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Amazon Fees For Sellers - What's The Real Cost? - eBusiness Boss
Amazon Fees For Sellers – What’s The Real Cost?

Amazon Fees For Sellers – What’s The Real Cost?

My name is Nick and i have been a full time amazon seller for sometime now. Today i wanted to run through Amazon fees for sellers, from a sellers perspective.

amazon fees for sellers

Within this article I will run through the different costs of the United States and the United Kingdoms Amazon Marketplaces.

I’m am going to cover the following questions and topics:

  • How much does amazon charge sellers?
  • What is the amazon referral fee?
  • What are fulfilled by amazon fees?
  • Amazon seller account cost
  • Amazon selling fees individual
  • Amazon Pan EU & EFN Networks
  • Amazon FBA vs Amazon FBM
  • Amazon sales rank

Hopefully this article will serve as a useful resource for all amazon sellers, if you enjoy the article please share it with a friend 😀

How Much Do Amazon Charge To Sell?

Let’s start with Amazon.com – Amazon fees for third party sellers…

Amazon Selling Fees US

 Professional SellingIndividual Selling
Monthly Subscription$39.99N/A
Per-item FeeN/A$0.99 per item (Monthly 40 item limit)
Referral FeeSeller pays the greater of the two: Category specific referral fee (Usually 15%) or Applicable minimum referral feeThe same as professional selling
Fulfillment Fee (Only relevant for FBA)See graphic belowSee graphic below
Variable closing feeFor media items a seller will also pay a fee of $1.35 per itemThe same as professional selling

As you can see the monthly subscription fee is only payable when you have a professional amazon seller account.

If you are an individual seller you will not have the monthly subscription cost of $39.99.

You will however have a cost of $0.99 for every item you sell, on top of this you will also have the relevant referral fee.

Amazon Fulfillment Fees US

amazon US fulfillment fees

Amazon Referral Fees US

Usually the referral fee amounts to about 15% of the sale price, but it completely depends on the category you are in.

Click here: To see the up to date referral fee pricing for Amazon.com

Hopefully this explains the US side of amazon fees for sellers but don’t go anywhere just yet, there is more we need to look at.

Let’s see how things differ for Amazon.co.uk

Amazon Selling Fees UK

 Professional SellingIndividual Selling
Monthly Subscription£30N/A
Per-item FeeN/A£0.75 per item (Monthly 35 item limit)
Referral FeeSeller pays the greater of the two: Category specific referral fee (Usually 15%) or Applicable minimum referral feeThe same as professional selling
Fulfillment Fee (Only relevant for FBA)See article link belowSee article link below
Variable closing feeSellers also pay a closing fee of £0.50 per media item that is sold.The same as professional selling

Another slightly hidden cost is the “Refund administration fee”…

The above table provides an overview

You can find full details about the Amazon referral fee in the United kingdom within the article below.

Click Here: For full details of the European Amazon seller fees

The above article runs through the majority of amazon fees for sellers based in the UK.

Let me explain exactly what the different fees are and then i’ll show you some real world examples.

What Is The Amazon Referral Fee?

First things first, every amazon seller will pay the amazon referral fee.

It’s the cost of advertising your products across their hugely successful network.

The Amazon referral fee is there to guarantee that hosting your product is worth amazon’s time.

Don’t be fooled by their percentage structure…

As mentioned earlier if you sell an item for a penny/cent plus shipping, you will still be charged the per item fee…

They wouldn’t be making enough on transactions like this otherwise.

Next up let’s talk about amazons fulfillment fees, these will only apply if you are making use of Amazon’s FBA program.

What Are Fulfilled By Amazon Fees?

This is the business model we have followed from the very beginning, i am a big fan of Amazon FBA.

Fulfilled by amazon fees will apply to anyone that wants to use amazon’s FBA program.

When your products are stored at an Amazon FBA fulfillment center each order will be picked, packed and shipped out on your behalf.

The Amazon fulfillment fees are there to cover the cost of them doing this.

Amazon calculate your fulfillment fees based on the size and weight of each unit.

Before you jump into any product idea you need to have worked out ALL of the associated costs.

Otherwise, how are you going to know how much money you’ll make? (or lose for that matter)

Let’s run through some Amazon FBA fee examples to help break this down.

