Amazon Seller Fees and Costs
Amazon's costs can initially seem complex and challenging, but they are not particularly difficult once you understand them.
The primary reason these costs may seem daunting to those without prior experience on Amazon is the sheer number of different terms and product categories. Each product category has slightly different rules, and trying to learn all these rules and cost thresholds at once can be overwhelming. However, if you focus on the categories that you and your business are actually interested in, it soon becomes much easier.
In the text below, I will go through the costs for professional sellers with a Seller Central account, which is the majority of all sellers. For Vendor Central sellers, negotiated agreements with Amazon are written, and non-professional sellers do not have access to many of the functions that are, in principle, necessary. Therefore, I focus here on Seller Central sellers with professional accounts.
What Costs Exist?
Amazon has several different costs, and I will go into these in detail, but first, I want to quickly summarize them. All costs can be divided into the following five categories:
- Referral Fee: The cost of using Amazon's platform to sell. This fee is a percentage of the sale price, usually between 10-15%.
- FBA Costs: This category includes all costs associated with Amazon's logistics solution Fulfillment by Amazon (FBA). If you choose to handle shipping to the end customer yourself, this does not apply to you.
- Storage Costs: For Amazon to manage shipping and delivery via their FBA logistics solution, they also need to store the products. If you handle shipping to the end customer yourself, this does not apply to you.
- PR Costs: This includes everything related to campaigns, ads, and other paid exposure. These parts are entirely optional, and you can set the budget yourself.
- Other: This category covers everything that does not fit into the categories above. For example, you can let Amazon package and label products. Amazon's monthly fee of around SEK 400 is also in this category.
To summarize - you pay about SEK 400 in monthly costs + about 15% in referral fees on sales + storage and logistics costs + optional PR costs + other costs (usually SEK 0).
1. Amazon Referral Fee - What Is It?
The referral fee is the most basic fee for selling on Amazon. It doesn't matter how you ship, how much the products cost, or which product category you sell in; the referral fee must always be paid. The referral fee is based on your product's sale price and takes a percentage of that amount. The exact percentage depends on the product category, but the standard is 15%.
Referral Fee at Low Price Levels
If the products have a very low price, you may need to pay a minimum amount instead of a percentage. For example, if you sell "Home & Kitchen" products for under SEK 20, you always pay SEK 3 referral fee. It doesn't matter if the price to the end customer is SEK 5 or SEK 20; your referral fee is always SEK 3 per sold product.
Different Category Costs on Amazon
As mentioned, the cost varies for different categories. The standard is 15%, but it varies greatly. For computers, it is instead 7%, and for clothing, it is 15% of the product price up to SEK 472.50, and then 7%. Below are links to Amazon's marketplace fees for different countries.
- Sweden
- Europe (Amazon requires an Amazon account to view this information)
- USA
- Japan (Amazon requires an Amazon account to view this information)
- Canada (Amazon requires an Amazon account to view this information)
Amazon requires you to have a seller account to access much of the information. Therefore, I do not link more of these pages. However, if you want an approximate cost for another country, I recommend using Amazon's calculator for this. You can find these here:
2. Amazon FBA - How Much Does It Cost?
Amazon's logistics program, Fulfillment By Amazon (FBA), is a program that allows Amazon sellers to store products with Amazon and let them handle picking & packing, shipping, possible returns, and even some parts of customer support.
In general, the Amazon FBA program is inexpensive and likely not a marginal cost for you compared to alternatives. It is confirmed that Amazon will open its FBA program in Sweden with the Swedish launch, and it is a program that the majority of sellers internationally use.
The price steps based on product dimensions vary between countries and regions. Below, you can see some of Amazon's markets and links to their price levels:
When Do You Pay FBA Costs?
FBA costs are added per order as a one-time fee. If a customer chooses to return the product after their order, you also pay a "return fee," which is the same as the original FBA cost per unit. For returns, Amazon refunds the referral fee taken on the sale, but they keep 20% (max SEK 52.5 in Sweden) of this referral fee as administrative costs.
Return Example: If a customer returns a product that cost SEK 1000 and had a referral fee of 15% (SEK 150), Amazon refunds SEK 120 of the SEK 150 for a return. SEK 150 * 20% = SEK 30 (Amazon administrative fee). SEK 150 - SEK 30 = SEK 120, which is what you get back from the referral fee you paid.
Examples of Amazon FBA Costs (in Sweden):
Example 1: Toaster
- Weight: 2.2kg
- Dimensions: 25.5cm x 18.5cm x 17cm
- FBA Costs: SEK 41.94 per sold product
Example 2: SD Card
- Weight: 30g
- Dimensions: 3.2cm x 2.4cm x 0.2cm
- FBA Costs: SEK 17.14 per sold product
3. Storage Costs on Amazon - What Do They Cost?
For Amazon to manage your shipments to the end customer, your products also need to be stored in their warehouse. This is something you pay for separately. FBA costs are added per order, while storage costs are deducted monthly and are based on the average volume you have had in storage the past month.
