It’s so important to understand your numbers to make sure that you’re making the profit on the items that you’re selling on Amazon. Amazon takes a percentage fees from different categories, the weight on an item also has different fees. There’s a whole lot of steps involved and you have to be sure that you have a profitable business on the items that you’re selling on Amazon. In this article, I will give you the information about Amazon Fees which is something every seller should be educated about before starting their online marketplace business.
The first fee that you probably are going to looking at is Amazon Referral Fee. This is going to be charged whether you’re doing FBA or whether you’re doing merchant fulfilled orders which is 8 to 15 percent of the sale price. An amount is based on the category. It means that certain categories have different fees. Amazon subtracts the referral fee percentage which is calculated on the total sales price without any taxes calculated using Amazon tax calculation services. In the same time, total sales price includes the item price and any delivery or gift wrapping charges. Let me show you how it works. For example, you want to sell watches, so this is how you should calculate the Referral Fee for this product:
You’re also going to have a Amazon closing fee which is variable in media products like DVDs and if you’re not selling media products you don’t need to worry about that one. But when you sell it you have a fixed media Closing Fee of $1.80, a 15% referral fee on amount sold (product + shipping) and a fixed $0.99 per item fee (waived if a professional seller).
Anybody who sells more than 40 units a month needs to be a professional seller because if you are not a professional seller, if you’re an individual seller, you’re only paying 99 cents for every product you sell. If you’re professional seller which costs 40 dollars a month you don’t have to pay $ 0.99 fee anymore. For example, if I’m selling a hundred products a month and don’t have a professional seller account I’d be paying a hundred extra dollars in fees. If I do have a professional account, I’m only paying $40. So if you’re selling more than 40 units per month probably you should grab a professional account.
This storage fee is calculated based on the daily average volume of storage space your inventory occupies in Amazon’s fulfillment centers. Amazon alone owns the calculation used to determine the fee you will pay, and they even indicate this in Seller Central.
Shipping is a very big variable. If you doing private label you’re going to have one or two methods of shipping. if you’re doing private label it means you’re having products made in overseas like in China or India and then you’re importing these products either to the United States or UK, you either do one of two things, you can have it shipped to your house and then shipped it to Amazon or you can have it shipped directly to Amazon. If you have it shipped directly to Amazon you’ll pay Shipping Fee one time. It’s really hard to put a number on that because it depends on how big the shipment is, how much weight, the volume, how fast you want to do it (air shipping is way more expensive than ocean shipping). Don’t ship huge heavy things in the air because it’s very expensive.
If you’re doing arbitrage then you’re picking products up either locally or online. If you’re buying online you have to pay for shipping to your house or your fulfillment company and then you have to pay for shipping to Amazon, so you’re paying for shipping twice if you’re doing arbitrage.
Amazon’s FBA fees are rationalized. FBA fees include packaging, boxes, and even cover returns processing if your buyers return your products back to Amazon. There are two FBA fees you’ll see:
- Pick, Pack & Weight Handling Fees
Monthly Storage Fees: This is the cost of storing your products occupy in Amazon’s fulfillment centers
Also, FBA fees are based on the size of the product you’re shipping. Size includes any packaging for your product. Amazon divides FBA products into two size categories:
- Standard-size products: Standard-sized items, fully packaged, must weigh less than 20 pounds and not exceed 18″x 14″x 8″.
• Oversize products: Any item over 20 pounds and/or exceeding 18″x 14″x 8″ is considered oversized.
Here’s the link to FBA calculator. It is the useful tool for any seller who is deciding whether to use Fulfilment by Amazon. FBA calculator is the absolute best calculator for calculating all your fees on Amazon if you’re not using it, you need to be.
Click here for more information about the Amazon Fees.