How much does it cost to sell books on Amazon?

You must have been considering starting a business of your own on Amazon. With all the vibes going on around with people making a fortune selling on Amazon, it presents an opportunity for others to join in and have their share of the cake.

However, Amazon has some selling fees you must have to pay before you can successfully start selling on their platform.

These fees depend on what account type you are willing to set up, which will further determine what fees you will be excepted from or compulsory to be paid.

Understanding the costs or fees that will be incurred to start a business in any field is very important to be sure of what you are getting into and if you can be profitable.

Well, I am going to break down these fees for your understanding and the two types of seller account you can use in selling on the Amazon platform.

You must understand even though you are paying a fee to sell on the Amazon platform, you are responsible to spend some time managing the account, making sure you are meeting the requirements to sell on Amazon and listing and following the right steps and sending your products over to Amazon

Amazon Market Place And How It Works

The Amazon Marketplace is one of the World’s leading e-commerce platform with millions of buyers ready to purchase from the wide variety of products available on the platform. Amazon is known to be a ready market full of third-party sellers selling both used and new items alongside Amazon’s.

Sellers on Amazon are placed under two categories; Amazon FBM (Fulfillment by Merchant) and FBA (Fulfillment by Amazon). The two options are available for individuals willing to sell on Amazon to choose and work with, depending on which will best work for your business strategy.

With the FBM option of selling on Amazon, the merchant is responsible for the storage, customer service, shipping, and delivery of sales. On the other hand, with FBA, also known as “Prime” sellers, Amazon takes care of the storage, customer service, shipping, and delivery of sales.

This is the reason why the fees associated with selling on the Amazon platform depends on the account type you are willing to use for your business. FBM or FBA?

In our case, or interest which is on books, you can store your books at your home or rent a space to keep your books and fulfill your orders by yourself, taking care of customer service and shipping which can be a big deal if you are looking to become a mega-seller.

OR, you can send in your books to Amazon and worry less about storage, customer service, and shipping but focus more on sales and building your inventory. But there are fees involved.

Better Still Why not both?

When you register as a pro member, it is also possible to sell on Amazon without sending in your products to Amazon. Many sellers take advantage of both FBM and FBA to better meet their sales needs and benefit from the benefits both options come with.

Before I jump into the fees involve in selling either FBA or FBM, let me present some advantages of selling FBA, FBM, or even both options.

Advantages And Disadvantages of Selling FBA Or FBM

Advantages for Selling Amazon FBM

• Less Amazon fees. You won’t be paying referral fees, storage, fees, every other fee associated with selling as FBA
• Full control of your inventory instilling a high sense of ownership.
• A slightly increase margin since you are excepted from all FBA fees
• Increase confidence as you can inspect a book to make sure it is 100% perfect before shipping to a buyer.
• Easy to start selling since you don’t need to experience the waiting time of sending your inventory to Amazon.

Disadvantages for Selling as Amazon FBM

• Much work is involved especially if you don’t have a processing network in place
• Takes away your freedom as you can’t travel or enjoy a peaceful vacation
• Difficult to win the “buy box.” Buy box is a space reserved on a product page for quick sales. Priorities are higher for FBA members.
• Fewer sales. Over 82% of sales are from Prime members who are only willing to buy from prime sellers
• Still costly as you need to look for a space to store inventory and to process orders
• Your customers won’t enjoy the benefits of buying as a prime member.

The advantages and Disadvantages of Amazon FBA

Advantages of Amazon FBA

• Orders are fulfilled by amazon instills a high level of trust from the buyer.
• Amazon takes care of all the work, including storage, customer service, packing, and delivery.
• You have the freedom to concentrate on other important aspects of your business and can run your business from anywhere in the World.
• You sell as Prime which attracts the Prime buyers on Amazon
• You enjoy the “buy box” space.
• You enjoy a variety of fulfillment channels which means an increase in sales

Disadvantages of Amazon FBA

• A variety of fees involved, such as referral fees, storage fees, Long-term storage fees (applicable if your products are not sold after a period of one year)
• Lack of full access to your own inventory. You just hope all goes well.
• Prepare your shipments and labeling to send over to Amazon fulfillment centers. This is sending your inventory to Amazon.
• No control of which Amazon fulfillment center and in which state your books will end up in. It can be complicated for taxes.

