How Much Does it Cost to Sell on Amazon in 2022?

How Much Does it Cost to Sell on Amazon in 2022?

Do you want to sell on Amazon?

Wondering how much does it cost to sell on Amazon?

Good news! We’ve got the answer you’re looking for!

The e-commerce marketplace is booming, and more sellers want to join Amazon because it is the most reliable and trustworthy platform among others. But wait! Before you get started, you must know all possible costs to sell on Amazon.

In general, the cost of selling on Amazon depends on many factors including the product category, selling plan, fulfillment plan, and others. Moreover, there are some additional costs you need to consider before you decide to sell on Amazon.

In this blog, we’ll talk about all the numbers associated with selling on Amazon. So you’ll be able to decide how much money you need to start selling on Amazon.

Let’s dive into details!

Chapter 1. How much does it Cost to Sell on Amazon?

There are primarily 3 kinds of Amazon seller fees associated with seller account on Amazon. These fees are as follows:

  • Seller account fees
  • Referral Fees
  • Fulfillment Fees

We will go over each type of seller fee in detail and demonstrate to you how to calculate the fees you will need to pay for every product you sell.

So let’s start understanding how much does it cost to sell on Amazon:

1.Cost to sell on Amazon: Seller Account Fees

1.Cost to sell on Amazon: Seller Account Fees

One of the first major decisions you’ll have to make as a beginner Amazon seller is to decide which seller plan to use.

Amazon provides two kinds of seller accounts: individual selling plan and professional selling plan. Each selling plan’s fees, as well as features, are designed for the specific selling needs of small-size businesses and high-volume businesses.

  •  Individual selling plan

Selling on Amazon is not very costly if you have a low budget. In general, you can sell products on the platform and it offers a very easy way to get your product in front of a lot of people at once.

But if you’re new to selling online, an individual seller account might be a better option than starting out with a professional account.

You can avail the following features using an individual selling plan on Amazon:

  • Zero subscription fees: There are no recurring monthly subscription fees, so you don’t have to worry about them.
  • Free product listing: Free product listing: Individuals can list the products for free.
  • Per item fee: A fee of $0.99 will be charged for each item you sell on Amazon.
  • Temporary halt listings: You can halt your listings for a month or two if you need to take a break from selling them or if you’re having difficulty fulfilling orders.

With some perks, there come restrictions as well. If you choose to use an individual selling plan on Amazon, you can’t sell the following products:

  • Health and personal care
  • Shoes, sunglasses, and handbags
  • Luggage and travel accessories
  • Clothing and accessories
  • Beauty products
  • Wine
  • Gourmet and grocery food
  • Watches
  • Automotive parts, equipment, tools, and accessories
  • Jewelry
  • Professional selling plan

An Amazon Professional Seller account is a must-have if you want to take your business to new heights. This account type provides more benefits than an individual seller account and can result in increased sales volume and profits.

By using a professional seller account, you can sell items in more product categories than an individual seller account allows. Below are some of the key features of the professional seller account:

  • Monthly subscription: Professional seller account costs $39.99 per month.
  • No flat rate: No one will charge you a flat rate for each product sold; instead, you’ll be billed only once a month for each listing that gets added to your Amazon catalog. So it doesn’t matter whether you sell just one item or a thousand.
  • Product page: To keep your listings active and visible to other shoppers, you can create as many product pages as you like within the Amazon site for free.
  • Temporary halt listings: Just like an individual selling plan, you can halt your listings if you need to take a break from selling them.
2. Cost to sell on Amazon: Referral Fees

2.Cost to sell on Amazon: Referral Fees

Being an Amazon seller, you’ll also need to pay a certain % of the referral fee—whether you choose an individual plan or a professional plan. Your referral fee is determined by two factors: product category as well as the selling price.

You will pay a referral fee as a percentage of the selling price of your product. On average, most sellers pay a referral fee of 15%. However, depending on the category of your products, such fees can vary from 6% to 45 %.

