What Is Amazon Referral Fee? (Sellers Should Know)

Thomas Joseph

To maximize your sales on Amazon, it is imperative that you, as a current or prospective seller, have a firm grasp of how Amazon's referral fee works. If the Amazon referral fee is new to you, worry not; this post will teach you everything you need to know.

Table Of Contents

What Is Amazon Referral Fee?

Knowing the ins and outs of Amazon referral fees might help alleviate anxiety about the hidden costs associated with being a seller on Amazon. As your Amazon sales increase, this factor will become increasingly important in determining your net profit. 

Every time you make a sale on Amazon, you'll incur a cost known as the referral fee. It's typically 15% of the final tally when calculating a sale. However, this percentage shifts around from product to product. Typically, it falls around between 8% and 45%.

Continue reading to learn more about the costs.

How Much Does Amazon Take?

As a seller on Amazon, you will owe Amazon a commission based on the final sale price, which will include not just the item price but also shipping and gift-wrapping fees, if applicable. Alternatively, you will have to pay the given fixed amount—whichever is greater.

Keep in mind that referral fees are just part of the fees that you, as an Amazon seller, will have to pay. Other fees you will incur include selling plan fees, fulfillment fees, and inventory fees, among others.

The referral fees vary by category. The following are some of the referral fees you will have to pay based on the product category.

Please note that certain products require approval. For instance, if you are selling cell phones, it would be great if you first read through the guidelines to see if you require any prior approval.  If you are selling media items, you will not only have to pay the referral fee, but you will also have to pay an additional $1.80 per item.

Additionally, keep in mind that the Everything Else category is to be used with items that do not clearly fit in any of the given categories. You should, therefore, not list an item that clearly fits in a particular category in the Everything Else category.

Why Does Amazon Charge The Referral Fee?

You can think of the referral fee as a charge you pay to Amazon so as to use the platform. As a seller, Amazon is “advertising” your business to the whole world, therefore, broadening your customer base. The referral fee is simply the fee you pay to Amazon for the customer referred to you.

Let's face it if you, as a seller, started selling on your own website, you wouldn't have the same exposure and traffic. You would incur additional costs in advertisements to promote your site. Amazon, therefore, alleviates most of the expenses required in starting your own platform, requiring you only to pay a small referral fee.

How to Calculate The Amazon Referral Fee?

 Amazon usually takes a percentage cut of the price that the customer pays. You can calculate the referral fee using the formula below.

(sale price + shipping cost + gift wrapping charges) * (referral fee percentage)

In some cases, you may notice that the fee in the Seller Central preview does not change when you run a sale. Contrary to what the fee preview in Seller Central may indicate, you will only be charged the proportion of the final sale price that is actually collected from the consumer.

Is There A Minimum Referral Fee Charged?

Yes! Amazon will collect a minimum referral fee of $0.30 even if the percentage referral fee on your item is less than that. For instance, if you're selling toothpicks for $1 each, your referral fee would only be $0.15. As a result, the least amount you'll have to pay as a referral fee is now $0.30, up from $0.15. Keep in mind that Amazon's minimum referral fee is calculated on a per-item basis, regardless of the category in which the item is listed.

Does Every Seller On Amazon Have to Pay A Referral Fee?

Every seller on Amazon, whether using a personal or business account, must pay the referral fee. In addition to the commission for the referral, individual sellers will also be subject to a flat fee of $.99 per item sold.

On the other hand, professional vendors will be required to pay a $39.99 monthly charge. However, if you use a professional seller account, you won't be required to pay a set closing cost. Along with offering you expert selling plan insights, the account also gives you robust seller tools.

If you are an Amazon seller and your business is experiencing rapid growth, it might be time to upgrade to a professional selling plan. In addition to the cost savings on fees, there are many other advantages to listing in bulk, such as better management tools.

Additionally, It doesn't matter if you ship the item yourself as the merchant (FBM) or if Amazon does it for you (FBA); you still have to pay the referral fee.

Bottom Line

The percentage of each sale that goes to Amazon is called the Amazon Referral fee. The charge is based on a percentage of the total cost of your order (including shipping and gift wrapping). All sales are charged based on the category of the specific item.

In addition, there is a minimum and maximum amount you will have to pay for the service. If you are a new Amazon seller, we suggest reading the instructions to familiarize yourself with the referral fee structure.

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