Amazon’s selling fees can be confusing to merchants who are new to the marketplace. We have provided a breakdown of the different kinds of fee structures common to Amazon, and how these different fees affect sellers.
What is the commission rate per transaction?
Amazon’s selling fees vary based on the type of selling account you have—either individual or professional.
If you have a professional seller account, you will pay $39.99 per month and no individual item fees. However, you will still pay referral fees and closing fees. If you are an individual seller, you will not pay a monthly subscription fee, but you will pay $0.99 per item sold, plus referral fees by category, and closing fees for media products.
What are referral fees on Amazon?
Referral fees are a percentage of the total sale price, not including any calculated tax, and they vary by the category of item sold. Percentages range from 8% to 17% for most categories, but are as high as 96% for merchants selling warranties or protection plans. The total sale price also includes the cost of shipping. Think of it as the total amount a customer paid, not including tax. If the customer paid for gift wrapping and expedited shipping, that counts toward the sale amount that is used for calculating the referral fee.
Let’s say you’re selling products in bulk on Amazon. The referral fee for clothing is 17%.
If you sell a $20 sweater, with a tax of $2.00, a shipping cost of $5.00, and a gift wrapping cost of $1.50, then the referral fee will be 17% of $26.50 ($20 + $5.00 + $1.50). This would result in a referral fee of $4.505, and it seems that Amazon rounds to the nearest penny, so the final referral fee would be $4.51.
What are closing fees on Amazon?
Closing fees apply to media product categories. Media products (like books, Blu-ray discs, video games, etc.) have an additional charge of $1.80 per item sold. Factor this into your pricing to be sure you can still make a profit after a sale.
Should I select an individual selling plan or a professional selling plan?
If you sell more than 40 items a month as an individual seller on Amazon, then you will save money by switching to a professional seller account, eliminating the $0.99 fee per item, and instead paying $39.99 per month. Professional seller plans also give you access to categories that are not available to individual sellers, such as shoes and luggage, so you may find that the type of item you sell requires a professional seller account anyway.
Professional sellers are free to set their own shipping prices, whereas individual sellers must charge buyers the shipping rate that Amazon determines per category. Read more about this below.
How do shipping credits work on Amazon?
If you have an individual selling plan, Amazon specifies what the shipping rates are for each category, regardless of how much it actually costs you to ship the item. Yes, this means that it is possible to lose money if you are not careful!
It does not matter how much it actually costs you to ship the item, Amazon will only charge the predetermined shipping fee to the customer. If the shipping for a particular item costs you $12, instead of $4.99, then you will want to calculate that in advance and add the difference to the price of the item. Keep in mind, this scenario only applies to individual selling plans, because you cannot change the shipping prices that Amazon shows to customers.
Let’s look at an example. If you are selling an item at a price of $10, and Amazon’s shipping credit for that item’s category is $4.99, then the customer will pay a total of $14.99 (plus tax, if it’s being collected on Amazon). Amazon will calculate their referral fee based on the total amount the customer paid, not including tax, and then deposit the amount paid (minus selling fees) into your account. On an individual selling plan, you also pay a $0.99 fee per item.
If we had a 10% referral fee in this hypothetical scenario on an individual selling plan, the fees would break down as follows:
$14.99 (item price + shipping cost)
– $1.49 (referral fees)
– $0.99 (item fee)
______________________
$12.51 goes to the seller
Professional selling plans give you the freedom to choose the shipping fees you want to display to customers. Put simply, if shipping costs you $12, not $4.99, then you can set the shipping price to $12. However, in terms of making your offer more compelling, you may find that customers respond better to free shipping, with the cost of shipping added to the price of the item instead. An item with a cost of $10 plus $12 shipping might not seem as reasonable as a product that is $22 with free shipping. However, how you choose to recuperate your expenses does not affect how Amazon calculates their selling fees. Amazon will still base their referral fee on the total amount paid by the customer, not including sales tax. With the professional selling plan, the fee structure is the same, but it does not incorporate a per-item fee of $0.99.
What are High-Volume Listing Fees?
High-Volume Listing Fees are a charge for active (non-media category) offers that have existed for longer than a year and haven’t had any sales for a year. You are allowed to have 100,000 ASINs that meet the criteria before the High-Volume Listing Fee kicks in. The fee is $0.005 per ASIN.
If you have 200,000 active offers that have existed for over a year without sales, you will have to pay $0.005 per ASIN for 100,000 of those items.
It’s not common that a seller qualifies for this fee. This policy may have been enacted by Amazon as a response to large drop-shippers who were able to show millions of listings without moving stock.
Are Referral Fees Affected by Fulfilled By Amazon (FBA)?
If you choose to participate in FBA, the shipping costs will not affect your referral fee. FBA is a separate program that charges you based on the weight and size of your products. For example, a non-apparel small item of 10 ounces would have a fulfillment fee of $2.50.
You also will be charged a monthly inventory storage fee, and any other applicable fees, like long-term storage fees.
As the seller using FBA, you would need to account for the referral fee as a percentage of the item price alone, plus the fulfillment fee, and any applicable inventory storage fees. Amazon will charge the cost of the shipping to the buyer (unless the buyer has Prime), but you will not receive that money in your account, since Amazon is doing the shipping.
The true cost of shipping the item will be irrelevant, as you are paying the flat-rate fulfillment fee to Amazon for picking and packing, shipping and handling, returns, and customer service. Depending on how much it costs you to handle these tasks, you may find that FBA is suitable solution for you.
Amazon has a detailed breakdown of their fees available on their website. For more tips about popular marketplaces, keep an eye on our blog. Feed On!
Brian Roizen is the Cofounder and Chief Architect of Feedonomics, a full-service feed optimization platform that optimizes product data for hundreds of channels. He has been featured on numerous podcasts and eCommerce webinars, and regularly contributes to Search Engine Land and other industry-leading blogs. Brian graduated summa cum laude from UCLA with both a Bachelor’s and Master’s degree in Mechanical Engineering.
