Listing your products on Amazon is super convenient. But those sneaky Amazon seller fees can come back to bite you at tax time if you're not completely on top of it.
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Amazon charges fees for using their services. Some of these fees, such as account fees, are charged monthly. Others, such as referral fees and variable closing fees, are charged per item sold.
Here are three reasons why it's helpful to keep track of the Amazon seller fees you pay:
When you sell your products through Amazon, you'll have to pay seller fees. These fees fall into two categories: monthly, and per-item.
Amazon charges monthly seller fees—you guessed it—monthly. Account fees are standard, depending on the account package you use. In other words, they cost you the same month to month.
Amazon charges other monthly fees, but you only pay them if you use Fulfillment by Amazon (FBA). In this case, you'll pay a monthly rate, per item, for the cost of storing your products in Amazon's warehouses. The exact amount will depend on which items are being stored—specifically, the total size and weight of the items.
Amazon charges per-item fees either as a percentage of your product's cost, or as a minimum per-item cost. How much you pay will depend on the price, weight, and size of the item, as well as the category it falls under.
For instance, Amazon charges a 17% referral fee on clothing, but only an 8% fee on photography equipment. So a pair of jeans and a camera that each cost the same amount will each bring you a different amount of income.
The resulting percentage is taken off the total amount Amazon sends you for the sale of the item. If your per-item fee is 15%, then the sale of a $100 product through Amazon will net you $85.
The account fee you pay Amazon depends on what type of account you have: individual or professional.
Individual accounts cost nothing to set up with Amazon. In addition, you'll pay $0 per month to run your individual account.
However, for every item you sell, Amazon charges you $0.99. This small fee will be on top of referral fees, or any other fees you may have to pay.
Additionally, there are a few limitations that come with individual accounts:
With an Amazon professional account, you pay a flat monthly fee of $39.99 instead of being charged on a per-item basis. You will, however, still need to pay other costs—such as referral fees and variable closing fees.
With a professional account, there's no limit on which categories you can list items under and you can sell as many items per month as you like. Plus, Amazon allows you to upload multiple listings at once, which saves you time.
If this is your first foray into ecommerce, the individual account is a great choice. You'll get a chance to test the waters, practice putting together listings, and go through the process of fulfilling orders.
Once your monthly sales start approaching the 40-item limit, it'll be time to switch to a professional plan. Once you break that 40-item barrier, a monthly $40 fee will be cheaper than paying per item. Plus, you'll get to take advantage of the other perks of having a professional account.
If you're already experienced in ecommerce, or your existing ecommerce business is expanding to include Amazon listings, start off with a professional account right away. It includes all the categories you may need to list your items, it's faster to upload listings, and—assuming that you fulfill more than 40 orders per month—you'll save money.
Regardless of whether you have an individual or a professional account with Amazon, you'll pay a referral fee on every sale you make.
The referral fee for each item is determined by how much it costs and which product category it's listed under. Referral fees range from 6% to 20% of the price of the product. The average referral fee is 15%.
Most—but not all—product categories have a minimum referral fee. When you sell a product, you'll pay Amazon whichever is higher: the referral fee, charged as a percentage of the price, or the minimum referral fee.
Across the board, the minimum referral fee is $0.30.
An example of how referral fees work
Say you sell a spoon that costs $1.90 to buy. The spoon is categorized as a kitchen product. The referral fee for kitchen products is 15% and the minimum referral fee is $0.30.
However, 15% of $1.90 is just $0.29 (or $0.285, to be exact). That's less that $0.30.
So, instead of $0.29, Amazon charges you the minimum referral fee of $0.30.
The following table shows you all the referral fees based on product category. For some categories, the referral fee changes based on the price of the item. Also, some product categories—like music and books—have no minimum fees. In those cases, Amazon charges the referral fee as a percentage—no matter how small its dollar amount.
Amazon referral fees
On top of referral fees, Amazon charges a flat rate of $1.80 on the sale of every product categorized as "œmedia."
You'll be charged $1.80 on each sale of products that fall under the following categories:
Amazon shipping credits aren't technically a fee. They're Amazon's way of collecting the cost of shipping from customers, and passing that money on to you.
But if you don't stay on top of how much Amazon collects for shipping—and compare this amount to the amount it actually costs you to ship the items in question—you could end up losing money on each sale. This can easily eat into your bottom line.
Amazon usually collects less for shipping than the amount it really costs for you to ship most products. So, Amazon may collect $3.99 from the customer to cover standard shipping on a book you sell—and pass that $3.99 on to you as a shipping credit.
But let's say that when you actually bring the book to the post office, the shipping total comes to $4.99. Suddenly, you're short a dollar. Multiply that by hundreds of items per month, and a small crater begins to form in your profits.
