The Ultimate Guide to Reducing Amazon Seller Fees
Amazon accounts for approximately 39% of the U.S. e-commerce market share, which makes it one of the best places to sell your products online.
However, selling on Amazon comes with a lot of fees — and if you don't pay close attention to them, it's all too easy to spend more than you make.
Wondering how to reduce Amazon fees? Let's take a look at Amazon selling fees and talk about how you can minimize them — or avoid them entirely.
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Your Amazon Selling Plan: The First Fee
If you want to sell on Amazon, you need to pick a selling plan. You only have two choices, so it's pretty simple: Individual plans are for small sellers, while Professional plans are for large sellers. You'll want to pick a plan based on your sales volume.
Individual Plan: 99 Cents Per Item Sold
Amazon's Individual plan is a no-frills option that allows you to list and sell your items. It's a good way to dip your toes into selling on Amazon, but it has a lot of limitations. You can only sell certain product types, you can't create listings in bulk, and you don't get detailed reporting. If you sell more than 40 items per month, you can save money by getting a Professional plan.
Professional Plan: $39.99 Per Month
Amazon's flat-rate Professional plan is what you want if you sell on Amazon regularly. It gives you tools to use to grow your Amazon business. You can sell in more categories, list products in bulk, qualify to get higher placement on product pages, have access to reporting, and more.
But Amazon selling plans aren't the only costs for selling on Amazon. In addition to your plan, you'll pay additional selling fees based on what you sell and how you sell it.
Amazon Seller Fees That Are Charged on Every Sale
On top of your selling plan cost, there are a few other fees you'll pay whenever you sell an item.
Amazon's referral fee is 3% to 45% of the total sale cost, depending on the category and price of your item. Be aware that the total price of your item is considered the item price, plus shipping costs, plus gift-wrapping costs — which may bump your item into a different fee category.
Minimum Referral Fee
Amazon's minimum referral fee is typically 30 cents, but it varies depending on the product category. You'll typically pay the referral fee or the minimum referral fee, whichever is higher.
A fee specific to media, Amazon's closing fee is $1.80 per media item sold. It applies to books, DVDs, music, software and video games, video, video game consoles, and video game accessories. You'll pay this in addition to to a referral fee on these product categories.
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Amazon Referral Fees: Understanding Your Biggest Cost
The referral fee is typically your biggest cost of selling on Amazon, but it's also one of the best ways an Amazon seller can save cash. By carefully choosing the products you sell on Amazon, you can pay lower referral fees.
The first step to saving is understanding Amazon's complicated fee structure and figuring out what categories your products belong in.
For instance, if you're selling Consumer Electronics, there's an 8% referral fee. On the other hand, Electronics Accessories generally boast a 15% referral fee. It's important to put your products in the correct categories so customers can find them, but you also want to pick the products you sell carefully so you don't pay high referral fees.
The table below outlines Amazon's current referral fees for each category.
|3D Printed Products||12% (minimum $0.30)|
|Amazon Device Accessories||45% (minimum $0.30)|
|Automotive & Powersports||12% for most products, 10% for tires and wheel products (minimum $0.30)|
|Baby Products (excluding Baby Apparel)||8% for products with a total sales price of $10 or less, 15% for products above $10 (minimum $0.30)|
|Beauty||8% for products with a total sales price of $10 or less, 15% for products above $10 (minimum $0.30)|
|Books||15% plus $1.80 closing fee|
|Camera & Photo||8% (minimum $0.30)|
|Cell Phone Devices||8% (minimum $0.30)|
|Clothing & Accessories (excluding Shoes, Handbags, & Sunglasses)||17% (minimum $0.30)|
|Collectible Coins||15% for the portion of the total sales price up to $250, 10% for any portion from $251 to $1,000, 6% above $1,000 (minimum $0.30-$1)|
|Collectible Entertainment or Sports Items||15% for the portion of the total sales price up to $100, 10% for any portion from $101 to $1,000, 6% above $1,000|
|Consumer Electronics||8% (minimum $0.30)|
|Electronics Accessories||15% for the portion of the total sales price up to $100, 8% for any portion above $100 (minimum $0.30)|
|Fine Art||20% for the portion of sales proceeds up to $100, 15% for any portion from $101 to $1,000, 10% from $1,001 to $5,000, 5% above $5,000 (minimum $1)|
|Furniture & Decor||15% for the portion of the total sales price up to $200, 10% for any portion above $200, mattresses 15% regardless of price (minimum $0.30)|
|Grocery & Gourmet Food||8% for products with a total sales price of $15 or less, 15% for products above $15|
|Health & Personal Care (including Personal Care Appliances)||8% for products with a total sales price of $10 or less, 15% above $10 (minimum $0.30)|
|Home & Garden (including Pet Supplies)||15% (minimum $0.30)|
|Industrial & Scientific (including Food Service and Janitorial & Sanitation)||12% (minimum $0.30)|
|Jewelry||20% for the portion of the total sales price up to $250, 5% above $250 (minimum $0.30)|
|Kitchen||15% (minimum $0.30)|
|Luggage & Travel Accessories||15% (minimum $0.30)|
|Major Appliances||15% for the portion of the total sales price up to $300, 8% for any portion above $300 (minimum $0.30)|
|Music||15% plus $1.80 closing fee|
|Musical Instruments||15% (minimum $0.30)|
|Office Products||15% (minimum $0.30)|
|Outdoors||15% (minimum $0.30)|
|Personal Computers||6% (minimum $0.30)|
|Shoes, Handbags, & Sunglasses||18% for products with a total sales price of $75 or less, 15% for products above $75 (minimum $0.30)|
|Software & Computer/Video Games||15% plus $1.80 closing fee|
|Sports (excluding Sports Collectibles)||15% (minimum $0.30)|
|Tools & Home Improvement||15% for most items, 12% for base equipment power tools (minimum $0.30)|
|Toys & Games||15% (minimum $0.30)|
|Unlocked Cell Phones||8% (minimum $0.30)|
|Video & DVD||15% plus $1.80 closing fee|
|Video Game Consoles||8% plus $1.80 closing fee|
|Watches||16% for the portion of the total sales price up to $1,500, 3% for any portion above $1,500 (minimum $0.30)|
|Everything Else||15% (minimum $0.30)|
Don't Forget Amazon Fulfillment Fees!
