WIKI: Understanding Amazon Fees

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#1

While it’s common to hear people simply say “Amazon Fees”, when referring to the cost of selling on Amazon, there are actually two sets of fees you should be familiar with. The fees I describe assume that you have a Professional Seller account ($39.99/mo.) as they will be slightly different for sellers with an Individual (free) account.

  • Amazon Referral Fees
  • Amazon FBA Fees

Amazon Referral Fee
The Amazon Referral fee is basically the commission that Amazon charges you to list on their platform. The percentage you pay will depend on the category of the product sold, but for most products it is a fixed 15% with a $1.00 minimum.

You can find the full list of Referral Fees by category at http://www.amazon.com/gp/help/customer/display.html?nodeId=1161240, but 15% should be a good rule of thumb in most cases.

It’s important to note that the fee is based on the actual amount the customer pays, which includes shipping and gift wrap charges, but less any discounts. If you have offered a coupon that the customer redeemed, the Referral Fee would be based on the discounted price.

Let’s take a quick example assuming the following:

  • The product is in a category with a 15% referral fee
  • The product has an MSRP of $50
  • Your normal price is $40
  • You’re offering a sale at $35
  • You’ve also offered coupons for an additional $10% off

What fee would you pay in this example?

Well, it’ll depend if the customer uses a coupon or not. If a customer purchases the product at the sale price of $35, you will pay a referral fee of $5.25 ($35 x 15%). However, if the customer uses the 10% discount coupon (and pays only $31.50), then the fee would be $4.73 ($31.50 x 15%).

Remember, referral fees are also charged on shipping and gift wrapping, so if the customer paid $31.50 for the product, but an additional amount for shipping and/or gift wrapping, the referral fee would increase.

You should also be aware that Fee Preview on your Manage Inventory page is always calculated on the regular price, even though what you’re actually charged is based on what the customer pays, as described above. So, if you have a sale price posted, the Fee Preview will overestimate your fees.

Once you have your first sale, you’ll be able to see the actual fee you were charged.

If you’re not using Amazon’s FBA services, this is the only fee you would pay. However, if you are using FBA, then there are additional fulfillment fees that you will be charged. Also keep in mind that most categories have a $1.00 minimum referral fee which (at a 15% rate) would impact you on products being sold (or discounted) for $6.67, or less.

Amazon FBA Fees
Amazon’s FBA fees are only relevant to you if you’re using their fulfillment services. Fulfillment fees will depend on a few factors, but they are made up of:

  • Order Handling Fee ($1.00+ per order)
  • Pick & Pack Fee ($1.02+ per unit)
  • Weight Handling Fee (based on the outbound shipping weight)
  • Storage Fee (monthly, based on the size of the product)

As with the referral fees, the amount you pay depends on a couple of factors, including the category of the product sold and the size and weight of the product.

The above is based on applicable fees for most non-Media categories, but please refer to Amazon’s complete FBA fee schedule (excluding storage fees) here: http://www.amazon.com/gp/help/customer/display.html/?nodeId=201119410

For details on their storage fees, refer to their schedule here: http://www.amazon.com/gp/help/customer/display.html?nodeId=200627230

With respect to storage fees, please be aware that in addition to their monthly fees there is also a long-term storage fees for products that are held in inventory for an extended period of time. You can find specific details on the long-term storage fees here at http://www.amazon.com/gp/help/customer/display.html/ref=hp_left_ac?ie=UTF8&nodeId=201101150

They do change their fees from time to time, so it’s important that you stay up to date with any changes.

If you’ve tried reading through any of the links posted above, you’ve probably noticed that Amazon’s fee schedules can be complicated. If you know what you’ll be selling the best thing to do would be to find the ASIN of the product you will be selling (or one in the same category that is similar in size and weight) and plug it into the Amazon FBA Revenue Calculator:

https://sellercentral.amazon.com/gp/fba/revenue-calculator/index.html/

This will tell you the FBA fees that would be charged for the product at a specific sales price and is much easier than trying to calculate fees yourself.

Additional Information
The fees outlined above cover all their services. This means that you are not paying an additional amount for marketing (unless you use their paid ads), payment processing, affiliate commissions, shipping boxes or customer service.

While the fees may seem high, running an ecommerce business on another platform is often much more expensive when you take the cost of traffic generation, payment processing and fulfillment into account.

This post is part of the Ultimate Wiki Project


The Ultimate Wiki Project: Selling on Amazon FAQ
#2

@Dax I understand that the 15% is chargeable against the price the customer pays. However when I run my referral fee preview report which I thought would show the actual fee charged, it shows the fee based on the original price, not the sale price. How can I ensure I will be charged based on the sale price? Is there a field I am missing? Thank you.


#3

You’re not missing anything. The Fee Preview on your Manage Inventory page is always calculated on the regular price, even though what you’re actually charged is based on what the customer pays. So, if you always have a sale price posted, the Fee Preview will overestimate your fees.

Once you have your first sale, you’ll be able to see the fee you were charged.

I’ll update the post with this additional information.


#4

Hi @Dax, I unfortunately won’t have sold all of my inventory and will be subject to long-term storage fees. I have read the details on the Amazon website and I believe that once I pay the fees I will still be able to offer and sell my product as normal, is this correct?


#5

Yes, that’s correct. You will have to pay the fee, but you will be able to keep your inventory there.


#6

The Amazon FBA calculator is very tedious to use, you can’t compare the product margins on different products, you can’t factor in your ACoS, marketing costs, taxes, etc.

The main issue for sellers is that it’s very difficult to track your exact profit margins after Amazon fees, FBA fees, PPC fees, etc are all taken out. You need sales & profit tracking tools that will sync with your Seller Central account, and can pull all the relevant data for you in real time.


#7

I agree. Few tools were available when this post was first written, but now I usually refer to Jungle Scout to quickly check fees for a particular product.