Selling on Amazon: Are There Hidden Fees? What are the Costs?
Selling on Amazon might seem like pure profit, but there are various fees involved. Of course, buying inventory is one, and you must also factor Amazon account costs into your profit margins.
Here at Lezzat, we often get asked to explain the fees of selling on Amazon to our clients. To make things easier, here is a comprehensive list of the costs of running an account on Amazon.
Fees for Selling on Amazon
The simplest way to break things down is by overall fees. Some are the same for all seller accounts, while others depend on your inventory, selling price, and more. We advise the difference below.
1. Professional Selling Plan
The most obvious place to start is with the selling plan fees. For a professional selling plan, you have to pay £25 a month. This plan contains numerous benefits and features for professional sellers that individual sellers can’t use. These include:
- The ability to advertise
- Access to advanced selling tools (APIs and reports)
- Bulk listings
- Advertising tools
Other than these benefits, the main requirement is that you sell more than 35 products a month. Of course, there are additional selling fees, too, but you can find out more information on Amazon’s pricing page.
2. Referral Fees
Amazon charges sellers referral fees for the ability to sell on its website. Think of it like commission charges that you’d find in other industries.
You list products, Amazon’s market reach brings you customers, and you pay for this. It’s a fair exchange.
Amazon’s referral fees vary wildly depending on the product category and price. Generally, it’s 8% for products under £10 and 15% for products over £10.
The site charges a minimum fee of £0.25. So, if you thought you could avoid heavy fees by selling inexpensive products, think again.
But there are exceptions. For example, DIY and tools have a 13% referral fee, and jewellery has up to 20%. It’s best to check Amazon’s full list for specific details or speak to one of our qualified Lezzat consultants.
Another thing to consider within referral fees is refund administration fees. While not something you technically pay, it does result in a loss for you.
Amazon charges an administration fee on any refunds it processes. It’s either £5 or 20% of the referral fee, whichever is less. For example, on a £10 product with a 15% referral fee, the refund administration fee would be £0.30.
3. FBA Fees (Fulfilment Fees)
Fulfilment fees are (unsurprisingly) only charged to FBA sellers. Not sure what this is? Check out our post on FBA selling for more information.
FBA sellers are charged flat fees per unit shipped and storage space used. It entirely depends on the size, weight, and volume of your products, so use a calculator or speak to us for more details.
4. Inventory Charges
As mentioned, Amazon charges inventory fees if you store your products in its warehouses. It charges this to FBA and multi-channel fulfilment sellers, so it doesn’t apply to everyone.
You’re charged a daily rate per cubic foot of space, and rates vary by calendar month and type of goods.
Fees also depend on how well your product sells. If it’s not a great seller and it sits in the warehouse for a long time, you’ll get charged more, including a long-term storage fee.
But, if your product sells out in 2 months or less, the charges will be minimal. Follow our tips on choosing the right product and optimising its listing to maximise your sales.
5. Advertising Charges
While advertising is vital, the amount you spend on it depends on your budget and ambitions. Of course, product quality helps, too, as you could spend all you wanted on advertising and still not sell a poor product.
Amazon Advertising is a pay-per-click, auction-based model, so it’s fairly easy to control how much you spend on it. You must also consider off-site advertising if you want your reach to go further.
If you need a clear-cut advertising plan for your Amazon selling account, contact us for more information.
As a general rule, your advertising budget should be between 8 and 14% of your selling fee for a healthy account.
6. Discount and Opt-In Programmes
Amazon runs a wide variety of discount programmes, whether it’s Prime discounts or daily deals. Many of these carry a fee for sellers, as Amazon’s logic is that you’ll sell more products using discounts, so it can justify taking a fee.
The fees depend on the programme. For example, Prime exclusive discounts have a £25 fee per enrolment. It’s best to look into specific programmes as you extend your advertising reach, and you should consider absorbing these fees into your advertising budget.
The viability of discount programmes depends on your product and desired reach. If you’re unsure whether a discount programme would be suitable for your selling account, a Lezzat consultant can provide more specific advice.
7. Non-Amazon Fees
There are numerous fees associated with buying and shipping your products before (and after) you get Amazon involved.
- Transportation fees
- Local VAT
- Important duties
- VAT on imports
If you’re not running an FBA account, you also have to consider processing and shipping costs, too. It’s easy to overlook figures like this, so be sure to do a full cost analysis before you start selling.
Knowing Your Amazon Fees
A good Amazon seller should know all costs associated with their account in intimate detail. After all, how can you calculate profit margins if important figures slip through the net?
That said, understanding the numbers can be complicated if you’re just starting out as a seller on Amazon. Knowing the right selling model is difficult if you’re unsure which is most suitable for your product and sale volume.
But this is where Lezzat comes in. We’re a full-service Amazon marketing agency and can help you set up for success.
So, if you need help getting your figures and fees in order, reach out and see how we can help.
This blog post was written by Alex Karagiannis – founder of Lezzat.
Any other questions come to mind or looking for additional information? Don’t hesitate to contact us.