Category referral fees table

You can visit Amazon’s fee category guidelines for a comprehensive, searchable range of products for each category. This list makes it easy to identify which fee category applies to your items.

Categories Referral fee percentages Applicable minimum referral fee

(applied on a per-unit basis unless otherwise noted)

Amazon Device Accessories 45% $0.30
Baby Products (excluding Baby Apparel) · 8% for goods with an overall sales price of less than $10.00

· 15% for items with an overall sales price larger than $10.00.

$0.30

Amazon Explore 30% for Experiences

$2.00

Camera and Photo 8%

$0.30

Books (including Collectible Books) 15%

Consumer Electronics 8%

$0.30

Cell Phone Devices 8%

$0.30

Home & Garden 15%

$0.30

Furniture (including outdoor furniture) · 15% for the proportion of the overall sales price up to $200.00

· 10% for just any proportion of the overall sales price above $200.00.

$0.30

Mattresses 15%

$0.30

Office Products 15%

$0.30

Music 15%

Musical Instruments 15%

$0.30

Outdoors 15%

$0.30

Pet Supplies 15%, except 22% for veterinary diets

$0.30

Outdoors 15%

$0.30

Tools & Home Improvement 15%, except 12% for base equipment power tools

$0.30

Personal Computers 8%

$0.30

Software & Computer/Video Games 15%

Video & DVD 15%

Everything Else4 15%

$0.30

Toys & Games3 15%

$0.30

Sports (excluding Sports Collectibles) 15%

$0.30

Video Game Consoles 8%

$0.30

Beauty · 8% for items with an overall sales price of $10.00 or less

· 15% for products with an overall sales price above $10.00

$0.30

Compact Appliances (including parts and accessories) · 15% for the portion of the overall sales price up to $300.00

· 8% for any portion of the overall sales price above $300.00

$0.30

Lawn Mowers & Snow Throwers · 15% for items with an overall sales price of up to $500.00

· 8% for items with a total sales price above $500.00

$0.30

Click here to check the list of categories requiring approval from Amazon.

 

3. Cost to sell on Amazon: Fulfillment Fees

How much does it cost to sell on Amazon?

Now that you know some important costs associated with Amazon. It’s time to dig further and see what exactly fulfillment fees mean. In simple words, fulfillment fees are the cost of shipping products to customers.

While selling on Amazon, you can utilize the following two options for fulfilling orders:

  • Fulfillment by Amazon (FBA)

a.Fulfillment by Amazon (FBA)

When a seller lists a product on Amazon, they can choose to have it fulfilled by Amazon—of course for an additional fee. This means that the seller will not be responsible for shipping and handling, and all of their customer service responsibilities are taken care of by Amazon.

This can save time and money for the seller and make it much easier for customers to find their products, as well as reduce fulfillment costs for sellers.

FBA fees vary depending on the size and weight of the product. Before you sign up for FBA, you should understand the total costs you will pay to store & ship your items.

Click here to learn more about Fulfillment by Amazon (FBA) fees.

  •  Fulfillment by Merchant (FBM)

Sellers can also use their own fulfillment methods to ship products directly from the seller’s warehouse to customers’ doorsteps. This is often done through an online fulfillment service that will handle shipping, warehousing, packaging, and inventory management for the seller.

Chapter 2. What are some Additional Costs to Sell on Amazon?

What are some Additional Costs to Sell on Amazon?

If you think you know how much is it to sell on Amazon, you are wrong. There are many additional costs that will incur while you sell products on Amazon. So be sure to know every cost involved with the Amazon seller account so you won’t suffer any losses.

Let’s have a look at some of the additional costs that will incur along the way:

1. Inventory fees

Inventory fees

Sellers who use FBA are more likely to store their inventory at Amazon’s fulfillment centers. You can do so by paying Amazon a fee for inventory storage. This fee is calculated depending on the size or volume of the inventory and the number of months it is expected to spend in Amazon facilities.

