As an Amazon seller, you’ll encounter many types of fees. Among them: referral fees, subscription fees, refund fees and storage fees. It’s essentially the price of admission for gaining access to Amazon’s massive customer base.
But if you’re new to Amazon (and to starting a business or selling online), it’s easy to feel overwhelmed and wonder “is Amazon worth it?”
The short answer: yes. For most sellers, Amazon can be a lucrative sales channel and a valuable addition to your multichannel selling strategy. In fact, 32% of Amazon sellers earn profit margins above 20% even after fees—double the average margin (7% to 10%) for healthy small businesses.
In this article, we’ll discuss all the fees involved with selling on Amazon so you know what to expect. We’ll then cover tips for managing your fees and running a profitable Amazon business.
What are Amazon’s seller fees?
Amazon seller plan fees
Before you can sell on Amazon, you must pick a selling plan. Amazon offers two options for sellers:
Individual - No monthly subscription fee, but you must pay an additional $0.99 per unit sold on top of the referral fee
Professional - $39.99 per month, but no fee per unit sold
If you’re just starting and want to test the waters, the individual plan may be best for you. But if you’re serious about building a real business and making money on Amazon, choose the professional plan.
The professional plan offers many valuable benefits, such as the ability to advertise your products, to view advanced reporting, and to sell in restricted categories (provided that you meet the requirements).
Per Amazon’s guidance, the individual plan is likely too limiting if you plan to sell more than 40 units per month.
Amazon referral fees
The referral fee is a percentage-based fee that you will pay after each sale you make on Amazon. Think of it as Amazon’s commission. The exact cost will depend on the category you sell in, but the referral fee is typically 15% of the total sale price (including any delivery or gift-wrapping charges).
You will be charged the referral fee once the item is shipped to your buyer. View a complete category-by-category breakdown of Amazon’s referral fees.
Amazon FBA fees
When selling on Amazon, you can choose to fulfill orders in two different ways:
Fulfilled by Merchant (FBM)
Fulfillment by Amazon (FBA)
A third of sellers still use FBM for some or all of their products, but a vast majority of sellers (89%) leverage FBA—either in part or in full—to remain competitive in the marketplace. With FBA, your products become Prime eligible. This means that you can appeal to Amazon’s 200 million Prime members and offer fast, free shipping on any FBA items.
Amazon will also pack and ship orders for you, leveraging its advanced fulfillment network to ship orders within two days or less. You don’t need to worry about packaging, labeling, or shipping out orders—nor handle returns or customer service for any FBA items.
Of course, this service comes with other fees that you’ll want to be aware of. Make sure you fully understand these costs, alongside the pros and cons of fulfilling through FBA.
FBA fulfillment fees
FBA fees are paid on top of the referral fees mentioned above. These per-unit fees cover the cost of shipping, returns, and customer service. The exact fee depends on your product type, size, and weight.
Note: Starting April 28, 2022, a 5% Fuel and Inflation Surcharge will be applied to FBA fulfillment fees. This surcharge is subject to future adjustment.
Below are the rates for non-apparel goods.
And for all of you fashion and apparel sellers out there, here are the fulfillment fees you can expect to take on.
If you sell small, low-priced products on Amazon, you may qualify for the FBA Small and Light program. The program offers reduced fees on items that meet size, weight, and price requirements.
FBA monthly storage fees
On top of the fulfillment fee, Amazon also charges storage fees for items in their fulfillment centers. You’ll be charged monthly based on the “daily average volume in cubic feet” that your inventory occupies once it’s properly packaged and ready to ship.
These fees typically range from $0.83 to $2.40 per cubic foot for standard size items (with the latter charged during the Q4 holidays). Oversize items are subject to fees ranging from $0.53 to $1.20 per cubic foot.
FBA long-term storage fees
If you have inventory that is not selling, take action to get it sold or removed from Amazon’s fulfillment centers. If your inventory sits there for longer than 365 days, you will be charged a long-term in addition to the monthly storage fee.
Long-term storage fees range from $6.90 per cubic foot or $0.15 per unit—whichever is greater. They are charged monthly and calculated based on unit volume or per unit—whichever is greater.
Amazon will assess your inventory on the 15th of each month to determine if you have inventory older than 365 days. Needless to say, if you have lots of inventory older than 365 days, it can cost you hundreds or thousands of dollars.
Use Amazon’s Inventory Dashboard in Seller Central to check your inventory performance and heed these inventory management tips to avoid losing control over your costs.
FBA removal order fees
You can create a removal order if you have inventory that’s at risk of attracting long-term storage fees. A removal order allows you to ship inventory from Amazon back to your location.
