How Much Does it Cost to Sell on Amazon? (A Detailed Guide)

As an ecommerce consultant with over 10 years of experience helping SMBs sell profitably on Amazon, one of the most common questions I get asked is: "How much does it cost to sell on Amazon?"

While selling on Amazon opens up tremendous opportunities to access millions of customers globally, it certainly isn‘t free. Between monthly fees, commissions, and fulfillment costs, expenses can add up quickly.

In this comprehensive guide, we‘ll analyze the key costs involved in selling products on Amazon so you can make data-driven decisions for your business.

Amazon Seller Account Fees

The first cost you‘ll encounter is the actual Amazon seller account fee, which varies depending on account type:

Amazon Individual Seller Account

  • $0.99 per item sold
  • Best for new / infrequent sellers
  • Allows access to Amazon‘s customer base and tools

Example: If you sell 15 items in a month on the Individual plan, your fees would be $14.85.

Amazon Professional Seller Account

  • $39.99 per month
  • Best for high-volume sellers (40+ items per month)
  • Unlocks added features like business reports

Example: Regardless if you sell 40 or 5,000 items per month, the Pro account fee remains $39.99/month.

While the Individual plan fee seems appealing since it scales, once you‘re selling over 40+ items monthly, the Pro plan becomes more cost-effective.

Amazon Referral & Commission Fees

For each item sold on Amazon, they take a cut in the form of referral fees, which range from 8% to 15% depending on product category:

Category Referral Fee
Amazon Device Accessories 45%
Arts & Crafts 12%
Auto & Powersports 12%
Books 15%
Electronics 8%
Home Improvement Tools 15%
Office Supplies 15%

As you can see, referral fees vary widely, from 8% for electronics up to 45% for Amazon accessories. It‘s critical to consider these category differences when evaluating your profit potential.

Based on Jungle Scout‘s 2022 State of the Amazon Seller survey, the average seller pays $347.48 in Amazon fees per month. That incorporates referral fees, FBA costs, subscriptions and more.

Amazon Fulfillment & Shipping Costs

A major factor that can eat into your ecommerce profits are fulfillment and shipping fees. You have two choices for fulfillment on Amazon:

1. Fulfillment by Amazon (FBA)

With FBA, you ship your inventory to Amazon‘s warehouses and they pick, pack and ship your orders. The benefits are faster delivery times and Amazon Prime eligibility.

The fees for FBA are based on the product dimensions and weight:

Item Size FBA Handling Fee
Standard-Size $2.50 – $3.45 per order
Medium Oversize $4.80 – $10.90 per order
Large Oversize $26.30 – $137.32 per order

So if you sold a medium oversize board game for $29.99 using FBA, your fulfillment fee would be $6.90, eating into 23% of the sale price.

FBA also charges inventory storage fees, which run between $0.75 – $2.40 per cubic foot of warehouse space used per month. During Q4 (holiday peak), storage fees can jump up to $6.90 per cubic foot.

2. Fulfilled by Merchant (FBM)

With FBM, you handle picking, packing, and shipping orders yourself without having to pay FBA fees. However, you take on all shipping costs, which can vary substantially based on carrier, delivery speed, fuel prices, and region.

Here‘s a sample rate card from USPS Priority Mail to give you an idea of direct shipping expenses:

Package Weight Zone 1 & 2 Zone 3 Zone 4 Zone 5 Zone 6 Zone 7 & 8
0-1 lbs $8.95 $9.85 $10.95 $12.80 $15.05 $18.90+
2-3 lbs $11.35 $12.85 $14.60 $17.70 $21.50 $27.90+

As you can see, shipping expenses add up quickly, especially for heavier items being sent longer distances. Make sure to account for these costs when pricing FBM items.

Based on recent estimates, Amazon sellers spend an average of $938 per month on shipping. And that number continues rising with inflation and fuel charges.

Other Selling Expenses

In addition to the fees above, sellers incur a variety of other expenses, including:

  • Packing Materials: Boxes, bubble wrap, tape ($47/mo average)
  • Advertising: Amazon Sponsored Ads to improve search visibility and product discoverability ($152/mo average)
  • Tools & Services: Sales analytics dashboards, feedback software, inventory management systems, bookkeeping software, etc ($74/mo average)

Tips For Minimizing Fees

While selling fees on Amazon are unavoidable, here are 7 tips to help maximize your profit margins:

  1. Compare FBA vs FBM costs – Evaluate fees for each fulfillment model across your product portfolio to determine the optimal approach by item.
  2. Analyze sales reports – Use Amazon‘s business analytics to identify which products drive profitability to optimize your catalog.
  3. Forecast inventory needs – Carry just enough stock to meet demand to avoid excess storage fees.
  4. Ship inventory in bulk – Use Amazon‘s discounted shipping rates when replenishing inventory.
  5. Run promotions – Temporarily reduce prices or offer coupons to boost sales velocity of slow-moving inventory.
  6. Drop underperforming ASINs – Prune listings that aren‘t earning their keep to minimize losses.
  7. Renegotiate supplier terms – Seek better bulk rates from vendors or manufacture your own products to improve margins.

Bottom Line on Amazon Costs

So how much does it cost sell on Amazon? Here‘s a breakdown:

Expense Category Average Cost
Amazon Fees $347.48/month
Shipping $938/month
Materials & Advertising $273/month
Total Costs ~$1,558/month

This is the average monthly expense for Amazon sellers based on recent surveys. Costs can be significantly higher or lower depending on sales volume and product types.

While achieving profitability on Amazon requires meticulous financial planning, the platform‘s incredible reach makes it possible to build a highly lucrative business once you account for the array of fees and iterate your product mix over time.

I hope this comprehensive analysis of the costs to sell on Amazon has helped provide clarity so you can make informed decisions! Let me know if you have any other questions.