If you want to calculate the inventory storage costs, use the below formula:

Inventory storage cost per item = average daily units (for a month) x volume per unit x applicable rate

  • Long-term storage

Amazon will charge a long-term inventory storage fee from you if your inventory stays for more than a year in the fulfillment center. Generally, the long-term stock management fee is $0.15 for every unit per month or $6.90 per cubic foot (if the inventory’s total long-term storage cost per unit is less than $6.90).

  • FBA removal order fee

If you sell products on Amazon using FBA, you will need to pay a removal order fee upon removing any product from the fulfillment center. The removal order fee depends on the shipping weight of your products.

2. Rental book service fees

Another miscellaneous fee that you need to know is the rental book service fee of Amazon. If you rent textbooks using Amazon, you can expect to pay a $5.00 fee for renting books. This fee will be charged per rental.

3. High-volume listing fees

3.High-volume listing fees

High-volume listing fees is applied to all SKUs that have not been sold in the last 12 months. This fee is charged by Amazon to cover cataloging costs and management. It costs $0.005 per SKU.

  1. Refund administration fee

When Amazon refunds an order to the customer for which the seller has been paid already, it deducts 20% of the applicable referral fee per product. It’s known as a refund administration fee.

  1. Marketing costs

Marketing costs

Marketing and promotion are critical components of any e-commerce business, and the same goes for Amazon sellers.  As a newcomer to the game, you should be aware of the various marketing channels available for your products, as well as the associated costs.

Let’s understand some of the basic marketing costs associated with Amazon:

a. Amazon PPC

PAY PER CLICK

Amazon’s PPC costs fluctuate a lot. Generally, you might have to pay $0.0.2 to $3 per click for the campaigns. And, the costs mostly depend upon your product category, marketplace, or the money your competitors are able to bid in the Pay per click (PPC) auction for specific keywords.

While selling on Amazon, you can utilize 3 types of PPC campaigns. These campaigns are:

  • Sponsored Product Ads: This type of ad appears in search results for the keywords you specify.
  • Sponsored Brands Ads: This type of ad appear on results pages and product pages of Amazon search results. They promote a relevant brand, headline, logo, and product images.
  • Sponsored Display Ads: Such ads appear on relevant Amazon product detail pages around the “Add to Cart” click, and promote suitable products.

b. Non-Amazon Advertising

The good news is you can also advertise your products on platforms other than Amazon, such as Facebook. In this way, you can increase traction & conversion on your offerings by utilizing one of the most popular social media platforms.

Furthermore, you can also boost your listings using Amazon’s powerful Affiliate Program. Affiliate marketers advertise and promote your products on their websites or even YouTube channels in exchange for a percentage of the sale.

c. Amazon Vine Program

AMAZON

Participation in the Amazon Vine Program can help you get a lot of legitimate reviews for your product and increase sales. This program is open to Amazon customers who have a long and consistent history of purchasing and reviewing on this platform.

Amazon gives such customers, known as “Vine Voices,” a free item in return for a review. As a seller, you are not required to pay any fees to participate in the program. However, you only need to pay for your items offered to Vine voices.

After you have a Seller Central account, navigate to the Advertising drop-down section to understand how you can use various marketing and promotion methods to keep your listings ahead of the competition.

Chapter 3. How to Save Extra Costs while Selling on Amazon?

HOW TO SELL ON AMAZON

Now that you know how much does it cost to sell on Amazon. What if we tell you that you can still reduce selling costs by adopting some good strategies? Yes, you read it right!

So let’s look at the top 7 tips for saving extra costs while selling on Amazon:

1. Create a professional seller account

AMAZON SELLER CENTRAL

This is the first step toward saving time and money when selling on Amazon. We suggest you create a professional seller account which costs $39.99 per month instead of a free individual account.

Wondering why?

Creating a professional seller account will help buyers feel more confident about buying your product, and it will help you create a better-looking product listing.

It will save you money over the long term because it includes unlimited listings & extra features to support you sell much more on the platform.

2. Calculate the right product size

If you are a new seller, likely, you will not know what the perfect size of your products should be but in order to save costs, you should only choose the right one.