How Do You Calculate Storage Costs on Amazon?
Storage costs on Amazon depend on four factors:
- During which months do you hold stock?
- How much volume do you store?
- Are the products oversized?
- Product category.
The months you hold stock affect the cost because Amazon charges a higher storage cost during the fourth quarter (October - December). In the USA, the price for storage increases by about 300% during October to December. In Sweden, the price increases by about 40% during the same period. The important factor is not the percentage increase but the actual price (see prices below).
The volume is calculated in cubic meters in Europe, while in the USA, it is calculated in cubic feet. Prices vary slightly between different countries and regions but are comparable. In Europe, the cost is almost the same in the different countries.
Oversized products qualify for lower storage costs. In Sweden, the price for oversized products is about SEK 100 cheaper per cubic meter than for other products. Which products are oversized? It varies in different countries. In Sweden, products larger than the following are considered oversized: 12kg, 45cm on the longest side, 34cm on the middle side, and 26cm on the shortest side.
Product categories Clothing, Shoes, and Bags have lower storage costs.
How Much Does the Storage Cost?
As mentioned, three factors influence the prices, and they differ in different countries. Below are links to all countries. In Sweden, the cost is according to the following table:
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More info directly from Amazon for the different countries and regions:
4. PR and Advertising Costs on Amazon
Amazon offers many advertising options on its platform and connected platforms. Both direct marketing (product ads) and brand marketing aim to build brand awareness.
All PR and advertising are entirely optional but something you should use to succeed well on Amazon. Especially direct marketing aimed at driving sales, which can also result in better rankings on Amazon, leading to even more sales.
I will not try to set an approximate sum or percentage of the total budget you should spend on advertising and PR, but the more you can allocate here, the better. Especially during a launch, as this is a vital part of starting a sales momentum on Amazon.
What PR and Advertising Options Are There?
There are many ways to advertise on Amazon, and I will go through more of these in detail later. However, here is a short list of some options:
- Amazon Advertising: Purchase ads for both products and brands.
- Amazon Early Reviewer Program: Offer gift cards to customers as an incentive for them to leave reviews on your products.
- Amazon Launchpad: Get increased exposure on Amazon's Launchpad, where unique products are showcased and promoted (requires an invitation).
- Amazon Vine: Invite top reviewers to leave reviews on your products.
5. Other Costs for Sellers on Amazon
There are some additional costs that may arise when selling on Amazon. Most are optional and incurred if you want help with processes instead of handling them yourself, while others are mandatory.
Professional Seller Account
First and foremost, there is a monthly fee of about SEK 400/month to have a professional seller account on Amazon Seller Central. This is essentially a requirement if you want to sell on Amazon. Without the professional account, you can only sell a maximum of 40 products/month, and you also lose many important features in Amazon's interface.
This cost provides you with a professional seller account in the entire region you sell in. However, if you want to sell in another region, you must pay the same amount to have a seller account in that region as well.
The regions currently available are:
- Europe: Sweden, Germany, Netherlands, UK, France, Spain, Italy
- America: USA, Canada, Mexico, and Brazil
- Asia-Pacific: Japan, India, Australia, Singapore
- Middle East: United Arab Emirates, Turkey
Other Costs
As mentioned, there are other costs that may become relevant. Primarily, this involves labeling and packaging products, which you can avoid in 99% of cases by doing the work yourself. Costs also arise if, for example, you want to send back products from Amazon's warehouse to yourself or simplify certain tasks for yourself in various ways.
I will not go into detail about these costs here. If you face costs falling under the "other" category, you can always Google or search Amazon's documentation.
Summary - Cost of Selling on Amazon
To summarize, Amazon's costs can be divided into five different categories, with the referral fee category being the most relevant to all sellers. The monthly cost (category: other) also applies to all professional sellers.
Other costs are linked either to PR & advertising or Amazon's FBA program for logistics and storage management.
If you want to quickly calculate costs, you can use the following formula:
- SEK 400 in monthly costs per region you sell in.
- 15% of the sale price in referral fees.
- FBA costs deducted for each sale.
- Storage costs deducted monthly.
- Optional PR/advertising costs.
- Other costs (usually SEK 0).
I hope this helped you and made you a bit wiser. If you and your company want help maximizing sales, you are always warmly welcome to contact us at SellWave. We have helped both large and small companies sell on Amazon and can certainly help you too. All the best and good luck!
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