How to Much Does Amazon Charge to Sell?

Understanding the costs associated with selling on Amazon is crucial for setting your pricing, managing your margins, and ultimately, running a profitable business. Amazon offers different fee structures depending on your selling plan, product category, and fulfilment method. In this comprehensive guide, we’ll break down the various fees, explain how each charge works, and provide tips on how to calculate these costs so that you can price your products competitively while maintaining healthy profit margins.

1. Amazon Selling Plans: Individual vs. Professional

The first cost decision you’ll face when selling on Amazon is choosing between two selling plans: Individual or Professional. Both have their own fee structure and benefits, and which one you choose will depend on the volume of your sales.

• Individual Selling Plan:
  The Individual plan is suitable for sellers who plan to sell fewer than 40 items per month. This plan does not have a monthly subscription fee, but you will be charged a flat fee of £0.75 per item sold in addition to referral fees and variable closing fees (where applicable). This plan is ideal for casual sellers or those testing the waters before committing to a more robust selling strategy.

• Professional Selling Plan:
  The Professional plan is designed for higher-volume sellers, offering additional tools and insights that are not available on the Individual plan. For a £25 (plus VAT) monthly subscription fee, you can sell an unlimited number of products. You won’t pay the per-item fee, but other selling fees, such as referral fees, still apply. This plan also provides access to advanced listing options, bulk uploading, and eligibility for the Buy Box, a coveted feature that can significantly boost sales.

If you’re selling more than 40 items a month, the Professional plan usually works out to be more cost-effective.

2. Referral Fees

Regardless of your selling plan, Amazon charges a referral fee for each item sold. This fee is a percentage of the total sale price (including any shipping or gift-wrapping charges). The referral fee varies by category but typically ranges between 8% and 15%.

Here are some examples of common referral fee percentages by product category:

• Books, Music, and DVDs: 15%

• Clothing and Accessories: 15%

• Electronics: 8%

• Home and Kitchen: 15%

• Beauty and Personal Care: 8% to 15%

Amazon provides a full list of referral fees by category, so be sure to check the specific rate for your products before setting your prices. Remember to factor in this cost when calculating your profit margins.

3. Fulfilment Fees: FBA vs. FBM

Amazon sellers have two main options for fulfilling orders: Fulfilment by Amazon (FBA) or Fulfilment by Merchant (FBM). Each comes with its own set of fees, and your choice will depend on your business model and resources.

Fulfilment by Amazon (FBA) Fees

FBA allows you to store your products in Amazon’s fulfilment centres, and Amazon will handle the picking, packing, shipping, and customer service. While this offers convenience and eligibility for Amazon Prime, it comes with additional costs.

FBA fees are typically divided into two parts:

1. Fulfilment Fee: Charged per unit, this fee covers the cost of storage, picking, packing, shipping, and customer service. The fee varies depending on the size and weight of your product.

   • For example, standard-size items (weighing less than 1kg) incur a fulfilment fee of around £2.25 to £3.60.

   • Larger items or items that are oversize (over 12kg) may incur fees upwards of £5.52 per unit or more.

2. Monthly Storage Fee: This fee is based on the amount of space your products occupy in Amazon’s warehouses. Storage fees vary by time of year, with higher rates during the peak holiday season (October to December).

   • Non-peak storage rates are approximately £0.75 per cubic foot, while peak season rates can rise to £2.40 per cubic foot.

FBA fees can quickly add up, so make sure to account for these costs when setting your prices. You’ll also want to regularly manage your inventory to avoid long-term storage fees, which are imposed on items stored for more than 365 days.

Fulfilment by Merchant (FBM) Fees

With FBM, you manage the entire fulfilment process, including storage, packaging, shipping, and customer service. While you avoid the fulfilment fees associated with FBA, you’ll need to cover your own shipping costs, which can vary depending on the shipping carrier, product size, and destination.

FBM sellers are still subject to referral fees and any other selling plan costs but have more control over their fulfilment process and related expenses.

4. Additional Fees

In addition to referral and fulfilment fees, there are several other charges you might encounter depending on your business needs:

• High-Volume Listing Fees: If you list more than 2 million active SKUs on Amazon, you may be charged an additional £0.0003 per listing each month.

• Refund Administration Fee: If you refund a customer for an order, Amazon will return the referral fee minus a refund administration fee. The refund administration fee is £5 or 20% of the referral fee (whichever is smaller).

• Closing Fees for Media Categories: For certain categories like books, music, video games, and DVDs, Amazon charges an additional closing fee of £1.00 per item.

5. Long-Term Storage Fees (FBA Sellers Only)

Amazon imposes long-term storage fees on items that have been stored in their fulfilment centres for more than 365 days. These fees are £7.50 per cubic foot or £0.15 per unit, whichever is greater. To avoid long-term storage fees, it’s crucial to keep track of inventory levels and sales velocity, removing slow-moving stock when necessary.

6. VAT Considerations

If you are a VAT-registered business in the UK, you will need to account for VAT on your sales and possibly on some of Amazon’s fees. Amazon calculates fees exclusive of VAT, so be sure to factor in VAT costs if applicable. Depending on your VAT registration status, you may be able to reclaim VAT on certain expenses.

7. Calculating Your Total Costs

To ensure your products remain profitable, it’s essential to consider all the fees involved in selling on Amazon. Here’s a quick example of how to calculate the total costs:

Let’s say you’re selling a product for £25 and you use FBA for fulfilment.

1. Referral Fee: If the referral fee is 15%, you’ll pay £3.75 to Amazon for each sale.

2. Fulfilment Fee: For a standard-size item, let’s assume the FBA fulfilment fee is £2.85.

3. Storage Fees: Let’s assume storage fees of £0.10 per item, based on the space your inventory occupies.

4. Selling Plan: If you’re on the Professional plan, you’ll need to cover the £25 monthly subscription. Divide this by the number of units you expect to sell to calculate how much this adds per item.

Total Cost per Sale:
Referral Fee (£3.75) + Fulfilment Fee (£2.85) + Storage Fee (£0.10) = £6.70 per item.

With a selling price of £25, your profit before other expenses (like product sourcing and shipping to Amazon) would be £18.30 per sale. Factor in any additional costs like VAT, shipping, and advertising to get a complete picture of your net profit.

Conclusion

Amazon’s fee structure can seem complex, but understanding how the various charges apply to your products is crucial for running a successful business. From selling plan subscriptions and referral fees to fulfilment and storage costs, knowing what Amazon charges to sell will allow you to price your products effectively and manage your profitability. By keeping track of all these costs and regularly monitoring your margins, you can ensure that your business remains competitive and profitable on the world’s largest online marketplace.