How much does it cost to sell on Amazon?

Thinking about selling on Amazon? It’s one of the most popular e-commerce platforms in the world, with access to millions of customers. But before you start listing your products, it’s crucial to understand the costs involved. Whether you’re a casual seller or planning to build a full-blown e-commerce business, breaking down the expenses can help you make informed decisions and maximize your profits.

So, how much does it actually cost to sell on Amazon? Let’s explore the various fees, services, and optional expenses you might encounter on your seller journey.

1. Amazon Selling Plans

Your first decision will be choosing between two types of Amazon selling plans:

• Individual Plan: Ideal for low-volume sellers. Costs $0.99 per item sold. No monthly subscription fee, which makes it great if you’re selling fewer than 40 items per month.
• Professional Plan: Best for businesses or high-volume sellers. Costs $39.99 per month, regardless of the number of items sold. Offers advanced tools such as bulk listing and access to restricted categories.

Choosing the right plan depends on your sales volume and the kind of features you require. If you’re testing the water, the Individual Plan may be enough, but serious sellers often find the Professional Plan more cost-effective in the long run.

2. Referral Fees

Amazon charges a referral fee on each sold item. This is a percentage of the total sales price, including shipping and gift-wrapping charges. The rate typically ranges between 8% and 15%, depending on the product category.

Here are a few examples of referral fees by category:

• Consumer Electronics: 8%
• Books: 15%
• Toys and Games: 15%
• Apparel and Accessories: 17%

The referral fee is automatically deducted from your sales proceeds, so you won’t need to worry about paying it separately, but it’s vital to include it in your product pricing strategy.

3. Fulfillment by Amazon (FBA) Fees

If you choose Amazon’s warehousing and shipping service — Fulfillment by Amazon (FBA) — there are some additional costs involved. With FBA, Amazon stores your products, picks, packs, ships, and also handles customer service and returns.

FBA fees fall into two main categories:

• Fulfillment Fees: Based on item size and weight. For example, a small item might cost around $3.22 per unit to fulfill, while a larger or heavier one can go much higher.
• Storage Fees: Charges for storing your products in Amazon fulfillment centers. These vary by season — around $0.87 per cubic foot from January to September and $2.40 per cubic foot during October to December (peak season).

Keep in mind, long-term storage fees may apply if your products sit unsold in the warehouse for more than 365 days.

4. Optional Costs and Tools

In addition to the basic fees, there are several optional services and tools that can help you grow your business — but they come at a price:

• Advertising: Amazon ads (Sponsored Products, Sponsored Brands, etc.) require a pay-per-click (PPC) model. You set your budget, and Amazon charges you when users click.
• Premium Account Features: Extra features such as A+ Content or Amazon Brand Registry may involve added costs but can boost visibility and trust.
• Third-party Tools: Many sellers use third-party software for inventory management, keyword research, and repricing. These tools can range from $10 to $100+ per month.

Though optional, these investments can significantly improve your efficiency and competitiveness.

5. Other Fees to Consider

Other occasional fees you might encounter include:

• High-Volume Listing Fee: If you list more than 100,000 items.
• Refund Administration Fee: Charged when you refund a customer and Amazon processes the reimbursement.

So, What’s the Total Cost?

There’s no one-size-fits-all answer, but here’s a quick example for selling a product via FBA:

• Product Price: $25
• Referral Fee (15%): $3.75
• Fulfillment Fee: $3.22
• Monthly Storage Fee: ~$0.50 per unit

Net Payout: Around $17.53 per unit (before cost of goods and other optional expenses)

Conclusion

Selling on Amazon offers incredible reach and opportunities, but it comes with a variety of fees that can add up quickly if you’re not careful. Before diving in, take the time to evaluate your products, budget for associated costs, and decide which services (like FBA) make the most sense for your strategy.

By understanding what’s involved and doing the math, you can create a profitable Amazon business with confidence.