Amazon Fees Explained for New Sellers
Amazon fees are rarely discussed amongst sellers. You’ll often hear about how much money people are making on Amazon, but you’ll rarely hear about what the cost of doing business is.
If you’re not careful about your expenses and the fees that Amazon charges, you could be losing money.
Take a look at your settlement. You’ll see that fees are all lumped together, making it difficult to know the expenses line by line. While you can get a bit more detail by filtering, those details aren’t organized as well.
For most sellers, the selling fees don’t matter since there’s no way to opt out of paying them, but understanding the fees Amazon charges will empower sellers in making critical business decisions.
Below are the most common fees and credits you’ll see from Amazon.
This fee is a flat $0.99 rate charged on all items sold with the Individual Selling Plan. If you’re consistently selling more than 40 items a month, then you should upgrade to the Professional Selling Plan, which has no Per-Item Fee and a host of other features.
Referral Fee on Item Price
Items sold on Amazon will have a referral fee based on a percentage of the item price or the minimum referral fee of usually $1.00. For many categories, that cost is 15% of the item price, but the percentage can range anywhere from 6% (Personal Computers) to 45% (Amazon Device Accessories).
Referral Fee on Gift Wrap
If you charge for gift wrap, Amazon will take a percentage of this as well. In some states, gift wrapping is taxable. For example, Arizona doesn’t tax gift wrapping services, while Florida does. California does tax gift wrapping depending on what the item is.
Referral Fee on Shipping
Amazon takes 15% whatever you charge for shipping.
Variable Closing Fee
This fee depends on the category of the item you sell. Media like books, DVDs, and Video Games are $1.80 per item you sell. But most categories outside of media won’t have this fee.
Sales Tax Collection Fee
Yes, Amazon even charges you to collect sales tax.
Refund Administration Fee
Fee for non-media items. This cost is 20% of the order-related fees, up to $5.
You can purchase shipping from Amazon. This is the recommended route, as you get more seller protection by purchasing through Amazon than you would shipping it on your own.
Amazon may also charge a small fee for specific shipping services purchased through Amazon.
Amazon’s shipping is likely to be cheaper than what you would pay if you were to go to the post office or at a UPS retail location.
Cost of Advertising
This is the total cost of your advertising fees on Amazon for the period.
Shipping Services Refund
Refund for shipping services purchased.
High Volume Listing Fee
This fee is for sellers with more than 100,000 active listings. Each listing after is charged a monthly fee of $.005.
FBA Fulfillment Fee
This FBA fulfillment fee depends on the item you’re selling. But it starts at $2.41 for small, standard-sized packages weighing under 10 ounces.
Storage fees are for storing your items at the fulfillment centers. For items sitting in the warehouse longer than twelve months, you have to pay long-term storage fees, which are a lot more.
For standard-sized products from January to September, the cost is $0.69 per cubic foot. For October to December, the cost goes up to $2.40 per cubic foot.
Long-term storage fees increase to $6.90 per cubic foot.
This charge is for shipping purchased through Amazon to ship to their fulfillment centers.
The subscription fee is for Professional accounts.
This is usually any money you’ve paid Amazon through your credit card. So if you have 0 sales and a -39.99 subscription fee on your settlement, you’ll see a 39.99 Successful charge entry on your next settlement.
Payable to Amazon
This is the amount you owe Amazon, it’s generally carried over from the last settlement.
Removal Fee (Disposal)
If you need to dispose of your inventory, then Amazon charges $0.15 per item or $.30 for large items.
Removal Fee (Return)
If you want your inventory returned to you, then it’s $0.50 per item or $0.60 per oversized item.
FBA Label Fee
If you choose to use Amazon’s label service, then it’s $0.20 per label.
Amazon Capital Services
If you’ve accepted an Amazon loan, then you’ll see this listed on your settlements.
Amazon will reimburse you for damaged FBA inventory. They may reimburse you in cash or give you another of the same product.
This reimbursement is for lost FBA inventory.
Removal Order Lost
You’ll receive a reimbursement for removal orders that Amazon loses.
Removal Order Damaged
This reimbursement is for removal orders that Amazon damages.
If Amazon has reimbursed you in cash for lost inventory and later finds it, you will see this charge.
Sample Fees for an Individual Account FBA Order
Let’s say you sell a standard-sized, lightweight item (under 10 ounces) on an Individual account. For the sake of convenience, let’s say it’s in the office products category with a 15% commission.
Your fees would be the following:
- $20.00 Sale Price
- $2.41 FBA Fulfillment Fee
- $3.00 Referral Fee
- $0.99 Per-Item Fee
- Total to your seller account $13.60
Missing from these fees are your inbound shipping fees, storage fees, and cost of goods. Generally, inbound transportation fees are low if you’re sending in large shipments. Storage fees are generally low if your inventory moves quickly.
If this is your only sale for the period, you’ll see any money you owe Amazon deducted from your sales proceeds. So you may end up getting less than $13.60 for inbound and storage fees.
Many sellers will never take a look at the details of their sales. They’re satisfied so long as there’s a net positive disbursement. But after accounting for cost of goods sold and labor, there may not be much of a margin.
But knowing the details of the orders will allow businesses to make smarter financial decisions like whether or not they should discontinue a product or stop using FBA.
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