What is Amazon Referral Fee? A Complete Guide to Amazon Seller Fees

Retailers and businesses have a big opportunity to reach millions of people globally by selling on Amazon. However, sellers must be aware of the various fees Amazon imposes in order to optimize earnings and efficiently control expenses. BurgerPrints will explain Amazon referral fees, their operation, and other significant Amazon selling costs that all sellers should be aware of in this guide.

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What Is Amazon Referral Fee?

Every product sold through Amazon’s marketplace is subject to a compensation fee known as the referral fee. Depending on the product type, this charge is computed as a percentage of the product’s selling price.

The referral fee is typically 15% of the product’s price. However, depending on the category you sell in, the rate may vary from 8% to 45%. Amazon’s official seller fee schedule allows you to view the precise fee percentages for every category.

When Does Amazon Charge a Referral Fee?

Amazon referral fees apply to every successfully sold product on the platform. In other words, whenever you make a sale through Amazon, the marketplace takes a percentage as a commission for bringing customers to your listing and facilitating the transaction.

Is Amazon’s 15% Referral Fee Too Expensive?

At first glance, a 15% fee may seem high. However, when compared to the benefits Amazon provides, many sellers consider it reasonable.

Consider Amazon as a vast international retail center with millions of active customers. Amazon provides you with direct access to a vast client base, saving you thousands of dollars on marketing efforts, SEO, paid advertising, or content production.

Compared to creating an independent e-commerce store from the ground up, Amazon effectively serves as a middleman between sellers and potential buyers, assisting businesses in generating revenue considerably more quickly.

However, referral fees can have a big effect on profit margins, particularly for low-margin or low-cost products. Because of this, before offering goods on Amazon, merchants should carefully consider product pricing, delivery expenses, and overall profitability.

Given the exposure and infrastructure the platform offers, Amazon’s referral fee system is widely seen as reasonable. Having a solid pricing plan and being aware of all related selling expenses are crucial.

Below is a summary of the advantages and disadvantages of Amazon referral fees:

How Amazon Referral Fees Are Calculated

1. Standard Referral Fee

Amazon calculates referral fees based on the final price paid by the customer, not necessarily the original list price.

Referral Fee Formula: Product Sale Price × Category Referral Fee Percentage = Referral Fee

For example, if you sell a pair of socks at a discounted price of $80 (originally $100) and the referral fee for that category is 15%:

80×15%=12

=> Your Amazon referral fee would be $12.

Note:

If you fulfill orders yourself using FBM (Fulfilled by Merchant), Amazon calculates referral fees based on:

Product Price + Shipping Fee + Gift Wrapping Fee (if applicable)

For example: If the customer pays:

Product price: $80

Shipping fee: $2.89

Then the referral fee becomes: (80+2.89)×15%=12.43

In this case, the referral fee would be $12.43.

Even if Seller Central displays estimated fees before discounts are applied, Amazon always charges the referral fee based on the final sale amount paid by the customer.

2. Minimum Referral Fee

Besides percentage-based referral fees, Amazon also applies a minimum referral fee in some situations.

If the calculated referral fee is lower than $0.30, Amazon charges the minimum fee of $0.30 instead.

For example: If you sell a hair tie for $1.00 and the category referral fee is 15%:

1.00×15%=0.15

The calculated fee would only be $0.15. Since this is below Amazon’s minimum threshold, Amazon charges the minimum referral fee of $0.30 instead.

This minimum fee applies per item sold, regardless of category. In many cases, low-priced items end up paying the minimum fee rather than the standard percentage-based fee.

Other Amazon Seller Fees You Should Know

Besides referral fees, Amazon sellers may encounter several additional costs while operating their business.

1. Amazon Selling Plan Fees

As you are aware, there are now two kinds of seller accounts available on Amazon: Professional and Individual. Every kind of account offers features and pricing that are appropriate for certain seller requirements.

The monthly maintenance price is waived if you sign up for an individual account. For every product sold, merchants will be required to pay a $0.99 listing charge. Your sales revenue will be automatically reduced by this fee.

On the other hand, you will need to pay $39.99 a month to keep the professional account active, but there is no listing cost for goods sold.

2. Additional Selling Fees

When selling on Amazon, merchants must pay three different kinds of fees. Amazon sellers must pay closing costs and high-volume listing fees in addition to the aforementioned referral fee.

2.1 Closing Fee

For every product sold in specific product categories such books, DVDs, music, software & computers/video games, video game consoles, and video game accessories, Amazon sellers are required to pay a closing fee. Its goals are to reduce the selling of fake or pirated items on Amazon and to mitigate Amazon’s order processing expenses for these products.

