Selling on Amazon is an excellent way to reach millions of customers worldwide. However, before you start, it is crucial to understand the costs involved. Whether you are an individual seller or a business, Amazon has different pricing structures that impact your profitability. In this article, we will break down all the costs associated with selling on Amazon, helping you make an informed decision.

1. Amazon Selling Plans

Amazon offers two primary selling plans, each with its own pricing model:

Individual Selling Plan

• Costs $0.99 per item sold.
• Best for sellers who sell fewer than 40 items per month.
• No monthly subscription fee.
• Additional fees apply, such as referral fees and fulfillment charges.

Professional Selling Plan

• Costs $39.99 per month (flat fee).
• Best for sellers selling more than 40 items per month.
• Provides access to additional tools, such as bulk listing and advertising options.
• No per-item fee, but other fees still apply.

2. Referral Fees

Amazon charges a referral fee on each sale, which is a percentage of the total selling price. The percentage varies by category:

The referral fee is deducted automatically from your sales revenue.

3. Fulfillment Costs

Amazon sellers can choose between two fulfillment options:

Fulfillment by Amazon (FBA)

FBA means Amazon handles storage, packing, shipping, and customer service. The costs depend on the item’s size and weight:

• Storage Fees:
  • Standard-size: $0.87 per cubic foot (Jan-Sep), $2.40 per cubic foot (Oct-Dec).
  • Oversized: $0.56 per cubic foot (Jan-Sep), $1.40 per cubic foot (Oct-Dec).
• Fulfillment Fees:
  • Standard-size items: $3.22 – $6.12 per unit.
  • Oversized items: $8.26 – $137 per unit, depending on weight.

Fulfillment by Merchant (FBM)

Sellers handle storage and shipping themselves. Costs include:

• Packaging materials (boxes, tape, bubble wrap, etc.).
• Shipping fees (varies by carrier and destination).
• Customer service and returns handling.

4. Additional Costs

Advertising Fees

To increase visibility, sellers often invest in Amazon PPC (Pay-Per-Click) advertising. Costs depend on bidding strategy:

• Sponsored Products: Average cost-per-click (CPC) ranges from $0.20 to $3.00.
• Sponsored Brands: CPC varies by category and competition.
• Sponsored Display: Retargeting ads with varying costs.

Storage Fees

If using FBA, Amazon charges monthly storage fees. Fees increase during peak seasons.

Long-Term Storage Fees

If inventory remains unsold for over 365 days, additional storage fees apply.

Return Processing Fees

For categories like apparel and electronics, Amazon may charge a return processing fee if a customer returns an item.

High-Volume Listing Fees

If you have more than 100,000 active listings that do not sell frequently, Amazon may charge an additional fee.

International Selling Fees

Expanding to different Amazon marketplaces involves:

• Currency conversion fees.
• Additional shipping costs.
• Compliance with local tax regulations.

5. Taxes and Regulatory Costs

Amazon collects sales tax in certain regions, but sellers must be aware of:

• VAT (Value Added Tax) for European marketplaces.
• Import duties and customs fees for international shipments.
• Business registration fees if selling as an entity.

6. Profit Calculation and Cost Management

To ensure profitability, consider the following:

• Use Amazon’s FBA Revenue Calculator to estimate costs.
• Monitor advertising spend to optimize ROI.
• Adjust pricing strategies to remain competitive.
• Reduce storage fees by managing inventory effectively.

Conclusion

Selling on Amazon offers great opportunities, but costs vary depending on your business model. Understanding the different fees associated with Amazon’s selling plans, fulfillment options, and additional costs will help you price your products correctly and maximize profits. By planning wisely and managing expenses efficiently, you can build a successful business on Amazon.

FAQs:

1. How much does it cost to sell on Amazon?

Amazon sellers typically pay two main types of fees: a selling plan fee and selling fees (such as referral fees and FBA costs). The Individual plan costs $0.99 per item sold, while the Professional plan costs $39.99 per month. Additional costs include referral fees, fulfillment fees, and optional advertising expenses.

2. What are Amazon’s selling plans, and which one should I choose?

Amazon offers two selling plans:

• Individual Plan ($0.99 per sale): Best for sellers with fewer than 40 monthly sales.
• Professional Plan ($39.99/month): Best for high-volume sellers who need advanced tools like reports and Buy Box eligibility.

3. What are referral fees on Amazon?

Referral fees are Amazon’s commission on each sale. They range from 8% to 45%, depending on the product category. Most categories have a 15% referral fee on the total selling price, including shipping.

4. How much does Amazon FBA cost?

If you use Fulfillment by Amazon (FBA), you’ll pay for:

• Fulfillment fees: Based on product size and weight, ranging from $3 to $15 per item.
• Storage fees: $0.87 to $2.40 per cubic foot per month, increasing during the holiday season.

5. What are Amazon FBM costs?

With Fulfillment by Merchant (FBM), you handle shipping yourself, so there are no FBA fees. However, you still pay referral fees, storage costs (if using a third-party warehouse), and shipping expenses.

6. Are there any hidden costs when selling on Amazon?

Potential hidden costs include:

• High-volume listing fees for sellers with 100,000+ SKUs ($0.005 per SKU).
• Long-term storage fees for unsold FBA inventory after 181+ days.
• Refund administration fees if Amazon processes a refund on your behalf.

7. How much does Amazon charge for advertising?

Amazon ads are optional but crucial for visibility. Costs vary based on ad type:

• Sponsored Products & Sponsored Brands work on a pay-per-click (PPC) model, averaging $0.50 to $1.50 per click.
• Amazon DSP (Display ads) requires a minimum budget of $10,000.

8. Do I need to pay for product listing on Amazon?

No, listing a product is free. However, if you want premium A+ Content or participate in programs like Amazon Vine (for reviews), there may be additional fees.

9. What taxes or regulatory fees should I consider?

Amazon may collect sales tax on your behalf in some states. You may also need to pay:

• Import duties (for international sellers).
• GST/VAT (if selling in countries like the UK or EU).
• 1099-K tax reporting (for US sellers with over $20,000 in sales and 200 transactions).

10. How can I reduce my Amazon selling costs?

To lower your expenses:

• Choose the right fulfillment method (FBA vs. FBM).
• Optimize ad spend to avoid overspending on PPC.
• Use Amazon’s fee calculator to estimate costs before listing.
• Monitor storage and inventory to avoid long-term storage fees.