As a marketplace, Amazon introduces millions of potential customers to sellers. In exchange for this, sellers incur a number of charges. This is the case for FBA sellers as well as FBM sellers. Regardless of how you’re promoting, packaging, and shipping your products, you’re still required to pay the fees to list and sell on the platform.
The referral fee is just one of the charges that Amazon puts on its sellers.
What is An Amazon Referral Fee?
Sellers are charged a referral fee whenever they sell a product. It’s essentially a percentage of the total sales price, usually around 15%, but this varies depending on the category you’re selling your products in.
For example, the percentage can be as low as 6% for personal computers but as high as 45% for brands selling Amazon Device Accessories. The latter is expected really, considering you’re essentially making money off Amazon’s own product catalog.
The referral fee is calculated as a percentage of each product’s gross sales, and it might include the additional costs of shipping and other charges depending on the selling plan you’re on.
Why Does Amazon Charge a Referral Fee?
Amazon’s referral fee makes perfect sense when you think about it. They have created a platform for sellers to promote their products on and have nurtured an audience of millions. Having access to the sheer amount of buyers on Amazon is worth the referral fee for most sellers.
It works a little bit like commission and means that sellers don’t have to spend thousands on marketing efforts to get people to notice their independent store – instead, they can tap into the millions of users already on Amazon
They’ve invested more than $15 billion in infrastructure, programs, people, tools, and services and, to continue to provide innovation and to thank sellers for sticking with them, they are running a referral fee promotion throughout 2020.
The Current Referral Fee Promotion
If you sell clothing, shoes, handbags, and accessories, you’re in luck. Amazon is running a referral fee promotion for FBA and Seller Fulfilled Prime users that predominantly sell these types of products until the end of February 2021.
If you sell personal care appliances, you’re also in luck. Amazon is reducing referral fees on these products from 15% to 8% on items with a total sales price of £10/€10 or less. Items with a total sales price higher than this will still incur a 15% referral fee charge.
Finally, the referral fee on computer and electronic accessories will increase from 12% to 15% for the portion of the total sales price up to £100/€100 and decrease from 12% to 8% for the portion of total sales if it’s greater than this amount.
How Are Amazon Referral Fees Calculated?
You can find the referral fee you’re charged for each individual product in the Transaction Details summary in Seller Central. The fee will vary for every product depending on the category it’s in, it’s price, and the shipping and extra fees applicable to its sale.
As we mentioned before, the referral fee is a percentage of the sales price the customer ended up paying. So, if you sell a clock for $50, Amazon will work out the percentage of $40 to take. If you’re running a promotion on the clock and are selling it for $30, Amazon will take a percentage of the $30 the customer paid, not the original $50 price tag.
If you have a FBM account and ship products by your own means, Amazon will add on the price of shipping to the full amount. If you sell the clock for $30 and it costs $3.99 to ship it to the buyer, Amazon will work out their referral fee as a percentage of $33.99.
There is an easy-to-use fee preview tool available in Seller Central, but be warned: the total referral fee doesn’t take sales or promotions into account. Don’t let this deceive you, though, as you will still only pay the fee percentage on the total price the customer ends up paying.
If you’re wondering if there’s a minimum referral fee, there is.
If the price of your product is low enough that when the referral fee percentage is calculated it comes to less than $1, Amazon will charge $1 based on the type of product you’re selling (the fee might be higher for products in certain categories).
Do You Still Have to Pay Amazon Referral Fees If You Have a Professional Account?
In short, the answer is yes.
You have to pay Amazon a referral fee regardless of whether you have an individual or a professional seller account.
The difference between the two is fairly simple. Individual seller accounts are required to pay a standard $0.99 for every item they sell, while professional sellers pay $39.99 per month. This means that if you consistently sell more than 40 items a month, it’s worth upgrading to a professional seller account to avoid those extras fees.
To clarify, these fees that are charged to individual and professional accounts are on top of the percentage referral fees Amazon takes from each sale.
So if you are an individual seller who’s just sold a clock for $30 with $3.99 shipping, you’ll be required to pay a percentage referral fee on the total $33.99 and the standard $0.99 charge per product.
The Amazon Referral Fee Chart
Let’s take a look at the different referral fees charged for each product category. Amazon has a handy chart you can use to get an idea of how much your fees might be, so it’s worth referring to that to get a ballpark figure on costs.
How to Lower Your Amazon Referral Fee
You technically can’t lower your Amazon referral fees. They are worked out automatically based on the category your product is in and the overall sale cost of the item.
However, while you can’t lower or cancel them entirely, you can be strategic with what you sell and where to minimize excess costs as much as possible.
For example, you can limit your Amazon account to products that have a relatively low referral fee, like personal computers and consumer electronics and sell any high-fee items on other marketplaces, like Walmart or eBay. For example, if you sell a lot of watches, gift cards, and Amazon Device Accessories, it might be worth listing these on other marketplaces to avoid the high referral fees that come with them on Amazon.
The Benefits of Amazon’s Referral Fees
While it might feel like an extra unnecessary cost, Amazon referral fees actually bring sellers a number of benefits.
Not only does Amazon bring in more than $80 billion in revenue every year, it has over 54 million users and is the most popular online shopping portal for 44% of US online shoppers. The platform sells more than two billion products a year, and the sheer amount of users means that your products are more likely to show up in search results than if you were trying to sell via your own, independent platform.
At Urtasker, we understand the incredible benefits of Amazon. It’s all about positioning your brand correctly and creating irresistible product listings. Our Amazon listing optimization services help sellers create powerful product pages that convert well and attract repeat custom.
On top of this, Amazon is well-trusted by consumers. As a result, shoppers feel more comfortable making purchases on the platform than they would through a website they’ve never heard of before. As a result, you can attract a huge number of buyers that might otherwise never have found your store or, if they did, wouldn’t trust you enough to actually make a purchase.
The Cons of Amazon’s Referral Fees
Sure, Amazon’s referral fees let you access the platform’s massive user base and sell more products, but it is an extra cost at the end of the day. If you’re running a tight ship with very little extra cash to spare, the referral fee can feel like a heavy weight on your shoulders.
On top of this, referral fees aren’t refunded to the seller if an item is sent back. So, if a customer returns a product and you sell it again, you’ll end up paying the referral fee twice on the same product.
Despite this, at Urtasker we believe the benefits far outweigh the negatives of Amazon’s referral fees. If you’re strategic about the products you sell and where you sell them, you can minimize fees as much as possible while still reaping the rewards of Amazon’s vast network of shoppers.
Discover how our team of Amazon experts can help you increase conversions and sales on your Amazon store and dramatically boost your revenue. Book a free 30-minute call with us today.