By now, you must be able to decide which account set up can best meet your needs. It is common practice for many booksellers today to use both FBA and FBM to enjoy the benefits from both sides.

In some instances, sellers are reluctant to send or sell low priced books via FBA in other to avoid the FBA fees “eating” up all the profits. Another typical case can be to avoid long term storage fees for slow-selling books, which might take a much longer time to sell. 

Let’s have a look at the fees involved in selling books on Amazon.

Amazon fees can be a little complicated to comprehend, especially during the early stages of the business. At one point, you might think Amazon is taking all of your profits away, but if you take your time to understand all the fees you incur while selling on Amazon, you will be able to go to sleep at night knowing Amazon is doing you a favor rather than stabbing you in the back.

I will try my best to make you understand the Amazon fees, which will help you to understand your profit levels and to avoid any instance whereby you will be selling on a loss. The most important thing about selling on Amazon is to know what you are spending and not just what you are making.

Selling As FBM (Regular or Individual Account)

If you decide to sell on Amazon via FBM, you won’t be having any complications understanding your fees structure as you are only entitled to a USD$0.99 for every sale made on Amazon and a variable closing fee of USD$1.80 for media items.

With the regular or individual account, you are allowed to sell only 40 products per month.

Selling As FBA (Professional or Prime account)

To set up a professional seller account, which is also known as a Prime account, you are entitled to a monthly subscription of USD$ 39.99. This fee is charged directly to your account every month. Amazon doesn’t charge for the first month as a professional seller, and you can sell unlimited number of items.

Once you are registered as an FBA seller / Professional / Prime seller, you are entitled to the following fees below;

Storage Fees.

The storage fee is what you pay Amazon for storing your products in their warehouse. It is calculated based on cubic foot, which is the amount of cubic foot your products are using up in the Amazon warehouse. Amazon will charge you monthly for the products you sent into Amazon.

This fee is charged between the 7th to the 15th of every month. If you are planning to fulfill your products by yourself, then you won’t be paying any storage fees to Amazon. It is very common for storage fees to go up between peak periods like October and December. During these peak sales periods, Amazon experiences a high volume of items coming into their warehouses, so it provides an opportunity for Amazon to charge more.

To have an idea of how much you will be paying for storage, you can use a simple calculation as for example; If you are sending a book with dimension say 10″ X 8″ X 2″ (In inches), First, you will need to convert from inches to cubic foot which can be done by multiplying the dimensions all through and dividing the total by 1728 (12 X 12 X 12) an equivalence of 1 cubic foot.

Using our book dimension above, we can calculate as follows;

10 X 8 X 2 = 160 (overall dimension of book)

Now divide 160/1728 = 0.093

Multiply by amazon’s rate per cubic foot ($0.64)

Which is 0.093 X 0.64 = $0.6 (what you will be paying Amazon as storage fees for that book)

Fulfillment Fee.

The fulfillment fee is what you pay Amazon when you make a sale. This payment is paid to Amazon to fulfill your order. This involves Amazon taking care of the whole delivery process (packaging, delivery, in the case of a return, refunds, and even customer service).

The fees greatly depend on the size of the package, which has been broken down to standard sizes and oversizes. For the purposes of selling books, we will be paying much attention to the standard sizes for the fulfillment fees.

The standard sizes are further broken down into;

Small Standard size (1lb. or less): $2.41 (up to 14 Oz and 15″ X 12″ X 0.75″)

Large Standard size (1lb. or less): $3.19 (up to 20 lb and 18″ X 14″ X 8″)

Large standard size (1lb. to 2lb): $4.71 (up to 20 lb and 18” X 14” X 8”)

Large standard size (over 2lb): $4.71 + $0.38/lb above first 2 lb (up to 20 lb and 18” X 14” X 8”)

Referral fee

This is the fee you pay Amazon to sell on their trusted platform. Amazon has already created a market for your item, and so you need to pay that referral fee. The referral fee is always 15% of the book sold. In a case whereby a 15% referral fee is less than a $1, Amazon automatically charges a minimum referral fee of $1.

