Gain insight into what it costs to sell on Amazon and learn about the fees, commissions, and expenses associated with using the platform as a seller.
Anders Stokholm Jessen
With Amazon’s arrival in Denmark just around the corner, we are often asked: “How much does it cost to sell on Amazon?”
If you want to sell your products via Amazon, there are two different options:
If you choose the first option, you simply upload your products to Amazon’s database and manage your own inventory, shipping, customer service, and returns.
However, if you want to offload these tasks (and potentially save money by streamlining these processes), you can take it a step further and become a Fulfilment by Amazon (FBA) customer.
In practice, this means you send your products to one of Amazon’s Fulfilment Centres (for example, in Berlin). From there, Amazon handles your products – they pack orders, ship them out, and even take care of customer enquiries and returns in case of wrong orders.
To make things clear and straightforward, I have separated the two solutions below.
Note – All prices are excluding VAT and are based on Amazon.co.uk pricing.
When your products are sold through Amazon, you pay what is known as a referral fee per product.
This can best be described as a fee Amazon charges for bringing you the order through their platform.
The amount of Amazon’s referral fee depends on which product category your items fall under.
For example, the computer category has a referral fee of 7%, while the computer accessories category has a referral fee of 12%.
Amazon has a total of 30 product categories, with referral fees ranging from 5% to 45%.
Products that do not fit into one of these 30 categories are subject to a fixed fee of 15% (source: Amazon).
All referral fees are calculated based on the price of the item plus shipping.
When using Amazon as a sales platform, there are again two different options: Basic and Pro.
The Basic solution is for those expecting to sell fewer than 35 units per month.
Here, there is no fixed monthly fee to Amazon, but you pay a higher referral fee per product.
On Amazon.co.uk, the surcharge is £0.75 per product.
Pro is for those expecting to sell more than 35 units a month. Here, you pay a fixed monthly fee as well as a referral fee to Amazon.
On Amazon.co.uk, the monthly fee for the Pro plan is £39.
A quick calculation shows that you need 34 product orders before it is financially worthwhile to be on the Pro plan.
Fulfilment by Amazon (FBA) is Amazon’s solution for those who want to increase their sales and outsource inventory, picking, packing, shipping, returns, and more.
As an FBA customer, it becomes even easier to sell on Amazon.
The cost of being an FBA customer depends on several elements:
The fulfilment fee is a fixed amount you pay per product.
The price depends on:
If you would like a complete price list for shipping, you can download this overview.
If you are an FBA customer, your products are also stored in Amazon’s warehouses. Here, you simply pay for the warehouse space you use. The price varies depending on the season, with high season running from October to December.
From January to September, the price is £0.65 per cubic foot per month.
During high season, from October to December, the price is £0.91 per cubic foot per month.
In addition to inventory management, pick and pack, and shipping, Amazon offers other services as part of the FBA agreement:
Let’s get out the calculator.
In the following, we calculate what it would cost to sell a standard t-shirt in size large. In this example, we have just started selling on Amazon. Therefore, we are on their Basic plan, but we have chosen the Fulfilment by Amazon solution. Our business is located in England, and so is the customer who buys the t-shirt.
Total price for t-shirt + shipping: £12
Referral Fee = 15%
Referral Fee = £1.80
+ surcharge for Basic plan = £0.75
Total Referral Fee = £2.55
If we did not have Fulfilment by Amazon, it would be our responsibility to find the t-shirt, pack it, ship it, etc.
Fortunately, we have Fulfilment by Amazon, so we can sit back and let Amazon do the work.
But what does it cost? Let’s find out now:
Because the t-shirt weighs less than 250g including shipping packaging and fits in a large envelope, according to Amazon’s fulfilment fees, it has a fulfilment fee of £1.62.
What about the storage fee? If we get down to the details, we can find the volume of the t-shirt and calculate the share of warehouse space a size large t-shirt occupies.
We can then allocate the storage cost to the individual t-shirt.
To save you the calculation, the storage fee for one size large t-shirt is £0.0845.
Referral Fee = £2.55
Fulfilment Fee = £1.62
Storage Fee = £0.0845
Total Fee = £4.2545
(Equivalent to approx. 36 DKK)
If, in the future, we sell more than 35 units a month, we can upgrade to Amazon’s Pro plan. This would save us £0.75 on each sale, in exchange for paying a fixed monthly fee.
That amount would then be spread across the number of products sold.
It’s time to get your calculator out again. Here, you should add up all your costs for inventory management, picking, shipping, returns, etc.
In many cases, it may well be worth it – not least because it allows you to focus more on your core business areas.
Would you like to get started with Amazon but avoid mistakes that could cost you dearly? Listen to our Head of Amazon, Jens, discuss the topic in this podcast episode.
Read also:
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