Understanding Amazon Marketplace Charge for Amazon Sellers
In the rapidly expanding world of global e-commerce, Amazon has become a critical platform for international sellers aiming to reach customers across continents. However, before diving into cross-border sales on Amazon, it’s essential to understand the various fees and charges involved collectively known as Amazon Marketplace Charges.
As an Amazon seller, you will encounter a range of fees associated with utilizing the platform. These include referral fees, subscription charges, refund processing fees, and inventory storage costs. Collectively, these fees represent the investment required to leverage Amazon’s expansive and highly engaged customer network.
For individuals new to e-commerce or business operations, navigating these fees can be complex and may prompt questions about the overall viability of selling on Amazon.
The concise response is that selling on Amazon remains a highly attractive and profitable opportunity for the majority of sellers. Amazon serves as a valuable component within a diversified multichannel sales strategy. Industry data indicates that approximately 32% of Amazon sellers achieve profit margins exceeding 20% after accounting for all fees, significantly outperforming the average net margin of 7% to 10% typical among well-managed small businesses.
This article aims to provide a comprehensive overview of the various Amazon marketplace charge associated with selling on Amazon, equipping you with the knowledge to anticipate and manage these costs effectively.
Amazon Seller Plan Fees
1. Individual Plan
This plan has no monthly subscription fee but charges an additional £0.75 plus VAT for each item sold on top of the standard referral fees.
2. Professional Plan
For a fixed monthly fee of £25 plus VAT, this plan waives the per-item selling fee, making it more cost-effective for sellers with higher sales volumes.
Amazon Referral Fees
When selling on Amazon, one of the most important costs to factor into your pricing strategy is the referral fee. This is essentially Amazon’s commission for providing access to its vast customer base, secure infrastructure, and end-to-end transaction services.
What Are Referral Fees?
A referral fee is a percentage-based fee that Amazon charges on each item you sell. It’s calculated based on the total sales price, which includes:
- The product price
- Any shipping costs (if fulfilled by the seller)
- Gift-wrapping charges (if applicable)
This fee is automatically deducted from your revenue after each transaction.
How Much Is the Referral Fee?
Amazon’s referral fee is calculated as a percentage of the total sales price (which includes the item cost, any shipping charges and VAT where applicable). Although 15 % is the default rate for many categories, the exact percentage you pay depends on the type of product you sell.
Certain categories benefit from lower rates. For example, consumer electronics and computers are charged at 7 %, while cycling accessories attract an 8 % fee. These reduced percentages help keep costs down on higher‑volume, lower‑margin items.
More specialised or premium ranges carry higher fees. Jeweler incurs a 20 % referral fee on the first £225 of the sales price and then falls to 5 % on any amount above that. Amazon Device Accessories are set at a 45 % rate. Other categories follow tiered structures too, such as baby products and beauty items which are 8 % on the first £10 of the sales price and increase to 15 % on any amount beyond £10, and automotive and powersports which are 15 % up to £45 of the sales price and 9 % on the remainder.
In every case, Amazon applies a per‑item minimum referral fee, most often £0.25 so that very low‑value products still meet a baseline fee contribution to the platform.
Why Amazon Charges This Fee
The referral fee helps cover the cost of services Amazon provides to third-party sellers, including:
- Access to millions of active Amazon shoppers
- Product listing and search visibility
- Secure payment processing
- Customer trust, returns, and support infrastructure
In other words, it’s the price of participating in one of the world’s most powerful e-commerce ecosystems.
Amazon FBA and FBM Fees
Selling on Amazon offers access to millions of customers, but it comes at a cost. Whether you’re using fulfilment by Amazon (FBA) or Fulfilled by Merchant (FBM), understanding the associated fees is critical to managing your expenses and maintaining healthy profit margins.
Below, we’ll provide a detailed breakdown of Amazon FBA and FBM fees, how they’re calculated, and how to choose the right fulfilment method for your business.
1. Amazon FBA Fees
Fulfilment by Amazon (FBA) is a service where Amazon stores, picks, packs, and ships your products to customers. It also handles customer service and returns. This is a popular option for sellers who want to scale quickly without managing logistics themselves.
Amazon FBA fees are made up of two main components:
Fulfilment Fees
- Charged per unit sold, these fees cover the cost of:
- Picking and packing your order
- Shipping and handling
- Customer service
- Product returns
FBA fulfilment fees are based on the size and weight of your item.
Monthly Storage Fees
These are charges for storing inventory in Amazon’s fulfilment centres. They are calculated based on the volume (in cubic feet) of your stored items.
Additional FBA Fees
You may also encounter other charges, such as:
- Long-term storage fees (applies to items stored for 181+ days)
- Removal or disposal fees
- Labelling or prep fees (if your products don’t meet FBA requirements)
2. What Is FBM (Fulfilled by Merchant)?
Fulfilled by Merchant (FBM) is when you, the seller, are responsible for storing inventory, packing orders, and shipping products directly to customers. You also handle customer service and return.
