Amazon Selling: The Importance of Knowing the Hidden Fees

To get your Amazon business striving, you must understand the prices that curtained behind the sound reasons for overpricing products. If a product is expensive, the seller gains more profit. It’s simple math for anyone who wants to understand the deal behind gaining profits by selling products.

Although you may feel many products on Amazon or any other selling website market products at overpriced rates, you must have come across products that are dirt cheap too. The first step is that if you sell on Amazon, you must understand the importance of hidden fees before suffering from losses. Sellers with cheap products either have low-quality products or are not making any profit at all. Numerous factors make up for the hidden fees on Amazon. For sellers, there are certain fees they must pay for every product they sell, which itself depends upon many factors. 

Let’s take a look into knowing the hidden fees in Amazon selling to make it easier for you to fix prices for your next sales.

Choose your plan

There are 2 plans between which a seller chooses. An individual or professional plan. 

Professional plan

The professional account has a fixed rate of $39.99 monthly that a seller must pay to keep their account active to be able to sell products.

Individual plan

An individual account would cost a seller $.99 for every product they sell. This would be of more benefit to sellers who sell less than 40 products a month. There are referral fees that account for the hidden prices that usually range from 8% to 45%, depending upon the product category.

Consider referral fees

For every product you sell, there is a referral fee along with the mandatory fee that is charged per-item according to the product category. The range at which referral fees are charged is about 8%-45%. The pricier the product the more the referral fee is. There is no escape from this fee and must be considered before you set prices on the products you want to sell up on Amazon.

The referral fees also account for the shipping charges depending on the destination. The amount will be deducted from the fixated price you have for your product. Be sure of including that if you don’t want to suffer from losses on Amazon. The referral fees keep getting updated yearly; therefore do your due research beforehand. 

Further, many sellers miscategorized themselves to get away from paying the referral fee. This is not the cleverest way of profiting on Amazon. This may create a bad impression and will not get you ranking anywhere near the top searches if you do so. 

Amazon fulfillment

Many people are oblivious to Amazon’s service of providing convenience to their sellers to sell products. It is a cost-effective and efficient way of delivering their product without hustling over the shipping worries. Sellers send their products to an Amazon storage and distribution center where it is stored until a purchase from the customer. The item is then delivered to the buyer depending on their location. Amazon storage and distribution center is close to their main customer base, so the seller doesn’t have to worry over the location, even if they want to deliver it themselves, to save from delivery charges. 

Use an FBA calculator

Many Amazon sellers underestimate the cost they must keep for their products to gain profits, due to all the confusion associated with the fixation of prices. Luckily, Amazon provides an FBA calculator that helps sellers calculate the perfect price to set for their products. Certainly, you can keep your margin of profit respectively, since you don’t have to strictly obey the calculator’s calculations.

To use the calculator, you must select a product already on sale on Amazon that is close to what you want to sell. Amazon will take into account all the necessary considerations to calculate the fulfillment cost of the product. The calculator will ask you to enter the selling price, which is the overall price of the product which includes all the aspects of fixing the price, and the actual product cost. Amazon will have an approximated value calculated by the product with Amazon fulfillment.

It has become quite obvious by now how important it is for everyone to know about the hidden prices behind online selling. Sellers can keep a margin for their product while buyers also have a breakdown of the product prices to judge for themselves if they want to buy the product based on the justness of the price.