How much will it cost me to sell on Amazon?
Updated: Oct 15, 2019
When you decide that you want to sell products on Amazon there are a number of key issues to consider - exactly what you want to sell, how to source it, its profit margin and demand are just some fundamental factors.
But it’s also crucial to establish how much Amazon will take in fees to sell products on their platform.
This isn’t as straight forward as it sounds as fees can be taken in a number of different ways, so Thompson and Holt managing partner Craig Gedey has outlined the most important principles to understand, which should be factored in once you decide you want to become an Amazon Seller.
Gedey explains: “It’s crucial to know how much Amazon fees are going to cost you when selling on the site. When you start out, there are two main types of fees to consider - your account fees and commission rates.
“In terms of account fees, you have two options to choose from once your start - a Basic Selling Plan or Pro Selling Plan.
“The Basic Selling Plan for sellers based in the United Kingdom is free, but only allows you to sell a total of 35 items each month. If you want to sell more than that, then you need to sign up to the Pro Selling Plan.
“That costs £25 a month (£28.75 including VAT), enabling you to sell as many items as you want. It provides an affordable way to increase your business on Amazon.
“In addition to that you also receive the following four benefits to help you sell more:
• Make use of bulk listing and reporting tools from Amazon marketplace web service
• Customise your shipping rates*
• Offer special promotions and gift-wrapping options for your products*
• Eligible for top placement on product detail pages
*Does not apply to music, videos, books, DVDs or software and games.
Sales Related costs
“Now you need to look at your sales-related costs. Given that Amazon is now the fifth biggest retailer in the UK and brings together millions of sellers and shoppers, they require you to pay a referral fee on every item you sell - regardless of which plan you have chosen.
“This is worked out on a percentage basis and differs from product to product. It’s worth spending time doing your research online to find out exactly what that percentage is for the product you want to sell, and it can be changeable. Only in June, Amazon changed the percentage on a host of different products. A useful blog as a starting point can be found at: http://blog.linnworks.com/amazon-seller-fees. But Thompson and Holt would recommend ensuring you know exactly what the percentage is now with Amazon when doing your budgets because they are prone to change.
“The same can be said of closing fees, which is the next cost you need to consider. They are extra fees you pay Amazon when making a sale, but only apply when you sell books, video games, DVDs, software, gaming consoles and any other media item. There is now a fixed closing fee cost which is £0.50 for every item you sell.
“Also consider the fact that, if you are registered as an individual seller on a free account, then you will be charged £0.75 per item, regardless of what category it is in. This does not apply if you are on the Pro Selling Plan.”
Shipping Credit and Costs
“Amazon helps Sellers that ship their own orders to cover your costs by paying you ‘shipping credit’ on every sale you make on the marketplace.
“Strictly speaking shipping credit and costs aren’t part of your Amazon Seller fees, but it’s important to understand how they work, not least because the shipping credits Amazon pays you can be low compared to the actual shipping rates you pay to send your orders.
“When you sell an item, you must ship it even if Amazon’s shipping credit paid to your account doesn’t cover all your shipping costs, otherwise Amazon may suspend your account. If that does happen, then contact Thompson and Holt immediately.
“There are two factors in the amount Amazon will pay your for shipping - the product category of your items, and the shipping method the customer choses. If you are on the Pro Selling Plan you can chose to offer free shipping, but Amazon then doesn’t pay any shipping credits so that needs to be factored into your figures.
“Again, the blog http://blog.linnworks.com/amazon-seller-fees can help work out the exact figures for UK Sellers, and it is important to fully understand whether Amazon’s shipping credits cover your shipping costs, and what the difference will be if there is any.”
“This is an option that sees you pay Amazon for a service that allows them to take care of selling your items. In essence, Amazon FBA takes the stress out of picking, packing and shipping your orders, but for a fee. It’s an entirely different category than the others in many ways that incurs its own specific fees, but it could be beneficial to your new business depending on a variety of factors. Amazon explains how it all works here: https://services.amazon.co.uk/services/fulfilment-by-amazon/features-benefits.html.”
“Take time working out exactly what your Amazon fees are going to be before you start selling on the site. Amazon has its own page for site fees at: https://services.amazon.co.uk/services/sell-online/pricing.html. For further reading, we also recommend you look at this article: https://www.junglescout.com/blog/how-much-does-it-cost-to-sell-on-amazon/, and do as much research as possible when establishing your Amazon costs.”
If you have found yourself suspended while selling on Amazon, contact Thompson and Holt for a free LiveChat to get your Amazon Seller business back online as quickly as possible.