This option offers more control and can be cost-effective for certain business models, especially if you already have a fulfilment infrastructure or sell bulky items with high storage costs.
FBM sellers avoid FBA fulfilment and storage fees but are still subject to other standard Amazon charges:
Referral Fees
These apply to all sellers, regardless of fulfilment method. They are calculated as a percentage of the total sales price and vary by category—typically around 15%.
Shipping Costs
FBM sellers must pay for shipping out of pocket or charge customers. Amazon offers shipping credit for sellers on the Individual plan, but it may not fully cover your expenses. Professional sellers set their own shipping rates (for certain categories).
Inventory and Fulfilment Costs
These costs are handled outside of Amazon and vary depending on:
- Warehouse rent or storage
- Labor and packing materials
- Shipping carriers and rates+
- Returns and customer service
While Amazon doesn’t bill you directly for these, they’re crucial to consider in your overall cost structure.
Miscellaneous Amazon Marketplace Charge
In addition to the core selling fees on Amazon—such as referral fees, subscription fees, and fulfilment charges—there are several other expenses that may apply depending on your product type, fulfilment method, and selling activity. These miscellaneous fees can affect your overall profitability and should be factored into your pricing strategy.
Here’s a breakdown of the most common miscellaneous fees you may encounter as an Amazon seller:
1. Refund Administration Fees
When a customer refund is processed and initiated by the seller, Amazon charges a refund administration fee. This fee is calculated as a portion of the original referral fee and covers the cost of handling the refund transaction.
2. Closing Fees
A fixed per-unit closing fee applies to specific product categories such as books, DVDs, music, video games, and related accessories. This fee is charged in addition to the standard referral fee and applies each time a unit in these categories is sold.
3. Lithium Battery Fees
Products that include lithium batteries are subject to an additional per-unit fee. This charge reflects the special handling and shipping requirements associated with battery-powered items.
4. High-Volume Listing Fees
Amazon imposes a high-volume listing fee for sellers with more than 1.5 million active SKUs. This is a recurring monthly fee designed to support system efficiency and catalogue performance for sellers with very large inventories.
5. FBA Inventory Placement Service Fees
Sellers who opt into Amazon’s Inventory Placement Service—allowing all inventory to be shipped to a single Amazon fulfilment centre—are charged a placement fee. Amazon then redistributes the inventory across its network, simplifying logistics for the seller but at an additional cost.
6. FBA Prep Service Fees
If your products do not meet Amazon’s preparation or labelling requirements for FBA, Amazon will apply a per-unit prep service fee. This fee covers services such as labelling, bagging, or other necessary prep tasks to ensure items are ready for fulfilment.
How to Estimate the Fees You’ll Pay Selling on Amazon
To estimate your Amazon selling fees:
1. Choose a Selling Plan
- Individual: £0.75 per item sold
- Professional: £25 plus VAT per month, no per-item fee
2. Calculate Referral Fees
A percentage of the sale price (typically 8–15%), based on product category.
3. Add Fulfilment Costs
- FBA: Includes per-unit fulfilment and monthly storage fees
- FBM: Factor in your own shipping, packaging, and handling costs
4. Include Miscellaneous Fees (if applicable)
E.g., refund fees, closing fees, battery surcharges, FBA prep services
5. Use Tools
Amazon’s FBA Revenue Calculator or third-party tools like Jungle Scout to get accurate estimates.
Taxes on Amazon Marketplace Charge
Amazon may apply taxes (such as VAT or sales tax) to fees charged to sellers—including referral fees, FBA fees, and subscription costs—depending on your country of residence and tax status.
Key Points:
US Sellers
Amazon does not charge sales tax on seller fees, but you’re responsible for reporting and paying income tax on your earnings.
EU/UK Sellers
EU/UK Sellers: Amazon charges VAT on seller fees if you're not VAT-registered. If you are VAT-registered, you can apply the reverse charge mechanism, subject to certain terms and conditions.
India
Amazon charges GST on seller fees, and sellers can claim input tax credit if registered under GST.
Other Regions
Taxes vary by country; Amazon usually provides a monthly tax invoice for your records.
Conclusion
Selling on Amazon offers unparalleled access to a vast global customer base but requires a clear understanding of various fees and charges. By familiarizing yourself with selling plans, referral fees, fulfilment costs, miscellaneous charges, and tax implications, you can strategically manage expenses and maximize profitability in your Amazon business.
Selling on Amazon? Understand the Costs with Sterling & Wells
Our team of experts is here to help you navigate Amazon’s marketplace fees, VAT implications, and hidden costs that affect overseas sellers. Your journey to profitable and compliant Amazon selling starts with a conversation.
Prasun
Prasun Shrestha is a specialist in accounting and taxation and has served numerous clients based inside and outside UK achieve regulatory compliance and optimal performance.