Selling on a large marketplace involves several separate fees, deducted at different points, which is why sellers so often misjudge their margin.
The headline percentage is the smallest part of the story. Fulfilment is priced on size and weight, storage accrues over time, and advertising operates as a variable cost that most sellers treat as optional until they stop it.
This covers each fee in turn, how it is calculated, what drives it up, and how to work out the real cost on your own products rather than on an average.
The Real Cost of Selling on Amazon
Amazon is the world's largest e-commerce marketplace, but it is not cheap to sell there. Between referral fees, FBA fulfillment fees, storage costs, and advertising, many sellers are surprised to find their effective take rate to Amazon is 30-40% of their selling price. Understanding every fee is essential before pricing your products.
Work out the fees on your own products rather than reading the percentages. Size and weight drive fulfilment costs so heavily that two items at the same price can land in completely different places on margin.
Ankit Sagatani, MBA, B.Com · LinkedInFee Type 1: Referral Fee
The referral fee is Amazon's commission on every sale. It is calculated as a percentage of the total selling price (including shipping, if charged). This is unavoidable on every sale regardless of fulfillment method.
| Product Category | Referral Fee Rate |
|---|---|
| Electronics | 8% |
| Clothing and accessories | 17% |
| Shoes and handbags | 15% |
| Home and kitchen | 15% |
| Books | 15% |
| Toys and games | 15% |
| Grocery and gourmet food | 8% |
| Health and personal care | 8% |
| Sports and outdoors | 15% |
| Most other categories | 15% (default) |
Fee Type 2: FBA Fulfillment Fee
If you use Fulfillment by Amazon (FBA), Amazon charges a per-unit fulfillment fee to pick, pack, and ship each order. The fee depends on the product's size tier and weight.
| Size Tier | Example Fee Range |
|---|---|
| Small standard (up to 15 oz) | $3.22 - $3.77 per unit |
| Large standard (up to 3 lb) | $4.99 - $6.90 per unit |
| Large standard (3-20 lb) | $6.90 - $10.18 per unit |
| Large oversize | $9.73 - $89.98+ per unit |
Fee Type 3: FBA Storage Fee
Amazon charges monthly storage fees for inventory sitting in FBA warehouses, calculated per cubic foot.
- January-September: approximately $0.78/cubic ft (standard-size)
- October-December (peak season): approximately $2.40/cubic ft
- Long-term storage: additional surcharge for inventory stored 365+ days
Pro Tip: High storage fees kill margins on slow-moving products. If you have inventory with a sell-through rate under 2 units/week and it is not peak season, consider a removal order or a deep promotion to clear it before long-term storage fees hit.
Fee Type 4: Long-Term Storage Fee (LTSF)
Amazon charges a long-term storage fee on any unit that has been in a fulfillment center for more than 365 days. The fee is assessed monthly and can be substantial for low-value, slow-moving products.
Fee Type 5: Professional Selling Plan
Amazon charges $39.99/month for a Professional seller account. This is required for sellers moving more than 40 units/month. Under 40 units/month, you can use an Individual plan with a $0.99 per-sale fee instead (but you lose access to advanced selling tools and Buy Box eligibility is harder).
Fee Type 6: Amazon Advertising (PPC)
Advertising on Amazon (Sponsored Products, Sponsored Brands, Sponsored Display) is technically optional but practically essential for most categories, especially new product launches.
- Billed as pay-per-click (PPC), you pay only when a shopper clicks your ad
- Average CPC varies widely by category: $0.30 to $3.00+ per click
- Your advertising cost of sale (ACoS) = ad spend / attributed sales
- Target ACoS depends on your margin; a 20% gross margin product cannot sustain a 30% ACoS
Understanding Your Amazon Settlement Statement
Every two weeks, Amazon deposits net proceeds to your bank account. The settlement statement breaks down:
- Product sales (gross)
- Less: referral fees
- Less: FBA fulfillment fees
- Less: FBA storage fees
- Less: advertising charges
- Plus: any reimbursements (damaged/lost inventory)
- Net settlement deposited to bank
For accounting purposes, you should record gross product sales as revenue and each fee category as a separate expense, do not just book the net settlement as revenue.
Calculating Your True Effective Take Rate
Add up what Amazon keeps on a sample product to see your real all-in cost:
| Fee Component | Example ($30 selling price) |
|---|---|
| Referral fee (15%) | $4.50 |
| FBA fulfillment fee (large std) | $5.50 |
| FBA storage (allocated per unit) | $0.50 |
| Advertising cost (20% ACoS) | $6.00 |
| Total Amazon fees | $16.50 |
| Effective take rate to Amazon | 55% of selling price |
| What seller keeps before COGS | $13.50 |
If this product costs $8 to source and land at FBA, your gross profit per unit is $5.50, a 18% gross margin. Once you add seller overhead, this product is barely viable.
Accounting Treatment of Amazon Fees
Amazon fees are ordinary and necessary business expenses, fully deductible in the year paid:
- Referral fees: Cost of Revenue / COGS category
- FBA fulfillment fees: Cost of Revenue / COGS (directly tied to units sold)
- Storage fees: Operating expense (period cost, not tied to units sold in the period)
- Advertising: Selling expense
- Monthly subscription: Administrative expense
Book a free consultation and we will get the numbers straight.
Frequently Asked Questions
Are Amazon FBA fees included in my 1099-K?
No. Your 1099-K reports gross sales before any Amazon fees. Amazon fees are your expenses to deduct, they are not netted out of your 1099-K amount.
Can I avoid FBA fees by fulfilling orders myself?
Yes, Fulfilled by Merchant (FBM) avoids FBA fulfillment and storage fees. But you take on shipping, warehousing, and customer service, and you lose Prime badge eligibility (unless you qualify for Seller Fulfilled Prime, which has strict performance standards).
What is the Amazon variable closing fee?
A variable closing fee applies to media categories (books, DVDs, music, software, video games), currently $1.80 per item sold. It is in addition to the referral fee.
Should fees be recorded gross or netted off sales?
Gross. Record the full sale as revenue and each fee as its own expense, even though Amazon pays you the net. Netting hides the thing you most need to watch, which is what the channel actually costs you, and it makes your revenue figure disagree with the 1099-K. It also makes fee increases invisible: if fees sit inside a single net number, a rise in them looks like a fall in sales.
Which fees can we actually influence?
Fulfilment and storage, mostly, and they move on things you control: package dimensions and weight, how much stock you hold and for how long, and how quickly slow lines are cleared. Referral fees follow the category and are effectively fixed. Advertising is a spending decision rather than a fee, so it belongs in a different conversation, measured against the sales it produced rather than lumped in with the cost of selling.
Written by
Ankit Sagatani, MBA, B.Com
Ankit works with business owners across the US on industry-specific bookkeeping, from real estate to construction and retail. He writes about what each trade's books actually need. Connect on LinkedIn Connect on LinkedIn
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