Other Fees To Master.

Long-Term Storage Fee. 

Amazon will charge you an LTSF for products that have been in their inventory for over 365 days. Amazon doesn’t like it when you send in slow-moving items in their inventory that will take up space for a long time period.

So they turn to discourage sellers by introducing the LTSF. Long-term storage fees are also charged per cubic foot and up to $11.25 per cubic foot for the books that have been above 365 days in the fulfillment center and a fee of $22.50 charged per cubic foot for items that have been in the fulfillment centers above 365 days.

Refund Administration Fee.

Refund Administration Fee is a fee amazon deducts for a customer refund on the referral fee. Permit me to explain further, when a customer is not satisfied and returns your book amazon refunds the customer which also leaves Amazon to refund the referral fee charged on that sale from your side.

But Amazon refunds the referral fee to you less 20%. Let’s look at an example for further clarification. If you sell a book for $25, the referral fee will be $3.75, which is 15% of the sales price. If a refund needs to be made, you will only get $3, which is less 20%. This explains why you should avoid returns by all costs, especially by describing your books very accurately.

Variable Closing Fee. 

The Variable Closing Fee is a fee for every media item sold. This fee is about $1.80

The Cost Of Shipping Your Books To Amazon. 

This is the cost that you will pay when you ship your books to Amazon. There is no fixed amount for this fee as it is established by several factors like weight, your location, and which fulfillment center you are shipping to. If you are fortunate enough to be living in a city where Amazon has its fulfillment center, it is most likely for the cost to be reduced due to less transit time.

What you need to know…

What percentage does Amazon take for books?

The estimated total of amazon fees is usually 33% of the total sales price. This is why you can sell FBA for a higher price to cover Amazon fees and make a decent amount of profit.

Let’s look at a typical scenario (Just hypothetical).

If you buy a book for about USD$10.00 and make a sale of the book, for example, USD$ 40.00 via FBA, an estimate of about 33%, which will be USD$ 13.20, can be for Amazon fees. The balance of USD$26.80 will be your estimated sales revenue. If you subtract the cost of the book (USD$10.00) you are left with USD$16.80 as your gross profit.

Here is what people think about Amazon and their fees

Many people today think Amazon is taking all the profits for nothing, and when I hear such complaints, all you are telling me is about your ignorance, especially when it comes to the online space. Amazon is rather doing you a favor rather than taking your profits.

Many still haven’t realized how difficult it is to get an online presence these days not to talk about the ready market Amazon has already build for you to just jump in start making money. If you think it is easy, find out how much it costs to grow an e-commerce store and how long it will take you if you decide to go by free traffic.

How long will it take to build the kind of trust Amazon has groomed for its ready customers? It will normally take between 6 months to 1 year with heavy content marketing before you can start experiencing a decent amount of traffic to your store.

If you are willing to pay for traffic, that’s thousands of dollars to be paid for traffic without a 100% guarantee of a sale. But Amazon is a trusted platform and a place where people only come to make a purchase.

Referring your products to their clients is a huge favor, a huge market ready-made for you. Amazon further takes care of your customer service, issues like returns, delivery at already contracted discount rates with trusted delivery companies like FedEx and UPS. Amazon is already taking all the work you needed to do to make a sale by referring you to its existing customer, so you need to pay them for that privilege.

EndNote

Now you have it all. If you are planning to start selling on Amazon, my advice is for you to go for the professional or prime seller account and enjoy all the benefits it comes with. If you are able to buy the right books, Amazon fees will never be an issue for you. Also, even with a professional account, you can still list your books as MF (Merchant Fulfill), which means you can always sell both ways. 

Share your thoughts about the Amazon fees you have come across, and if you can share any ideas on how we can manage Amazon fees for extra profits I would be pleased to know