As you may already know, Amazon has a fee structure for different services. On this page, we break down the fee structure and help you estimate how much you should expect to pay for every sale you make.
If you’re currently in the process of evaluating fulfillment services or calculating what your margins will be, this is the perfect guide for you. Please also note that this article uses public-facing numbers provided by Amazon and the figures may change in the future.
There Are Numerous Amazon Services to Pay For
Selling on Amazon isn’t as simple as Amazon has you to believe. The costs depend on a wide variety of factors from monthly fees to fulfillment fees to storage fees to all sorts of prep and processing fees. Before we get down to introducing all the services and fees, keep in mind that there isn’t one formula. There are numerous considerations to be made and factors you should include in the calculation, so it’s best to set your expectations right.
Now that we’ve established that it’s not a simple structure, let’s get down to the details.
The Minimum: Amazon Selling Plans
Here are the monthly recurring expenses that will act as the bare minimum you’ll need to pay in order to sell on Amazon. Consider the options for the scale of your operation, though most opt-in for the Professional Selling plan once they see any sort of sign of growth. You are able to change or cancel your plan, so you might want to start with the cheaper plan. Sellers should also keep in mind this is not the end of Amazon fees.
Individual Selling Plan
The Individual Selling plan does not have a monthly recurring membership fee but you’ll most certainly pay if you plan on selling even a single item. The free Individual Selling plan consists of a $0.99 per-item fee. Meaning, if you sell 1 item, it’ll cost $0.99; if you sell 10 items, it’ll cost $9.99. If you plan on selling more than 40 items per month (like any other successful venture), then it makes sense to pay for the Professional Selling membership.
As Amazon states, the Individual Selling plan might be right for you if you’re still stuck on deciding on what to sell or want to simply test the waters without running ads. This plan is for low volume projects and acts as a stepping stone for newbies.
Professional Selling Plan
The bare minimum you should expect to pay is $39.99 per month for a Professional Selling plan. This is a monthly recurring expense no matter whether you’re actually selling or not.
The Professional Selling plan comes with some features, too. Amazon made it very obvious that the Professional Selling plan is the logical choice since you also:
- Qualify for top placements on product detail pages
- Can run promotions including free shipping
- Get to sell in additional categories
- Are able to create listings in bulk
- Get access to API and advertising tools
- Have administrative access with different user permissions on your account
Though the price isn’t significant, the features that you get are key to making your venture successful. Just the first two features alone make the whole plan worth it since these will get your products seen and help convert eye-shoppers into paying customers.
This subscription fee is paid immediately from your Amazon account balance or credit card.
FBA Fees: Each Order Fulfilled by Amazon Has A Price
FBA, or Fulfillment By Amazon, is one of the key tools to your success. As explained in our What is FBA article, you’ll find your products ranking higher and converting better if you use FBA.
The fulfillment fees are first categorized from non-clothing items and clothing items. Then the prices vary for various sizes. The size tiers also have shipping weight limits, so your small standard items may be categorized as large standard items. The total shipping weight is the packaging weight plus the unit weight.
FBA Storage Fees
Since Amazon is fulfilling your orders, they also handle all logistics including storage. The two types of storage fees are monthly inventory storage fees and long-term storage fees.
Monthly inventory storage fees vary from the size of your products and which months they’re being stored in Amazon’s warehouses. They also charge slightly more for what they consider “dangerous”, or products that carry some risk to health and safety.
Below are the pricing tables:
As you can see, the storage fees are significantly greater just around the busiest time of the year: Black Friday and December holidays. The fees nearly quadruple in October, November, and December.
Amazon also charges extra for long-term inventory storage, or for items that have been sitting in the Amazon warehouses for more than 365 days. The minimum fee is $0.15 per unit; the price is calculated based on per-cubic-foot or the minimum fee, whichever is greater.
Other Fees To Consider
You probably thought that’s it for all the FBA fees.
There’s a reason Amazon is a trillion-dollar company. They know how to make money, even from the sellers. Here are some of the other costs you need to be aware of.
FBA Services
- Removal Order – Per-item fee on having Amazon return or discard your inventory from Amazon fulfillment centers.
- Returns Processing – Per-item fee equaling the total fulfillment fee for a returned product from a customer.
- Unplanned Services (Preparation/Labeling) – Per-item fee for items not prepared or labeled according to FBA standards.
- FBA Export – Per-order or per-item fee for international orders made through Multi-Channel Fulfillment.
- Rental Book Service – Flat $5 fee for each textbook rentals.
- High-Volume Listing – Per-item fee of $0.005 for 12 months of inactivity for non-media listings.
Advertising Services
- Strategic Account Services Core – SAS Core can be quite expensive since it starts at $1,600 per month plus 0.3% of your total sales plus tax capped at $5,000.
- Amazon Advertising (Ad Budget) – Your ad budget is entirely dependent on you. It wouldn’t make much sense to pay $1,600 for someone to manage $160 ad budget though, would it?
Amazon Also Charges Commission (AKA Amazon Referral Fee)
Whether you’re using FBA or not, this is a fee that you have to pay on each transaction when selling on Amazon.
This fee applies to all sales made on Amazon. It is a cut of the sale that Amazon takes, a significant commission that amounts up to 20-45% of the total sales for some product categories, though most categories have a fee of 8 or 15%.
This fee is taken out automatically from the sales you’ve made.
Amazon Sales Cost Example
Let’s take a closer look at the cost breakdowns and paint a better picture.
First, we’d need to figure out some variables to consider:
- Procurement Cost (Per Unit)
- Listing Price
- Fulfillment Method
- Product Size & Weight (and Duration of Storage)
- Product Category
So if we are procuring a small beauty product (10-16 oz) at $5.50 per unit and wanted to sell it for $18.99, simple math without all the Amazon variables state you’d make $13.49 per unit.
But we can’t just ignore Amazon’s fees.
The category referral fee for a beauty product is 15% for items with a total sales price greater than $10, or a $0.30 minimum referral fee (whichever fee is greater). In this case, we’re looking at the 15% figure which ends up being $2.85.
Then there’s the FBA fee which is $2.48 for standard-sized items that fit under the small category (10-16 oz).
Let’s not forget the storage fee which costs minimum $0.75 to $2.40 per cubic foot. Beauty supplies come in different shapes and sizes but let’s just go with the minimum for now.
In total, you’re looking at $6.08 in Amazon fees.
Your nice chunk of $13.49 per unit dwindles down to $7.41.
You also have to factor in your Professional Selling plan which costs $39.99 per month. At the bare minimum, you’d have to sell roughly 6 units per month to break even.
Then there are fees you have to factor in like long-term storage fees, removal order fees, returns processing fees, unplanned service fees.
There are also additional FBA services at a cost (which you definitely should consider using) like FBA label service, prep service, repackaging service, inventory placement service, and manual processing service.
Finally, we can’t ignore taxes and operational costs. Make sure you factor this in!
With so many variables and fees, you may be wondering: how can you maximize your margins while maintaining a smooth operation? BellaVix is a full-service Amazon agency that specializes in Seller Central management services. We’ll help you through the jungle and make sure you’re on the right path.
Contact us for a free consultation.
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