How Much Are Amazon Referral Fees by Category?
Whether you’re a seasoned seller or a neophyte Amazon arbitrage retailer who wants to market products on Amazon, being aware of the Amazon referral fee by category is a must. Knowing this will help you assess how much you should charge your products while still keeping a significant profit margin.
You have to keep in mind, however, that Amazon referral fees vary depending on the product type. In this article, we will help you understand more about the Amazon referral fee and its calculation. We will also give an overview of the latest Amazon referral fee by category.
What is an Amazon referral fee?
Whenever you sell a product on Amazon, you are charged with a referral fee for every item sold. Basically, an Amazon referral fee is like a commission taken by Amazon for bridging the gap between you and your buyer at the other end of the screen.
An Amazon referral fee greatly varies depending on the type of product you’re selling. It can be as low as 6% (for personal computers) or as high as 45% (for Amazon Kindle Accessories). But usually, an Amazon referral fee averages to 15%.
Why does Amazon charge a referral fee?
Now, you might think it’s a bit unfair to have your proceeds cut by 15% considering all the effort you’ve put in just to make a sale. At first glance, it actually is.
Well, you have the option to put up your own website from scratch and pay for marketing in order to gain significant traffic online. But have you imagined the cost and effort you have to shave off in order to establish an online presence and authority on your product niche?
Amazon, on the other hand, has already established itself as the world’s largest online retailer. Customers, dropshippers, and even resellers go there to shop online. And as a seller, your only job is to focus more on making a sale by providing quality and cost-effective products.
You have to take note, however, that providing quality products may not be enough. Making them virtually appealing by providing good photos and crafting great product details will surely set you apart from your competitors. If you need help in enhancing your boring product images, you might want to outsource it to our talented artists instead.
You can also consider putting up an Amazon storefront for your brand. If done right, it would be a great opportunity to massively attract customers. If you have no idea how to put up a website, you can check our Brand Page Builder service. From your brand logo to product images and videos, we have it all covered.
Overall, Amazon charges a referral fee for bringing the customers to you. As I’ve said earlier, the referral fee is like a sort of commission Amazon gets for every sale you make in return for the massive customers and the readily available online selling platform it brings to the table.
If you’re wondering how much referral fee Amazon cuts on your sales, you can refer to the Amazon referral fee by category table below. The list is sorted from the least to the highest referral fee percentage:
Amazon referral fee by category this 2020
|Amazon Referral Fee Percentage||Product Category|
|8%||Camera and Photo
Unlocked Cell Phones
Video Game Consoles
|8% for purchase price of $10 or less;
15% for purchase price greater than $10
|Baby Products (excluding apparel)|
|10%||15% for purchase price greater than $10|
|12%||Automotive & Powersports (except tires and wheel products)|
|12%||Industrial & Scientific (including Food Services and Janitorial/Sanitation)|
|Home & Garden (including Pet Supplies)
Luggage & Travel Accessories
Software & Computer Games
Video & DVD
|15% for purchase price of $100 or less (minimum referral fee of $1/product);
8% for purchase price greater than $100
|15% for purchase price of $75 or less;
18% for purchase price greater than $75
|15%, except 12% for base equipment power tools||Tools & Home Improvement|
|16% for purchase price of $1,500 or less;
3% for purchase price greater than $1,500
|17%||Clothing & Accessories|
|20% for purchase price of $250 less;
5% for purchase price greater than $250
Amazon Kindle Accessories
|Depending on Category Requirements.||Entertainment Collectibles|
Note: Products that are not mentioned here have 15% Amazon referral fees.
How are Amazon referral fees calculated?
Overall, the Amazon referral fee percentage is applied to the total cost of the sale, including shipping cost and wrapping charges, if there’s any.
To simplify, here’s how you can calculate the total Amazon referral fee:
(Total cost of sale price + Shipping cost + Wrapping charges) x Amazon referral fee percentage
To give you an example, let’s say you’re selling a toy for $100. Based on the table I presented above, toys are being cut with a 15% Amazon referral fee per item sold. Suppose you’re selling toys in different ways as follows:
Scenario 1: Excluding shipping cost and wrapping charges
$100 x 0.15 = $15 Amazon referral fee
Scenario 2: Including a shipping cost of $3.50
($100 + $3.50) x 0.15 = $15.525 Amazon referral fee
Scenario 3: Including a shipping cost of $3.50 and wrapping charges of $0.90
($100 + $3.50 + $0.90) x 0.15 = $15.66 Amazon referral fee
Scenario 4: Ran a sale from $100 down to $75.
$75 x 0.15 = $11.25 Amazon referral fee
(Note: Amazon will apply the referral fee percentage on the discounted price, and not on the original price. Also, fees may increase as shipping fees or wrapping charges are applied.)
Is there a minimum Amazon referral fee?
Yes, Amazon charges a minimum referral fee per item for most of the product categories. The minimum Amazon referral fee, however, went down to $0.30 per item from the original $1, which has taken effect on February 19, 2019.
Say for instance, you’re selling a baby product for $3. Baby products are currently charged with 8% referral fee for a purchase price of $10 or below, so the total referral fee should be $0.24. However, this falls below the minimum Amazon referral fee of $0.30, so instead of $0.24, you will be charged with $0.30 for this particular baby product.
Here are the other changes for Amazon referral fees, effective February 19, 2019.
- Minimum referral fee for watches and jewelry went down from $2 to $0.30.
- Referral fee for furniture was reduced from 15% to 10% for sales over $200, but sales below $200 remain at 15%.
- Referral fees for Baby, beauty, and health and personal care items were reduced from 15% to 8% for sales which are less than $10. Sales above $10 remain at 15%.
- Referral fee for jewelry was reduced from 20% to 5% for sales over $250, but sales which are $250 and below remain at 20%.
As the referral fees are reduced, Amazon believes it would help the sellers in listing more items in the said categories, which in turn could also increase Amazon’s product variety.
How to reduce Amazon referral fees
Unfortunately, there is no way to reduce Amazon referral fees regardless if you’re an Amazon FBM (ship the products yourself as the merchant) or an FBA (pay Amazon to store and ship products for you).
The same idea applies for individual and professional seller accounts. The difference between these two, however, is the closing fee on top of the referral fees you have to pay for. Amazon’s individual seller plan charges you a $0.99 fixed closing fee for every item sold. On the other hand, a professional seller account requires a monthly payment of $39.99, but the good news is you don’t have to pay for a fixed closing fee per item.
Although you cannot reduce Amazon referral fees, you can strategically choose the items to sell on Amazon. Perhaps choose the one with a lower Amazon referral fee by category. Or as an Amazon arbitrage retailer, you can repack your items into bundles in order to increase cost per sale while saving on shipping fees.
Knowing Amazon referral fees and other imposed charges is important to deliberately apply ways in maximizing your profitability. But being aware of these profit cuts will rarely get you anywhere unless you constantly implement good marketing techniques.
Should you ever need help in establishing an astounding Amazon presence that sets you apart from the ever growing competitors, feel free to check our Amazing Freedom Services and experience the amazing freedom you’ve always wanted to have.