There are two ways to handle fulfillment with Amazon: you can ship items to customers yourself, or you can let Amazon ship items for you.
The latter option is called Fulfillment by Amazon (FBA), and it can save you a lot of time and trouble — but this option has a lot of associated costs you need to weigh before you sign up.
If you choose to fulfill items yourself, you'll pay fewer fees to Amazon. However, that doesn't necessarily mean you're saving money, as the shipping fees Amazon charges may or may not cover your actual shipping costs.
Fulfillment by Amazon offers low shipping costs, which you pay as a fee per unit sold — but it comes with a network of additional fees you need to consider.
There isn't a right or wrong answer here; you just have to do the math based on the kind of products you sell and what you'll pay to ship them. If you have an economical way to ship, you could save cash by doing the shipping yourself. But don't forget that your time has value, too — and using Fulfillment by Amazon can save a lot of time.
Here's the rundown of costs for each type of fulfillment.
Fulfillment by Seller
Amazon's Fulfillment by Seller option is DIY, so shipping is all on you. When Amazon processes an order, it charges a shipping fee, which is returned to you in the form of a shipping credit. You'll use your credit to buy packaging and postage to send the item to the purchaser.
But your shipping credit may not actually cover the cost of packing and shipping your item. If you're an individual seller, you can't set your shipping prices and simply receive Amazon's standardized shipping rates as reimbursement. Amazon's shipping credit can be as low as $3.99; if shipping costs more than the credit, then you're on the hook for the extra cash.
If you have a Professional plan, you can set your own shipping rates, but you still have to do your homework to be sure you aren't losing money on shipping.
Whether you have an Individual selling plan or a Professional plan, you need to carefully review how much you're spending on shipping — including boxes, packaging materials, and postage — so you can adjust prices accordingly.
If you're an Individual seller, you may need to raise the selling price to fully cover the cost of shipping, whereas Professional sellers can simply set their own shipping rates.
Fulfillment by Amazon
If you use FBA, Amazon takes over a lot of your work — for a price, of course. You'll send your products to Amazon. The megaretailer will store your goods in its warehouses, and then pack and ship them when a customer places an order. Amazon will also handle customer service and returns, so you won't need to do much more than list your products to sell.
FBA has a lot of fees, though, and it can be a headache to figure out exactly how much you'll spend ahead of time. Get out your calculator and be ready to do some math before you decide to use the FBA program. Here are the FBA fees you can expect:
Fulfillment fees are for picking, packing, and shipping an order. This can range from $2.50 for a small item (10 ounces or less) to over $100 for heavy, oversize items (more than 151 pounds). Review FBA shipping fees and compare them to what you would pay to do your own shipping.
Inventory storage fees are for keeping your items. They're charged monthly, and have seasonal rates. From January through September, you'll pay 75 cents per cubic foot, and from October through December you'll pay $2.40 per cubic foot. Oversize items receive a discounted storage rate.
Long-term inventory storage fees are for storing items longer than a year, and are charged in addition to the standard storage fees. The cost is $6.90 per cubic foot or 15 cents per unit, whichever is greater.
Removal fees are incurred when removing inventory from storage, either to return it to you or dispose of it. The cost varies by item size and starts at 25 cents per unit. If your items move regularly and you aren't at risk of incurring long-term storage fees, you may not have to worry about this cost.
Return processing fees are charged for customer returns. These are equal to the original fulfillment fee.
Unplanned service fees are charged when you don't properly package or prep items you ship to Amazon. For example, you may ship an item that isn't properly barcoded or is packaged in an oversize box, which Amazon has to correct before the item can be sold. You can avoid these fees entirely by carefully following Amazon's guidelines.
You can also sign up for additional services that have their own fees. For instance, you can have Amazon apply barcode labels (30 cents per item) and package items to FBA standards (starting at 50 cents per item). These services are convenient, but weigh the costs before you sign up.