For media items, Amazon applies flat rate domestic shipping credits. All other items cost a base rate, plus a per-pound rate. And international shipping credits only apply to certain types of media.
* Includes APO, FPO, and U.S. Protectorate addresses
** Available to eligible sellers only (see Premium Shipping options)
*** Weight of the item, not including seller's packaging
You can't change the amount Amazon collects for shipping. But you can figure out how much it costs to ship each product. And if that cost is higher than the shipping credit Amazon offers you, consider adding the difference to the price of the item.
The US Postal Service offers a shipping calculator. Be sure to accurately measure the size and weight of the item. (If you don't have a postage scale, you can probably find an inexpensive one on Amazon.)
For ecommerce sellers, calculating shipping costs and fulfilling orders can become a tiresome, time-consuming task. That's why many make the switch to Fulfillment by Amazon (FBA).
It's quite simple really—ship your products en masse to Amazon, then Amazon handles the rest. Any Amazon user can use FBA—whether you have an individual or professional account plan.
When you use FBA, all your products are stored in Amazon's warehouses. Each time an Amazon customer orders something from you, Amazon picks the item off the shelves, packages it, and sends it on its way. On top of that, products shipped with FBA are eligible for Prime shipping, potentially attracting more customers than they might otherwise.
On your end, using FBA means no having to calculate shipping costs (and making up the difference), no wrestling with packing tape, and no one-off trips to the post office. If you're interested in using FBA, keep in mind that Amazon will charge you additional fees for the service.
FBA fees vary based on a product's price, category, size, and weight. Broadly speaking, though, there are two types of FBA fees: shipping and handling, and storage.
Amazon charges shipping and handling fees for each item you sell. These fees cover every part of order fulfillment—from picking items off the shelf to sending them out the door.
Amazon also charges you monthly storage fees. Think of it as paying rent for items you're waiting to sell while they sit in the Amazon warehouse. FBA storage fees vary, depending on the weight, size, and time of year.
Shipping and handling fees for FBA orders depend upon the size and weight of the item you're shipping. These can be a bit tricky—for instance, two boxes weighing 12 ounces each may have different prices, depending on their dimensions.
On top of that, Amazon sorts packages into standard-size, oversize, and special oversize categories.
Knowing the FBA fulfillment fee for each item you sell is important, since it affects your bottom line. Luckily, Amazon's guide to FBA fees make it easy to figure out.
You pay storage fees for FBA on a monthly basis. These fees vary based on the time of year. Since October, November, and December are busy shopping months, Amazon charges you more to store items during that time.
On top of shipping and handling and storage, Amazon may charge you additional fees under extenuating circumstances.
If, for instance, you store objects for an extended time in Amazon's warehouses, you may be charged a long-term storage fee. You may also incur a fee if you've miscategorized an item, and Amazon has to relabel it for you.
Be sure you're familiar with even the most obscure FBA fees before you start using the service—it could end up saving you money down the line.
It can be tricky to match up the revenue Amazon deposits in your account with the per-item revenue for the products you've sold, because you receive the money as a lump sum. That's where bookkeeping comes in.
Accurate bookkeeping gives you an accurate picture of your financial standing. It also ensures you're prepared to correctly file your taxes.
Amazon transfers your revenue to you biweekly, every 14 days; however, it can take as long as five days for the bank to process. So, by the time you get the money, it's been 19 days since the sale took place. That can make it difficult to figure out how much money you're making from each product.
On top of that, for accounting purposes—and to accurately report your income to the IRS—you need to record the total value of each sale. That's the entire cost of the item, including any money Amazon kept for themselves to cover fees.
To learn the simplest, most effective way to record Amazon sales on the books, check out our ecommerce guide to merchant fees or our dedicated guide on bookkeeping for Amazon sellers.
Amazon fees come with a silver lining—you can deduct them from your taxes.
First, make sure you're entering your fees correctly on the books, using our ecommerce guide to merchant fees. That includes recording Amazon fees as a business expense.
Then, at the end of the tax year, add up the gross amount you paid in Amazon seller fees. Report them on your business tax return to claim the deduction.
Sound like a bit of a hassle? When you use Bench, we can file your taxes for you. And since many Bench clients sell on Amazon, we know how to track your merchant fees, and help you claim them as a tax deduction. This means you spend less time worrying about the details, and more time growing your business.
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Amazon charges seller fees monthly or per-item, and they vary according to your account type and the types of items you're selling—including their weight and size. At first glance, tracking all your fees and recording your Amazon income on the books may seem like a Herculean task.
But put aside some time now to learn about every Amazon seller fee you have to pay, and the best way to record them. It will save you money in the long run. You'll be able to make smart business moves with accurate bookkeeping, and take advantage of ecommerce tax deductions.
Helpful resource: What You Need to Know About Taxes as an Amazon Seller
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