’s size tier and shipping weight. It’s also charged per unit disposed.
*Special handling items may include apparel, shoes, watches, jewelry, and dangerous goods.
Here are some sample computations for the two size tiers.
Let’s say you request for the disposal of three standard-sized units, each having a shipping weight of 1.76 lb.
Each unit’s shipping weight will be rounded up to 1.80 lb, which falls in the 1.0+ to 2.0 lb row.
This results in a $1.14 per-unit disposal fee, so your total fee will be $3.42.
Imagine you requested the disposal of two oversized units, each with a shipping weight of 11.4 lb.
Each unit’s shipping weight will be rounded up to 12.0 lb and classified in the “More than 10.0 lb” row.
You’d calculate your per-unit disposal fee as $7.25 (for the first 10 lb) plus $1.26 (for the extra 2 lb).
Each unit would be charged $8.51, resulting in a total fee of $17.02.
Now, we’ll introduce expenses you can possibly incur on top of the core Amazon selling and FBA fees.
This is charged when you refund your customer for an order where you’ve already been paid. Amazon will reimburse the referral fee, but will also deduct an applicable refund administration fee.
It’s charged per unit returned, and its rate is either a percentage of the transaction refunded or a flat rate.
Note: Before referring to the table below, see if your product is under the Book, Music, Video, or DVD category. Amazon handles the fee for these items differently. Also, for all other product types, the maximum refund administration fee is $5.
Amazon’s special handling fee specifically applies to televisions with 42-inch or larger screens. However, smaller TVs could also possibly incur this fee (due to factors like weight and fragility).
A single fixed rate of $40.00 is charged per unit, incurred once your customer’s order is fulfilled. Also, your screen’s dimensions are measured diagonally between opposing corners.
This is a simple fee where you pay a fixed rate of $5.00 for each book you rent to a customer.
You’ll be charged an $0.11 per-unit fee for lithium batteries and all FBA items that contain or are sold with them. If, for example, you sold four LED flashlights that include lithium batteries, a lithium battery fee of $0.11 would be applied per unit, meaning you’d pay a total of $0.44 for the fee.
The returns processing fee applies to product categories where Amazon offers free return shipping. It’s charged for each customer-returned item in the Apparel and Shoes categories, but not for items returned in Watches, Jewelry, Luggage, or Handbags & Sunglasses.
After being returned to Amazon’s fulfillment center, the item’s condition is assessed. Once that’s done, the fee incurred is based on the table below.
Amazon charges this fee to cover costs associated with cataloging and maintaining a large number of SKUs.
The high-volume listing fee is simple: Amazon charges a fixed rate of $0.001 per active SKU over 1.5 million. Let’s say you have 1,750,000 active SKUs. Your fee will be calculated as 250,000 x $0.001 = $250.00.
If your total number of active SKUs is less than or equal to 1.5 million, you don’t pay a fee. It’s charged on every first day of the month and is based on the highest number of active SKUs from the 5th to the 31st.
You’re charged a one-time FBA removal order fee for every unit of inventory you request to be withdrawn from Amazon’s fulfillment centers. The fee, which is based on your item’s size and weight, is incurred once the removal order is complete*.
*Processing the removal order for the shipment leaving the fulfillment center can take 90 days or more. Delivery by the carrier can take an additional two weeks.
If you want to boost your products’ visibility and sales on the platform, Amazon has different advertising options. The cost to promote your products within Amazon’s search varies depending on their categories. They’re also prone to seasonal fluctuations.
However, what’s most important to know is that advertising is calculated on a cost-per-click (CPC) basis. That means you only have to pay when your products are clicked.
When selling on Amazon, there are multiple strategies you can implement to lower your costs.
Opt for an Individual selling plan if you sell less than 40 items a month. It takes more than 40 monthly Amazon sales to offset the Professional selling plan’s $39.99 subscription fee.
On the other hand, if your monthly sales exceed 40 items, having a Professional plan lets you avoid the $0.99 per-listing fee. You’ll also gain access to:
Stay on top of your inventory, as going over your storage limits subjects you to a monthly FBA inventory storage overage fee. This is based on your average daily volume at $10.00 per cubic foot, and is charged for any excess space your inventory occupies in Amazon’s fulfillment centers.
This is an effective strategy for avoiding Amazon’s monthly inventory and long-term storage fees. Storing products with higher demand, like clothing and apparel, ensures you’ll seldom have items sitting in Amazon’s fulfillment centers for too long. Typically, fast-moving items also occupy less space.
You can still store slow-moving goods like expensive appliances and electronics. Just make sure to monitor your inventory turnover closely and keep a healthy mix of products in your inventory.
Being strategic about what you sell on Amazon can reduce your referral fees as well as other expenses like closing, fulfillment, and monthly storage fees.
For example, you could sell items that incur lower fees on Amazon. Then, for products that accrue higher charges on the platform, you can try other marketplaces — like Walmart or eBay — where your expenses would potentially be lower.
More sales doesn’t necessarily mean fewer expenses, but it does help offset them. Having a thriving Amazon business can easily make up for the platform’s numerous fees.
A helpful way to increase your profitability on Amazon is to opt in to Fulfillment by Amazon (FBA). According to the company’s 2021 Small Business Empowerment Report, sellers see a 20% to 25% increase in sales after joining the program.
Lastly, Amazon provides several useful tools to help its sellers traverse their fees.
Amazon’s myriad of fees can be overwhelming, but the company provides free tools to navigate them. If you’re worried about how expensive it is to sell on Amazon, there are many ways to minimize your costs (as we’ve shown).
By first learning about Amazon’s fees and how you can reduce them, and then utilizing the platform’s tools as you grow your business, your seller experience will be much smoother.