Have you ever wondered how Amazon’s fees work? Or what exactly is a Referral Fee? This is the article that will answer these two questions and breakdown the fee structure.
Referral Fees (sometimes called category fees) are the fees that Amazon charges the seller of a product when it is sold. In other words, whenever someone buys a product, the seller will pay a Referral Fee to Amazon. Typically, the charge is a percent of the total amount that the buyer (of your product) pays. This fee varies dramatically depending on the product sold. For instance, office products have a Referral Fee of 15% while personal computers have a Referral Fee of 6%.
In order to sell products on Amazon, a seller needs to have an Amazon Seller Account.
There are two types of Amazon Seller Accounts, the individuals and the Professional. The account you should pick is based upon the amount of items you sell monthly. A common misconception is that your amount of revenue determines which account to pick. This is not true! The only factor is the number of items you sell per month.
If you sell less than 41 items per month you should have the Individual Amazon Seller Account. With this type of account, Amazon charges you $0.99 per item sold (not including Referral Fees). There is no monthly subscription charge; this is a “pay as you go” type of account.
However, if you sell 41 or more items per month, then the Professional Amazon Seller Account is for you. There is no per item charge but there is a monthly subscription fee of $39.99. If you consistently sell over 41 items per month, the savings can add up quickly.
For instance, if you sell 60 items per month under the Individual Seller Account Amazon charges $59.40 ( 60 * 0.99), not including Referral Fees. With a professional subscription, you only pay $39.99 for the monthly fee; that’s a savings of $19.41 per month or an annual savings of $232.92.
In order to assist you in making the right choice for your product line, we’ve created a custom built Amazon Fee Calculator. This will simplify your choice.
Some product categories have minimum Referral Fees of a $1.00 while others have a multi-tiered Referral Fee. In addition, depending on the category amazon might charge an additional fee ( known as “variable closing costs”). For instance, there are Media closing fees ($1.80) for product categories: Books, DVD, Music, Software & Computer/video Games, Video, Video Game Consoles, and Video Game Accessories.
Let’s take a look a close look at the DVD category: a consumer is paying $15.00 dollars total for product (including everything but taxes). The DVD category has a Referral Fee charge of 15% and since it is media Category, there is also the Media Closing fee of $1.80. If the seller had an Individual account, there would be additional charge of $0.99.
Total fees paid to Amazon (Individual Account): $5.04 = $1.80 + ( 15% * $15.00) + 0.99
However, if the seller had a Professional Account then the per item would depend on the number of items sold per month. For example, if 120 products are sold per month then the per item fee is $0.33 (compare that to the the Individual Account).
Total fees paid to Amazon (Individual Account): $4.38 = $1.80 + ( 15% * $15.00) + 0.33
You have an individual Amazon seller account and you are selling a stapler for $8.99 in the Office Products category which has a referral fee of 15%.
Total fees paid to Amazon: $2.34 = $8.99 * 15% + $0.99
If you had the professional Amazon seller account your total fees would be $1.35.
Don’t forget to let our Amazon Fee Calculator do the dirty work for you!