Amazon FBA Fees: Examples

These examples are completely random, to calculate the fees i have used amazon’s free fee calculator.

amazon fba fees

So if you wanted to sell this product as an Amazon FBA seller, these are the fees you’d be looking at from Amazon’s side.

amazon selling costs

Referral Fee (Selling on Amazon Fees): $49.50

Fulfillment By Amazon Fees: $40.22

Total Cost: $89.72 – Amazon Take around 27% 

This leaves $240.27 for the seller…

Amazon fees for sellers are the first initial cost you need to think about…

Alongside this you need to think about any other costs that may effect you.

If you are an amazon seller based in the US i’d highly recommend reading through the associated seller tax requirements.

Amazon seller tax law is a complicated subject, i’d always recommend seeking the advice of a professional before you jump into the amazon platform.

Once you’ve got a full understanding of your costs you are now in a better place to start your product research.

If you are at the product research stage you might well find the following video useful 😀

Let’s now look at an Amazon FBA fee example for anyone selling within the United Kingdom.

Again, this is a random product selection, i have calculated these fee’s using Amazon’s UK fee calculator.

amazon fba fees explained

Here are the associated costs…

amazon fba fee calculator

Referral Fee (Selling on Amazon Fees): £3.15 Ex. Vat

Fulfillment By Amazon Fees: £2.50 Ex. Vat

Cost: £5.65 Ex. Vat – Amazon again take around 27% (26.91% to be exact)

As you will see the above figures have been quoted excluded VAT.

If you are a Vat registered seller you will be charged these fees without VAT.

Let’s assume that you are a non Vat registered seller in the UK…

This means that amazon are going to add 20% to each of these costs meaning the total selling cost comes to…

Total Cost Inc Vat: £6.78 – This brings the cost up to around 32%

This leaves £14.21 for the seller…

But the costs don’t end there for European sellers..

If you are holding stock in a European country you have to comply with the VAT tax laws.

This get’s a little complicated but let me explain what this means for this example.

The UK VAT tax threshold is currently set at £85,000.

This means that when a sellers annual UK turnover is higher than £85,000 they must start charging their customers 20% VAT.

They have a duty to collect this VAT for the United Kingdoms government, this applies to any business distributing stock from the UK.

It works the same way for the other European marketplaces…

The 20% Vat is added onto the full price of the product.

In this case – 20% of £20.99 = £4.19

So as a VAT registered seller the amazon fees will be £5.65 + Your VAT Liability

This brings the total costs up to = £9.84 – (47%)

You can see how VAT plays a major role in the amazon fees for sellers based in for Europe.

So for this item a seller will be left with £11.15

From that point we need to consider the cost of the item and the profit for the seller..

So when you hear about sellers making millions in gross sales remember that they also have a high level of associated costs.

It’s worth knowing that normally VAT registered sellers can reclaim the VAT on goods and services they have purchased for their business.

VAT can become pretty confusing, if you are in doubt consult a professional!

If you are growing your amazon business you will be aiming to surpass £85,000 in gross sales pretty quickly…

Amazon FBA vs Amazon FBM

So you may be thinking with all of Amazon FBA’s associated costs should i considered Amazon FBM?

The answer to that question will depend on your infrastructure…

If you have a warehouse with operatives ready to pick, pack and post your items out everyday… Amazon FBM might well be the best option for you.

However you could be limiting yourself in terms of market reach.

If you have your own warehouse Amazon FBM is perfect for your native marketplace.

However… If you want to sell across Europe you will need to find a storage and distribution solution to cater for your European customers.

The Benefits Of Amazon FBA

I love Amazon FBA, it’s the perfect solution for amazon sellers that are just starting out.

All you need to worry about is finding products with demand and purchasing them at a suitable price.

Through Amazon FBA you also have access to the Amazon PAN EU Network…

Through Pan-European FBA you have access to all of the European market places.

This sounds great but there are some points you need to consider, I’ve put together a video to run through some of the key considerations.

Through Amazon FBA there are three different ways a seller can access the European marketplaces…

  • Amazon Pan-European FBA – Mentioned above – Vat Numbers Required – Lower Fulfillment Costs
  • Amazon European Fulfillment Network – Known as the EFN network – No Vat Numbers required – Higher Fulfillment Costs
  • Amazon FBA Export – Products are available to customers outside of native marketplace – Read more here.

Amazon FBA: The Negatives

As mentioned i am a big fan of Amazon FBA but like anything it does come with it’s drawbacks.

  • Tracking inventory becomes more complicated
  • Associated costs of storage – Slow movers can cost you in the long term
  • FBA Shipping prep is complicated – Your items must be prepped to specific requirements or they will be rejected
  • You will have to pay to remove any of your items, this can also take time
  • You may experience a higher level of returns – With access to more customers, the amount of impulse or test purchases will increase

These are some of the key issues we have come up against over the last few years.