Despite all the Amazon FBA fees, the program can be a cost-effective way to manage your products. Just do your research ahead of time. Amazon offers a few helpful tools for determining how much you'll pay for FBA, including a revenue calculator and a fee preview.
Other Fees for Amazon Sellers
A few other fees may or may not apply to you, depending on what and how you sell.
The rental book service fee is $5 per textbook rental.
The high-volume listing fee is a tenth of a cent per month for each SKU you list over 1.5 million.
The refund administration fee is $5 or 20% of the original referral fee, whichever is less. When an item is returned, Amazon will refund your referral fee, minus this refund administration fee.
You might pay other costs in order to keep sales up, such as the price of advertising. Amazon makes it easy to buy ads on the site that give your products better page placement, which can be a smart buy to increase sales — but always be aware of the cost. You can also look into alternative forms of advertising, such as listing your products on DealNews.
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The 6 Best Ways to Save on Amazon Seller Fees
If you've been racking your brain about how to reduce Amazon fees — or how to reduce Amazon FBA fees in particular — we can help! These are all the ways for smart sellers to save on Amazon fees.
1. Pick the Right Selling Plan
The first decision you need to make is what kind of Amazon selling plan you'll sign up for. An Individual plan is good if you're selling at low volume — less than 40 items per month — and is a good way to test-drive selling on Amazon.
The Professional plan adds more features, but has a $40 monthly subscription fee.
Next, you'll need to decide whether you want to handle fulfillment on your own or hand it over to Amazon with the FBA program. The choice that makes the most financial sense here is going to require some math. Review what types of products you're selling, how large they are, and what it will cost to pack and ship them.
Then compare your costs to the FBA costs. (And don't forget to consider inventory storage fees and other FBA expenses!)
2. Only Sell the Right Products
Be selective with what you sell on Amazon. You can reduce the Amazon referral fees you pay by choosing to sell products with lower fees. Review the items you have to sell and the Amazon product categories they fit into. The items with lower referral rates are the ones you should list for sale.
3. Avoid Extra FBA Fees
Fulfillment by Amazon adds a lot of extra fees, but some are avoidable. When using FBA, be sure to do the following.
First off, you should follow all Amazon packaging and labeling guidelines when you ship your products. Amazon will fix any mistakes you make, but it will cost you! Secondly, you should monitor inventory age so you aren't surprised by long-term storage fees.
Also, don't use FBA for slow-moving stock, as this just increases your storage fees. And avoid selling large items if possible because these rack up additional storage fees.
Finally, consider skipping the extra services. Unless you're in a serious time crunch, you can label your own items instead of paying Amazon 30 cents per item to label them for you!
4. Handle Your Own Fulfillment
Doing your own packing and shipping may or may not save you money — you'll have to price out all of your packing and shipping costs to find out for sure. Review your products as well as the type of packaging and shipping they'll need, then compare your shipping cost to the shipping credit you'll get from Amazon.
Remember, Amazon sets shipping rates for Individual selling plans, while Professional accounts can set their own shipping rates. But either way, you'll want to know how much shipping costs, so you can set your rates appropriately. If your rates are higher than your shipping credit, then it's time to re-evaluate.
Can you save money on shipping? If you ship a lot, you may be able to get a business discount from your shipping provider. You may find switching carriers saves money, too. Using the U.S. Postal Service, which provides boxes for some types of shipping, can cut down on packaging costs. Do your research to see how low you can get your packing and shipping costs.
If your shipping costs don't make sense with the shipping credit you'll get, adjust your prices accordingly. Even if you don't have a Professional plan that lets you change your shipping rate, you can increase the price of your product to make up for additional shipping costs. The important thing is to be sure you aren't losing money on shipping fees.
5. Limit the Size and Weight of Your Products
Paying attention to the size of your goods can help you save on shipping and storage fees. If you're handling your own fulfillment, you want products that can fit into the smallest-size box — particularly important with flat-rate boxes — to keep shipping costs low.
You might do this by changing the way you package items, or you may want to stop selling large or awkwardly sized items to avoid the higher costs.
If you use FBA, limiting product size is about reducing your storage and fulfillment costs, both of which are based on size. Review the FBA costs for different package-size tiers, and aim to fit your products into the smallest packaging possible.
This is also an opportunity to evaluate whether it's worth stocking larger items, which incur higher fees. And during the holiday season (October through December), it's even more important to limit the size of your FBA products because storage costs more than triple.
6. Combine Individual Products Into Bundles
Building your own product bundles — as long as they're bundles people want to buy — can reduce your referral fees. Because these fees are charged per unit, bundling multiple items into a single unit will cut down on fees.
The easiest way to do this is by combining items into larger club packs of two or more. However, you may also see certain items frequently purchased together — charging cables and cell phone cases, for example. Those are the items you want to turn into bundles.
As we've seen, selling on Amazon comes with a lot of fees. But with a little research and careful calculation, you can reduce or eliminate a ton of these costs, and pave the way for more growth in your business.