When you start to sell on Amazon, the first thing you think about should be how much it will cost.
On average, new FBA sellers spend $2,000-$4,000 launching a new product on Amazon, which in comparison to traditional business is very little.
Now let’s break down the Amazon Seller Fees.
1. Cost for your Amazon seller account
If you want to sell on Amazon, it is the first step for you to have a seller account. Here Amazon gives you two different options. Individual and Professional Account.
2. Referral fees
For every item sold, sellers pay Amazon a percentage of the total price—including item price, shipping cost, and any gift-wrapping charges—or a minimum amount, whichever is greater.
This fee comes from the fact that Amazon brings or refers users to your business and products through its website and brand reputation.
Referral Fees include Referral fee percentage and Referral fee minimum.
- Referral fee percentage: Your referral fee percentage depends on your item’s category. Rates range from 6% (for personal computers) to 96% (for extended warranties, protection plans, and service contracts).
- Referral fee minimum: The minimum referral fee per item is $0.30. Some item categories, like books, music, and video games, do not carry a minimum referral fee. That means your referral fees will always come from your referral fee percentage.
Click to check the complete referral fees table.
3. UPC code
In order to start selling your product on Amazon, you have to get the UPC code for your product. There is only one legitimate producer of UPC codes that exists globally: GS1.
Generally speaking, UPC official service costs about $250 for 10 barcodes, and an annual renewal fee of $50 is required.
Once you reach cooperation with your supplier, you have to confirm the Minimum Order Quantity. Usually, suppliers require a minimum order quantity of 500.
In this way, you can calculate the cost you will pay for the inventory. If your Minimum Order Quantity is 500, and each product costs $5. You have to pay for $2500 for your inventory.
Of course, this specific amount depends on your product value and your order quantity.
5. Fulfillment Fees
Fulfillment fees depend on whether you plan to ship products yourself, or use Fulfillment by Amazon (FBA) to handle your logistics and offer Prime shipping for your products.
5.1 FBA fees
FBA does include a few different fees.
FBA order fulfillment fees are charged per piece, depending on the weight and size of the product.
FBA storage fees are divided into monthly storage fees and long-term storage fees
- Monthly inventory storage fee
Monthly inventory storage fees typically are charged between the 7th and 15th day of the month following the month for which the fee applies. For example, to see your inventory storage fee for January, refer to the February Payments report for transactions from February 7-15.
- Long-term inventory storage fee
A long-term storage fee applies to units that have been stored in an Amazon fulfillment center for more than 365 days.
The long-term storage fee is in addition to the monthly inventory storage fee. If you submit a removal order for items before the next inventory cleanup date, those items won’t be subject to long-term storage fees.
FBA removal fees
Removal fees are charged per item removed. Typically, removal orders are fulfilled in 14 business days. However, removal order processing may take 30 business days or more during the holiday season and peak removal periods.
Returns processing fee
Amazon will charge a return processing fee for returned products in categories where Amazon provides buyers with free returns. These categories include: apparel, watches, jewelry, luggage, shoes, handbags, and sunglasses
Note: If an order contains multiple products, the return processing fee incurred by the buyer when returning the product may be higher than the total delivery fee because Amazon charges fees based on shipping only one product at a time.
Unplanned service fees refer to the costs incurred by the seller for certain errors in the products shipped to Amazon, such as labeling. The unplanned pretreatment service fee is also charged on a piece-by-piece basis.
5.2 FBM fees
When you fulfill orders yourself, Amazon charges shipping rates based on the product category and shipping service selected by the customer, and then passes the amount on to you in the form of a shipping credit.
Sellers with the Professional plan set their own shipping rates (except for books, music, video, and DVD products, see credit table below). When a customer buys your product, you receive a credit from Amazon that matches the shipping rate.
Sellers with the Individual plan use Amazon’s set shipping rates for all products. Individual sellers have to ship orders at the set rates even if the shipping credit is less than total shipping costs, so it’s important to price items in a way that makes sure you’ll earn a profit.
6. Other costs
Product optimization costs
It is not necessary. Some sellers will want to find a professional organization to help them with design work, product photography, and product video.
This charge is based on specific charging standards. As far as we know, the service of high-quality product photographs starting from $25-$50 per image.
In order to protect your brand, you‘d better have a registered trademark. And expenses are different in different countries and regions.
Amazon advertising is the most common way sellers use to increase sales. 74% of surveyed U.S. merchants said they are using Amazon advertising to attract new customers and are concerned about building customer lifetime value; followed by 59% of sellers saying they use Amazon advertising to increase brand awareness.
And we find the advertising budget for pet products is very high. Pet product brands usually spend more than US$100,000 per month on advertising, and the average spending on toys and games is between US$60,000-80,000 per month.
Whether you have a lot of start-up funds or only very limited resources, you must make a detailed budget before you start spending money, so that you can spend every dollar in the right place instead of passively coping with some expensive, Unexpected cost.
Get Your Money Back With FBA Reimbursement Tool.