You’ll be charged a one-time fee for this service, which ranges between $0.52 and $1.51 per unit for standard-sized items. Or, for oversize and special handling items, you face fees between $1.50 and $7.25 per unit removed.
Miscellaneous Amazon fees
We’ve gone through the main fees you’ll face selling on Amazon, but here are some additional expenses you may encounter.
Refund administration fees - applied whenever you, the seller, initiate a customer refund
Closing fees - per-unit fees charged for certain categories, including books, DVD, music, and video game accessories
Lithium batteries fee - per-unit fee for products sold with lithium batteries
High-volume listing fee - monthly fee applied if you list more than 1.5 million active SKUs on Amazon
FBA Inventory Placement Service fees - charged if you sign up for Amazon’s Inventory Placement Service, which allows you to send all FBA shipments to one place where Amazon will then receive and distribute them
FBA Prep Service fee - per-unit fee if you hire Amazon to prep your products for FBA (which you’ll otherwise have to do yourself) or if Amazon has to unexpectedly prep your products
How to estimate the fees you’ll pay selling on Amazon
It goes without saying that you should calculate all of your fees before selling a product on the online marketplace. Luckily, Amazon offers a free Revenue Calculator, which you can use to estimate the fees for both FBM and FBA offers.
Simply enter the ASIN of the product you want to sell or a similar product, alongside the selling price, cost of goods, fulfillment costs (if you’re fulfilling the product yourself), and any other costs associated with selling the product.
The calculator will break down all your fees, including Amazon fees, fulfillment costs, and storage costs. The calculator will also show you your net profit and net margin.
How to manage Amazon’s fees and run a profitable business
The key to managing your fees is always being aware of what’s happening in your seller account. Aside from this, you’ll want to take these six tips into account.
01. Know your costs ahead of time
Use the Amazon Revenue Calculator to calculate your costs and potential profit before investing in inventory.
The revenue calculator accurately records your profit per unit when selling on Amazon after selling fees, unit costs, and fulfillment fees. Before selling any new item, plug in all your numbers to the calculator to make an educated decision.
02. Ship larger quantities to FBA
Shipping larger quantities of inventory to Amazon will reduce your cost per unit.
If you only ship a handful of items (e.g., one to 10 units) to Amazon FBA, the cost per unit to ship will be much higher, thus eating into your profit margin. Amazon does have a partnership with UPS to keep inbound shipping costs down, but the more units you send at a time, the less it will cost per unit.
03. Beware of overstocking
With that said, be careful not to send too much inventory into Amazon's fulfillment centers unless you are sure it will sell quickly. As a general rule of thumb, only send around three months of stock at a time.
Many sellers make the mistake of sending thousands of units of a new product that they think will be a hit—only to end up with tons of excess inventory. Test a smaller shipment first and gradually increase your inventory, especially if you’re new to Amazon and still need to establish your authority and rankings on the marketplace. Amazon’s Inventory Dashboard will also estimate how much inventory you should send in per product you’re selling. Or, use Jungle Scout’s Opportunity Finder to gauge demand as well as competitiveness around your product on Amazon.
04. Stay alert for any Amazon policy changes
Stay informed on Amazon’s terms and conditions so that there are no surprises, and keep in mind that Amazon may adjust fees throughout the year.
Amazon has many help articles to keep you informed, as well as a News section within Seller Central that includes any recent updates or changes.
05. Audit your Amazon listings
Audit your listings at least once a month to be sure your fees have not changed and that you are still selling profitably.
It’s possible for your Amazon FBA fees to be incorrect due to an error in Amazon’s system or because Amazon has logged inaccurate measurement of your product. If your FBA fees do not look right or have increased, contact Amazon Seller Support and ask them to re-measure and re-weigh your product.
06. Use automation to your advantage
As eCommerce sellers, you need to know your numbers at all times. You'll have difficulty running your business if you don’t use software or have another way of tracking sales, expenses, and inventory.
Leverage software like Jungle Scout or Wix eCommerce to centralize data and retain a grasp on your Amazon inventory levels and profit margins.
Learn more: eCommerce vs marketplaces
Amazon seller fees FAQ
What percentage does Amazon take from sellers?
As of my last knowledge update in January 2022, Amazon's referral fees vary depending on the category of the product being sold. Typically, referral fees range from 6% to 45% of the item's sale price, with most categories falling in the 8% to 15% range. Amazon may charge other fees, such as fulfillment fees for products stored in Amazon fulfillment centers, subscription fees for selling plans, and optional advertising fees for using services like Amazon Sponsored Products. It's important to note that fee structures and policies on platforms like Amazon can change, so sellers should refer to the latest information provided by Amazon Seller Central or contact Amazon Seller Support for the most up-to-date details on fees.
How much are the monthly seller plans with Amazon?
.