Before selling on Amazon, it is important to know how much it will cost. The online marketplace is a great way to earn an income, but there are many fees and other costs you need to be aware of if you want to be profitable.
In this post, we’ll answer the question of how much it costs to sell on Amazon so you know what you need to start your business.
The main costs of selling on Amazon
How much does Amazon charge sellers? The exact amount will depend on many factors, including the fulfillment of your orders, the type of products you sell, and the type of Amazon seller account you use. Let’s take a look at the main costs you’ll have to pay Amazon if you sell on their marketplace:
The first Amazon cost you will have to pay is the account fee. The nature of these fees depends on the type of seller account you have. There are 2 types of accounts: individual and professional.
As the name suggests, individual seller accounts are for people who sell on a smaller scale or as individuals. These accounts have no monthly or annual subscription fees. However, with this type of account, Amazon charges an additional $0.99 for each item sold.
Professional seller accounts are for those who want to sell more products. The Professional account charges $39.99 per month, but this account does not have an additional $0.99 per unit sold. This means that if you sell more than 40 products per month, the Professional plan is more cost-effective.
Amazon charges a referral fee for each order. Think of it as a commission, which is a pre-determined percentage of the total sales price. The exact rate depends on the category of product(s) sold. For example, if a customer buys one of your products in the books category, Amazon will charge 15% of the sale plus a $1.80 service fee. Below you can see the category referral fees for different niches:
Fulfilled by Amazon (FBA) is a logistics service where Amazon takes care of the storage and delivery of your products. The service comes with some benefits, including Prime deliveries, increased visibility in the Buy Box, and a reduced workload for your business. Unfortunately, Amazon can’t store and ship millions of items for free, so there are costs associated with the program. The FBA fees you’ll have to pay come in two main types: fulfillment fees and storage fees.
With Amazon FBA, you pay a fulfillment fee for each item you sell. This covers the costs of bundling, packing, and shipping your products. It also covers Amazon’s customer service and returns processing costs.
How much does Amazon charge for fulfillment? The per-unit fee is based on the weight and dimensions of the product. There are also different rates for apparel and non-apparel items.
In addition, Amazon has a Small and Light category for fulfillment fees. This offers sellers reduced restocking fees for products that meet certain size and weight standards.
When using FBA, Amazon charges a monthly storage fee for inventory. These are based on the average daily amount of space your goods take up in their fulfillment centers. So the more products you have in their warehouse, the more you’ll pay.
Calculating FBA fees
A product’s FBA fees have a big impact on its overall profit margin. If a product’s fulfillment and warehousing costs are high relative to its selling price, its margins will be lower, making it harder to be profitable with that product.
That’s why you need to know a product’s FBA fees before you bother to find it and list it on Amazon. Fortunately, this is not difficult as you can quickly check the FBA fees of a product using the AMZScout PRO extension’s profit calculator.
This can be done as follows:
- Go to the product’s Amazon listing.
- Click on the AMZScout icon. This will open an extension that shows detailed sales metrics for this and other related products.
- Open the Profit Calculator. Click on the row of the product you want to analyze to open a new toolbar. Select Profit Calculator to view the product’s stock, fill, and commission.
- PPC Costs
The last cost you have to pay to Amazon is the pay-per-click (PPC) advertising fees. Once you start selling, PPC is essential. You don’t have a product catalog to drive organic traffic, so you need to advertise your products to get your first customers.
With Amazon Ads, you are charged a fee every time someone clicks on your ad. How much you need to spend on PPC ultimately depends on your industry. The average cost per click (CPC) needed to get visitors is based on other offers on the market. Therefore, the more competitive and valuable your market is, the more you need to pay per click.
PPC costs also depend on how successful your campaigns are. If you convert a higher proportion of clicks into customers, you will have to pay less to get sales. That’s why it’s important to have a quality product that customers want. You’ll also benefit from understanding what keywords customers are using so you can better optimize your ads for conversions.