Shipping heavy products on Amazon can be expensive. This is why you should always calculate the size of your product properly. This way, Amazon will not take the wrong size into account and charge you for mass that just does not even exist.

3. Select your product category wisely

AMAZON CATEGORY

Choosing the wrong product category can cost you dearly in terms of both time and money spent on advertising campaigns, as well as shipping costs (and sometimes even returns).

Moreover, the category that you will place your product in will have a major impact on how much you pay in referral fees. If you are not cautious, you may have to spend more money than necessary.

As an example, suppose you sell jewelry on Amazon. If you select “Jewelry” as your product category, you will pay about 20% in referral fees. Contrary, if you choose “Apparel Accessories,” you will have to pay 17%.

4. Partner Up With a 3PL

If you want to save yourself time and headaches, outsource your shipping to a 3PL. Outsourcing your Amazon shipping to a Third-Party Logistics Provider (3PL) can save you time and money.

Working with a 3PL means that you won’t need to handle the process yourself, which will reduce stress and give you more time to focus on your other business tasks.

Moreover, working with a 3PL also guarantees that Amazon will not reject your items, saving you headaches and hassle ahead of time.

5. Properly manage your inventory levels

5.Properly manage your inventory levels

If you’re using Amazon’s FBA program, you must know its policy regarding inventory levels. Amazon has a policy that if you leave items in the Amazon warehouse for far too long, you will start to pay additional fees for warehousing. Furthermore, it may lead to losing storage space for additional products.

Therefore, in order to avoid additional warehousing fees, make sure to check your inventory levels each quarter and remove any item which does not sell within six months.

6. Sell products in bundles

Sell products in bundles

Nowadays, customers like to purchase complementary items with their orders. So why not avail this opportunity and reduce your costs?

Wondering how?

Amazon charges referral fees for each order, which can cost you money. So instead of paying for an extra order individually, bundle several products into one big package and only pay once per customer purchase.

The size of the combined package may cause additional fees since it requires more shipping space, but it could save you money compared to combined fees.

Product bundles also ensure that your customers receive the most out of their purchase and your brand. By simplifying the buying choice, a package can improve the consumer experience.

7. Recycle packaging material

Another way through which you can save costs while selling on Amazon is recycling packaging material. This way, you can save money and help the environment at the same time by recycling boxes you already have instead of purchasing new ones.

Chapter 4. FAQs about Cost to Sell on Amazon

FAQs about Cost to Sell on Amazon

1. Is it profitable to sell on Amazon?

The short answer is definitely yes—it is profitable to sell on amazon! The long answer is only when you do it right and follow the rules which we’ve discussed earlier in our article.

The first thing you’ll need to do is set up a seller account on Amazon so that your products are listed there. Then you can start listing your products and tracking sales. Once you have a couple of products, you can utilize the strategies which we’ve discussed to generate profits.

2. What percentage does amazon charges from sellers?

Amazon charges merchants an average of 8% to 15% on each product sold. The proportion varies depending on the product category. For comparison, eBay charges a flat 10% commission on all sales.

3. Can I downgrade the professional selling plan to an individual selling plan?

Yes, you can downgrade the professional selling plan to an individual selling plan. You can also downgrade individual plans for items that are not selling well or are no longer needed.

4. If I spend more money, will I find more success on Amazon?

If you spend more money, you will find more success on Amazon. The cost of promoting your products and buying more inventory will result in higher sales and profits. But this does not mean that spending more money is always a good idea or that it’s the only way to make money on Amazon.

Conclusion

We hope that you find this article helpful in your quest to sell on Amazon. Selling on Amazon can be a great way to make money. However, you need to make sure that you have a certain amount of capital to invest before you begin.

In a nutshell, there are a lot of factors that influence the price of products on Amazon. The main one is the price of the product. The higher the price of your product, the higher your commissions will be.

However, it is not only about the price of the product, but also about the number of sales you make. We hope that you now know exactly everything about how much does it cost to sell on Amazon.

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