How to Know How Much Selling Your Product on Amazon Will Cost
Pricing your products correctly on Amazon is a science and art form — find out how much selling your product on Amazon will cost you.
How do you come up with your product price when selling on Amazon?
There are four main categories that Amazon sellers should pay as membership fees – account fees, referral fees, shipment fees and fulfillment by Amazon (FBA) fees. Account fees start from $0 to as much as $39.99 monthly. Referral fees vary from 6% to 20% of the product’s selling price. Shipping and FBA fees will range widely depending on the category of the product.
Let’s take a look at the different factors that will determine how much selling your product on Amazon will cost.
Seller Account Fees
Amazon offers two types of Seller Accounts –an individual account for low-volume sellers and a pro merchant account for high volume business sellers.
Individual seller accounts are best for occasional business sellers and individuals. It has a $0 monthly fee and has a listing fee of 99¢ per item sold.
Here are the conditions of having an individual seller account:
- Limited to 40 products sales monthly. This does not refer to the number of product listings, but the number of sold products should not exceed 40.
- Limited categories
- Gift wrapping is not allowed.
- Inventory management is not available.
- Bulk uploads are not supported
- Manually create the listings.
Pro merchant accounts are recommended for businesses and high volume sellers. It has a $39.99 monthly fee but $0 listing fee.
Here are the benefits of choosing a pro merchant seller account:
- You can list as many products as you want.
- You can upload products in bulk.
- Has e-commerce and order management platforms
- Inventory management is available.
- FBA inventory management is available.
- Gift wrapping is allowed.
These accounts have features that accommodate the certain needs of the type and nature of business of the seller.
Which Account is Best For You?
If you have just started selling products, you can get the Individual account. It has no upfront fees, and you are only charged for every sale you make.
If you have been in e-commerce for a while and are seeking to expand your brand online, your best bet is to get the Pro Merchant Account.
There are three (3) types of Amazon referral fees that you are going to pay for when you sell your products on Amazon. The number of fees will vary greatly based on the item category and price point in selling.
Amazon sellers including Pro and Individual accounts, pay a Referral Fee for each item sold on the Amazon platform. This could range from 6% to 20% with an average pay of 15%. This type of fee is based on the product category and price point. Referral fees are a fraction of your product’s sales price point. You can check out Amazon’s Seller Fee Schedule for the complete list of specific categories in the Amazon market.
Minimum Referral Fee
Amazon allocates a Minimum Referral Fee to some categories. This could range from $0 to $2 for watch and jewelry categories. Not all product categories have minimum referral fee. If the referral fee for a certain product falls below the minimum referral fee, then you will pay the greater of the two fees which are based on your product’s selling price point.
Variable Closing Fee
Amazon charges a flat fee of $1.80 on all products listed under Media categories such as DVD, music, Video games, video, software and computer, books and video game consoles. This fee is considered the Variable Closing Fee and it is added on top of the Referral Fees.
Shipping Credits & Costs
Amazon pays you a Shipping Credit when you personally pay the shipment fee of the Amazon orders. But you have to be careful because Amazon pays lower than the average shipping rates that you might have incurred during the transaction.
You may end up spending more on the shipment fees than what you receive from Amazon’s Shipping Credit depending on the size and weight of your product package. To prevent this from happening, you need to identify how much you are getting from Amazon for every item you sell. Use the Amazon Shipping Credit Chart to have an approximation of your credits for each product shipment.
Compare the amounts in the chart to the actual costs of shipping. If you sell lightweight and small items, you may come out ahead, but if you ship heavy and large boxes, you may lose on each product sale.
Fulfillment by Amazon (FBA) Fees
Amazon offers its member sellers with the Fulfillment by Amazon platform where both Pro and Individual sellers can benefit.
Fulfillment by Amazon or commonly referred to as FBA, covers the stocking, packing, shipping and storing your products in the Amazon warehouse. Amazon charges some fees for this, but most sellers consider the FBA fees as reasonable, efficient and convenient for particular items. This takes off the hassle of daily packing and shipping orders from the seller’s to-do lists.
I highly recommend selling products FBA, as FBA products tend to perform much better than seller fulfilled.
FBA fees cover the following services:
- Pick, Pack and Weight Handling Fees – The fee covers the costs of picking, packing and shipping of your Amazon products.
- Monthly Storage Fees – The costs of warehousing your products in the Amazon storage facility.
The product size and weight can greatly influence the FBA fees calculation. This is why you should look into a FBA calculator, so you get a great understanding of the fees associated with your products. Size includes the packaging of your product including retail packaging, blister packs or shoe boxes.
Amazon splits the product categories into two categories:
- Standard-sized Products – When products are fully packed it should weigh less than 20 pounds and should not exceed the dimension 18” x 14” x 8”.
- Oversized Products – Any packed product weighing over 20 pounds and exceeding 18” x 14” x 8”.
FBA fees are added on top of the Account and Referral Fees. FBA fees fluctuate depending on the season.
During October to December holiday seasons, FBA fees may change drastically.
Amazon marketplace entices a million shoppers every day. If you want to achieve nearly half of the number of shoppers that buy online, you need to start selling on Amazon. There is a slim line that divides the profit and loss in each item you sell, so it is important that you understand how Amazon fees influence the price points.
You can use the Amazon seller fees calculator to get the approximate value that you need to pay. If the Amazon seller fees are consuming your profits, try sourcing out your products directly from affordable suppliers.