To understand your cost structure of your Amazon FBA business, it is crucial to know Amazon Fee breakdown. There are many fees when you run a store on Amazon. You must understand which fees apply to you and which sales plan you should start with. Then you will ready to tap the huge treasure house of Amazon.
According to the latest statistics, Amazon’s monthly active buyers have reached over 200 million. With the continuous increase in traffic, more and more sellers have begun to flood Amazon. Getting started is simple: create an account, choose a membership plan, and then list and sell your products. However, in the beginning, novice sellers often ignore some Amazon seller fees. Those fees will eventually hit their income statement and might surprise them. Therefore, this article sorts out the important Amazon seller fees so that novices can have a full picture before selling.
Here are the FBA selling fees that are most important to know from the beginning:
- Professional Plan Fee
- FBA Fee
- Advertising Fee
- Referral Fee (Seller Commission)
1. Professional plan Fee
When you log on to any Amazon’s country specific site, the first thing you see is a “Call to Action” (CTA) button:
Did you notice the small print under the button? In fact, Amazon provides two sales plans for you to choose from: professional and personal. This choice depends on your expected sales. If you think you can sell 40 or more items a month, then the professional sales plan is your best choice. This plan is subscription-based and costs $39.99 USD per month.
The personal sales plan is aimed at small retailers who sell less than 40 items per month. Although the program does not charge a monthly fee, each item sold will cost $0.99. So if you are new to e-commerce and are not sure about your sales, your personal sales plan is a good starting point.
Both plans include additional fees, depending on the type of product sold.
The figure below compares the two plans:
It is worth noting that the professional sales program allows sellers to access reports and inventory tracking. Since professional seller manages a large number of bulk orders every month, it is helpful to know the SKUs purchased by the customer and the amount of inventory. At the same time, Amazon will also provide professional sellers additional functions to track inventories, optimize sales and promote products. For example, professional sellers can grab the Buy Box (“golden” shopping cart). Buy Box is a small box in the upper right corner of Amazon’s product page. It is the easiest place for buyers to see when shopping. As long as the buyer clicks Add to Cart, the page will automatically jump to the seller’s store. On Amazon, getting the Buy Box means gaining sales and exposure. But individual sellers cannot get the Buy Box function.
Remember, if you choose the professional plan, you will have to pay a monthly subscription fee regardless of sales. Therefore, if you are a business that depends on seasonal sales to survive, then you need to do a cost analysis to determine whether a personal plan or a professional plan is more suitable for you.
For example, suppose you sell sports equipment in the late spring and early winter, and sales surge. During this period of time, you may sell 300 items per month, which offsets the cost of the monthly subscription. However, if you only sell 30 items per month during the off-season, the cost of maintaining the subscription is higher than the cost of sales. According to the personal plan, you only need to pay $29.70, which is based on the cost of 30 items you sell multiplied by $0.99 per item. It is much lower than the $39.99 Amazon seller fee under the professional plan.
In addition, you can also calculate which plan is the most cost-effective based on historical monthly sales. If you just started FBA business, it is recommended that you start with your personal plan first. Once you start selling more than 40 items per month, You can switch to professional plans as you see fit.
2. Amazon FBA Fee
With the fast growth of Amazon Prime’s same-day free shipping service, it is very crucial to deliver products to buyers as quickly as possible. The speed of product delivery plays an important role in consumers’ purchasing decisions. So for large retailers that ship hundreds or thousands of goods in the United States and even globally, it is a very wise choice to use fulfilled by amazon(FBA) service. Amazon will store, package and ship products for sellers and charge a certain fee. FBA cost varies depending on the weight and size of the product.
2.1 Amazon FBA fulfillment fee
|Standard-size product tiers|
|Product Type||Size tier||10 ounces or less||Greater than 10 ounces, up to 16 ounces (1 pound)||Greater than 1 pound, up to 2 pounds||Greater than 2 pounds, up to 3 pounds||Greater than 3 pounds, up to 21 pounds|
|Most products (non-dangerous goods, non-apparel)||Small standard||$2.50||$2.63||N/A||N/A||N/A|
|Large standard||$3.31||$3.48||$4.90||$5.42||$5.42 + $0.38/lb above first 3 lb|
|Apparel (non-dangerous goods)||Small standard||$2.92||$3.11||N/A||N/A||N/A|
|Large standard||$3.70||$3.81||$5.35||$5.95||$5.95 + $0.38/lb above first 3 lb|
|Apparel (dangerous goods)||Small standard||$3.85||$4.12||N/A||N/A||N/A|
|Large standard||$4.45||$4.56||$5.92||$6.39||$6.39 + $0.38/lb above first 3 lb|
|Dangerous goods (non-apparel)||Small standard||$3.43||$3.64||N/A||N/A||N/A|
|Large standard||$4.06||$4.23||$5.47||$5.86||$5.86 + $0.38/lb above first 3 lb|
|Oversize product tiers|
|Product Type||Small oversize||Medium oversize||Large oversize||Special oversize|
|Non-dangerous goods (both apparel and non-apparel)||$8.26 + $0.38/lb above first 2 lb||$11.37 + $0.39/lb above first 2 lb||$75.78 + $0.79/lb above first 90 lb||$137.32 + $0.91/lb above first 90 lb|
|Dangerous goods (both apparel and non-apparel)||$8.98 + $0.38/lb above first 2 lb||$11.22 + $0.39/lb above first 2 lb||$87.14 + $0.79/lb above first 90 lb||$157.12 + $0.91/lb above first 90 lb|
2.2 Amazon FBA Storage Fee
|Non-dangerous goods products|
|January – September||$0.75 per cubic foot||$0.48 per cubic foot|
|October – December||$2.40 per cubic foot||$1.20 per cubic foot|
|Dangerous goods products|
|January – September||$0.99 per cubic foot||$0.78 per cubic foot|
|October – December||$3.63 per cubic foot||$2.43 per cubic foot|
2.3 Multi-Channel Fulfillment Fee
If you, like 80% of Amazon sellers, also sell on other platforms, or operate a shopify site, you can use FBA Multi-Channel Fulfillment (MCF). Product can be stored and shipped from Amazon warehouse. The fee breakdown can be found in this link.
