Wondering if selling on Amazon is profitable considering that there are certain costs involved?
The cost of selling different products on Amazon depends on the category of products you offer, your selling plan, and how you intend to fulfill your orders. You can find flexible options that can work best for you to fulfill your goals, but the bottom line is that you should know the costs involved before you start trading on Amazon.
Check out this ultimate guide to Amazon sellers’ fees including some which are hidden.
How to Calculate Amazon Selling Fees
Many people often fail to calculate all the fees that are involved in selling on Amazon and they end up losing money instead of getting the intended profits. The situation is worsened by the fact that it is not easy to calculate all the costs associated with trading on the platform and some are hidden where Amazon does not tell you about them. It is essential to learn how to use Amazon’s fee calculator to understand all the Amazon FBA costs that you should expect to pay when you use their platform to trade different items. Amazon provides an FBA calculator that you can use to enumerate the costs. When you choose the item that you want to sell, just enter the selling price together with the product cost and press calculate. The calculator is easy to use, and it gives you an idea of the selling fees that you should expect to pay. However, the calculator is not 100% accurate.
Selling Plan Referral Fees
There are mainly two types of selling plans offered by Amazon which include an individual seller account and a professional plan. For each unit sale that you perform through Amazon, the cost is $0.99, and you also pay a referral fee of between 8 and 45% depending on the product category. This plan does not include a recurring monthly fee. On the other hand, a professional plan costs $39.99 per month regardless of the number of units that you sell. It is cheaper to get a professional account if you can manage to consistently sell more than 40 items per month. In the same vein, a professional account attracts referral fees that range from 8% to 45%.
For referral fees, you should check each product category so that you know the percentage range that you should pay. You will always be charged the minimum referral fee per item when you sell on Amazon. Unless you sell very cheap items, the referral fee is always higher than the minimum per-item fee. Most product categories will cost you about 15 % but you should not always assume that this is the standard fee if you are a new seller since this is not correct.
How Are You Going to Ship Your Orders?
You have two options that you can consider for shipping your orders. It’s either you ship your orders, or you use Fulfillment by Amazon (FBA). When you choose the latter option, Amazon will handle your shipping, customer service issues as well as returns. Returns and damaged goods can also cost you significantly, but you might not be aware of it since Amazon handles everything on your behalf.
All the same, Amazon considers the aspect of weight for each product they ship, and they charge certain fees depending on the number of goods. Amazon will add up 1lb. on top of the product if its size is big and this comes as a hidden fee. Oversized packages attract more charges, so you should take this into account when you make your calculations. In most cases, Amazon does not include extra-dimensional fulfillment fees in its fee calculator so you should cross-check your package dimensions to understand the total costs that can be charged.
On top of Amazon’s fulfillment fees, you should also know that you have to pay the storage fees for your goods in Amazon’s warehouse. Storage fees constantly increase every year and they are usually high during the holiday season. The size of your goods also has a great effect on Amazon’s storage fees. Oversized products will attract higher fees and you should consider this. Apart from storage fees, sending your goods to Amazon warehouses is costly and many people are not aware of this.
Selling on Amazon is a good idea, but you should properly plan so that you can achieve your desired goals. There are certain fees involved in using the Amazon platform to sell your products. Some of the fees are hidden, so you should take the time to use all available tools to calculate the costs that you expect to pay. Amazon will charge your credit card to cover the fees involved in all sales conducted through its platform.