The Benefits of Amazon FBM

Let’s talk about some of the positives when it comes to Amazon FBM.

First things first, if you want to scale you are going to need a warehouse.

Sure this can be a negative too, it’s an expense after all..

The reason i think it’s a positive is because it can allow you to diversify your business.

If you have a warehouse you can monetize this in more ways than one, if you have a team of operatives why not prep other peoples amazon products and make money from it?

Here are a few more of the benefits:

  • Lower Amazon Fees – Not only will you not pay a fulfillment fee, you also won’t have a storage fee
  • The ability to list product instantly – No need to wait for amazon to receive and check in your products
  • More flexibility – If a product doesn’t sell you can move it on elsewhere
  • Less stringent prepping – You can make your own rules, you won’t be rejecting products from your own warehouse 😉

Amazon FBM: The Negatives

As cool as this all sounds you will have the responsibility of storing your products, along with picking, packing and sending everything out.

If you want to stay competitive you’ll need to be fulfilling products pretty much everyday.

You will have the cost of staff along with the relevant warehouse insurance etc.

With Amazon FBA you don’t need to worry about how many sick days your fulfillment team will take, that’s Amazon’s problem.

The main issue for me with FBM is time…

Sure we have our own warehouse but it would be near on impossible for us to match Amazon’s market reach and efficiency.

With all of this in mind i prefer amazon FBA, but it really depends on the infrastructure of your business.

To finish off i want to talk about one of my favorite topics…

What Is Amazon Sales Rank

Understand the principles of amazons sale rank is important.

It ties into the amazon fees for sellers topic quite nicely..

After all i’m sure you are prepared to pay a little more on the seller fee side of things, if you know a product moves quickly!

So anyway amazons sales rank… How does it work?

It’s unlikely that any of us will ever know exactly how it’s calculated, the amazon sales rank algorithm is one of their most valuable assets.

In my opinion, the amazon sales rank has actually had a huge impact on the companies success.

Amazon’s third party sellers are actually extremely important to them.

In the fourth quarter of 2018 the percentage of paid units sold by third-party sellers was 52%.

That is a staggering amount….

Here is why i think the amazon sales rank system has played a big part in the companies success.

Amazon’s sales rank system allows each and every product to hold a ranking position on their website.

This allows third party sellers like you and i to analyze products that sell well and products that don’t.

The amazon sales rank is key to efficient product research!

With experience it’s fairly easy to guess how many sales a single listing is generating every day…

But you don’t need to guess.

Tools like helium 10 can provide you with excellent guidance, I’ve found their data to be very accurate.

This means that you and I can go out there and find excellent product opportunities.

Let me give you an example of how the amazon sales rank system works.

Amazon Sales Rank Explained

I think the best way for me to explain this is to give you an example.

Lets have a look at the following product…

amazon sales rank example

From experience i know that this product sells incredibly well, but how can we use sales rank to work out how well it sells?

amazon sales rank explained

This product is actually one of the best selling products on the entire amazon platform…

Every single amazon product will have a “Amazon Best Sellers Rank” under the product details section of the product page.

As you can see above this product ranks at #28 in Health & Household.

This means that out of ALL the products in the Health & Household category this product is the 28th best selling product.

The bigger the category – The more sales that are up for grabs.

This makes sense because there are more products competing for the number one spot.

Let me show you something really cool…

Using Helium 10’s Xray tool i can work out roughly how many units this item is selling on a monthly basis.

These figures are staggering.

best selling products on amazon

Yes you are reading that correctly, this product is selling around 58,000 units on a monthly basis.

That’s over $2,500,000 in monthly revenue…

It’s worth pointing out that this example has been taken from the Amazon.com platform…

This is the biggest marketplace by some distance.

The second biggest marketplace is Germany shortly followed by the United Kingdom 😀

Anyway i hope that explains the amazon sales rank, based on this I’ve got some advice.

If you are a new seller avoid products that are in the top 100 of every category..

I say this because amazon publishes these products for every marketplace and every category.

This means that A LOT of people can see these products and they instantly become very competitive.

Look for products that are popular but not too popular.

I like to find products that are just on the edge 😉

We’ve gone into quite a lot of detail today, the initial aim was to cover the amazon fees for sellers topic.

But i feel like the other things i’ve mentioned go hand in hand with the topic.

I’d love to hear your thoughts on the article, let me know in the comments below!

If you’ve enjoyed this article please share it with your friends! 😀

More soon,

Nick

amazon fees for sellers

eBusiness Boss

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