2.4 Small & Light Program
If you are selling specific small and light products with a price of less than $15, then Amazon will also provide another delivery program-FBA Small and Light (Amazon Small and Light Program). This service can help you save more shipping costs, because the storage, packaging and transportation costs of this kind of goods are very low. Sellers using this program must sell eligible products and register with the platform first.
The following is a breakdown of seller fees for Amazon’s Small and Light Program:
The fulfillment fees for the program are as follows:
|Size||Weight1||Fulfillment fee per unit2|
|16 x 9 x 4 inches or less||Less than 4 oz||$1.97|
|Greater than or equal to 4 oz and less than 10 oz||$2.39|
Amazon FBA fee comparison calculator
In order to determine whether FBA is right for you, Amazon has a dedicated FBA Revenue Calculator (expense calculator) that can help you compare the cost of completing an order with yourself.
First, choose one of the 12 million products sold on Amazon:
Then enter the logistics details and calculate the difference. You can play around with the numbers.
Part of the FBA fee will also be used to pay for returns and customer service that Amazon manages for you. This feature can save you a lot of cost and time. You don’t have to hire a large service team. You also don’t have to manage the costs of returns and shipments.
3. Advertising fees
There are more than 5 million sellers on Amazon. One way to stand out and attract more consumers’ attention is to place ads. Fortunately, sellers can increase traffic to your product pages without leaving the Amazon platform. Amazon provides advertising services.
There are three main types of advertising to choose from for professional sellers:
3.1 Sponsored Product Ad
Sponsored product ad is to promote specific products. It is the most commonly used ad type. These products will appear in search results when consumers browse. A Sponsored label will appear at the top of the Sponsored Products list. For example, if you want to sell excess inventory or increase sales of new products, you can use Sponsored Products ads.
This kind of advertising is similar to Google’s pay-per-click advertising (PPC), which only pays when a shopper clicks on the ad. The advantage of Sponsored Products advertising is that you can control costs. You can set the bid amount per click decide to increase or reduce the cost per click bid based on your strategy.
3.2 Sponsored Brands Ads (original headline search ads)
As Amazon newbies who want to increase brand exposure, you can use Sponsored Brands. Similar to Sponsored Products, this type of advertisement will also appear in search results, but the difference is:
- Brand name is visible
- Three products are shown
- A custom title is shown
When consumers click on this type of advertisement, they will jump to your product page, where they can browse and discover more products.
3.3 Stores ads for brand flagship store
Most consumers conduct product research before purchasing. So sellers need to make the purchasing journey easier. One way is to place Stores ads and lead the customer to Amazon storefronts where you can show different product selections.
Creating an Amazon Storefront is free. Sellers can use the drag and drop tool to create multiple pages. Once completed, share the custom Amazon URL in all advertising campaigns (both inside and outside the Amazon platform). In addition, use the store analysis function to view your store traffic, product clicks, sales, etc.
3.4 Other advertising options
In order to diversify your advertising strategy, there are four other types of advertising to choose from:
Display ads: Place ads on and off the Amazon platform and drive traffic back to your product pages.
Custom advertising: It aims to attract customers with innovative advertising, and the price depends on consulting an advertising consultant.
Video advertising: Use the power and influence of video to spread your brand message.
Amazon DSP: the demand-side platform, which allows you to buy advertising spaces inside and outside Amazon.
With the exception of custom ads, pricing for all ad types depends on your placement and format.
With so many choices and flexible budgets, you can try different types of ads and find those that can help you increase your exposure and sales. Divide the advertising budget by the type you choose until you find the type that best suits your product type and audience.
4. Referral Fee (Seller commission)
Seller’s commission is paid upon any product sold on the Amazon platform. The amount varies depending on the product category, ranging from 6% to 96% of the selling price.
The seller commission was adjusted all the time. So you have to constantly check Amazon’s website to get the updated fee. Here is the url.
In addition to the seller’s commission, the seller must also pay a variable settlement fee of $1.80 for products that belong to the media category. These products include:
- Software and computers/software and computers
- Video games/electronic games
- Video game consoles/game console
- Video game accessories/Game peripheral products
The variable closing fee is paid regardless of which selling plan you’re on: Professional or Individual.
Regardless of whether you are using a professional sales plan or a personal sales plan, you have to pay a variable closing fee.