At the moment, each product has a $1.80 closing cost. The referral fee and this fee are billed separately. In other words, Amazon will deduct both the closing fee and the referral fee for each successful transaction if you sell any of the aforementioned products.

Assume you are selling a book on Amazon for ten dollars. You will pay Amazon a $1.50 referral fee because the Books category has a 15% referral fee.

For this product, there is an additional $1.80 closing cost.

As a result, you will pay $3.30 in total fees to Amazon for this order.

2.2 High-Volume Listing Fee

You pay Amazon high-volume listing fees when you have a lot of unsold merchandise for a whole year. This charge is meant to incentivize vendors to get rid of unproductive goods and reduce the amount of storage space that is wasted. At the moment, Amazon charges $0.005 a month for each product.

Consider yourself an Amazon store owner who is renting out space. Amazon will impose a fee to cover the costs of storing and advertising your store if you have a lot of vacant storefronts for long periods of time.

Keep in mind that this charge only applies to goods that don’t fall under the Media category (books, DVDs, music, etc.). You don’t have to worry about this charge if you sell goods in the media category.

3. Shipping fees

In order to deliver items to clients, merchants must pay shipping fees to the delivery firm. This fee has a significant impact on a company’s profitability even though it is not explicitly included among the expenses merchants pay Amazon.

Amazon offers merchants a delivery credit scheme in which Amazon covers a portion of the shipping costs for orders that vendors deliver. This sum is typically less than what the seller actually pays, though.

To determine the cost of shipping their goods, sellers should consult Amazon’s Shipping Credit Chart. This graph shows the shipping credit amounts for several product categories according to delivery area, size, and weight.

Domestic shipping credit within the US

International shipping credit (outside the United States)

In addition, sellers should also consider several other factors affecting shipping costs:

Shipping method: Sellers can choose from various shipping methods, each with different fees.
Shipping distance: The further the distance from the seller’s warehouse to the customer’s delivery address, the higher the shipping cost.
Product weight and dimensions: Products with larger weights and dimensions generally have higher shipping costs.

4. Refund Administration Fee

The amount you pay on Amazon when you refund a consumer is known as the refund administration charge. In order to partially cover the expense of handling refund transactions, Amazon levies this fee on vendors.

Sellers only have to pay this fee if they agree to reimburse the buyer or if the buyer prevails in a claim pertaining to the order. If the buyer cancels the order before delivery or if you have a good cause to decline a refund and Amazon accepts it, there is no fee.

Less than $5.00 or less than 20% of the referral fee is the refund cost that sellers must pay.

For instance, the referral fee for that product category is 15% and you sell a $10 product. The customer’s refund request is granted.

Referral fee: $10 * 15% = $1.50

The default maximum cashback management fee is $5.00.

Alternatively, a 20% referral fee is $1.50 x 20% = $0.30.

=> In this case, you will have to pay a $0.30 cashback management fee.

5. Amazon FBA Fees

Amazon offers a warehousing and shipping service called FBA (Fulfillment by Amazon), which makes it simple for sellers to sell on their marketplace. Access to the Prime program, being able to expand your market reach, and not having to worry about inventory management, packaging, or delivering products to clients are just a few advantages of participating in FBA.

However, there are many expenses associated with adopting the FBA:

Standard storage fee: This cost is determined by the product’s volume and length of storage. Because there is more merchandise during the shopping season, the fee is greater in the later months of the year.
Long-term storage fee: An extra long-term storage fee will be assessed if a product is kept for longer than 365 days. For items kept for a long time, Amazon does, however, also provide reductions on storage costs.
Fulfillment Fee: This charge covers the price of each order’s selection, packing, shipping, handling, and customer support. The cost will change based on the product type, weight, and size.
Additional Service cost: You will be assessed an additional service cost if your goods are not packaged or labeled in accordance with Amazon’s policies.
Return Processing fees: Orders that qualify for free returns are subject to this cost.
Removal Request cost: There will be a removal request cost if you want to take your product out of storage or if its shelf life is less than six months. The cost will be determined by each product.

Additionally, if you offer a textbook rental service, you will be charged a rental book service fee. Amazon will charge $5.00 per loan.

Note: Amazon fees may change over time. Please refer to Amazon’s official website for the latest information: https://sellercentral.amazon.com/

Conclusion

Building a successful e-commerce business on the platform requires an understanding of Amazon referral fees and other seller costs. Amazon offers enormous benefits in terms of traffic, logistics infrastructure, consumer trust, and worldwide reach, despite charging several fees.

Sellers can still create extremely profitable companies on Amazon by accurately estimating expenses, improving pricing tactics, and effectively controlling inventory.

For sellers running Print-on-Demand (POD) or dropshipping businesses, BurgerPrints also offers professional POD fulfillment and FBA fulfillment services, including: