Selling on Amazon comes at a price. And for newcomers, Amazon Repay Charges are an unpleasant surprise.
We did our homework and created this comprehensive guide with everything you need to know about Amazon Seller Repay Charges.
What are Amazon Seller Repay Charges?
Whether you are an Individual or Professional seller, there are fixed charges that Amazon will collect from you each month.
If you’re enrolled in any other programs such as Advertising, Fulfillment by Amazon, Inventory placement service, Amazon-partnered carrier program, or Premium account services, you will pay charges related to those particular services.
At the end of each billing cycle Amazon tries to withdraw these charges from your account. If there are not enough funds, Amazon tries to charge your credit card instead. In this case these charges to your credit card are labeled as Amazon repay.
How Does Amazon Apply Seller Repay Charges?
Let’s say sales have been quite low and you haven’t generated a significant income for a while. Most likely, this has led you to withdraw some of the funds from your account, leaving a low balance.
If Amazon is not able to collect the recurrent service charges from your account due to insufficient funds on the first attempt, they will try again.
But this time, they will charge it to your credit card.
If your credit card has a disbursement limit, Amazon will keep trying to get its money every 24 hours until the remaining balance is paid in full.
What Can I Do to Avoid Seller Repay Charges?
We can all agree that seeing a negative balance in one’s account can be quite unsettling.
Therefore, we recommend you to stay on top of your account health by checking your Payments Report periodically.
Watch this video to learn more about how to navigate through your Payments Report in Seller Central:
Extra tip: Make sure to maintain a proper level of sales by designing a strategic marketing and fulfillment plan.
Repay the balance you owe
As of March 2021, the Balance Repayments Page is still unavailable. Instead, check your balance or update your credit card details in the Charge Methods page in your Seller Central Account.
This way, Amazon will be able to charge your credit card automatically.
Types of Amazon Seller Accounts and Related Fees
If you want to start selling on Amazon, you will have to choose between two account categories or plans. Each plan is designed to fit the seller’s profile, depending on their sales volume and business strategy.
Check them out:
Individual Seller Account
For each item you sell, you must pay Amazon a fee of $0.99.
This Per-Item Fee is charged only after the sale happens and it comes out from the money you receive from the transaction.
This kind of plan is ideal for sellers who sell below 40 items per month,
Professional Seller Account
With this kind of plan you pay a monthly membership of $39.99.
This account is recommended, as its name suggests, for professional businesses that are able to sell more than 40 items per month and that are willing to invest in advertisement and top placements on specific pages.
As it happens with the Individual Seller Account, the Professional Seller Account also needs to pay additional selling fees according to the type of products sold on the platform.
Here is where it all gets a bit more complex since these additional selling fees will be determined by the type of product you sell.
Each time you sell a product on Amazon you will have to pay a Referral Fee. The amount of the charge is calculated as a percentage of the total price of the item.
This percentage will vary, depending on the category the product falls into.
Please note that certain categories apply for what is called Minimum Referral Fees. This is all calculated excluding the tax which applies to each sale.
In case you offer media items through Amazon, you will have to pay $1.80 for each product that you manage to sell. This fee applies both to Individual and Professional sellers. This category brings together a wide range of items: video games, software, movies, music, DVDs, accessories, books, and consoles.
Amazon offers its sellers two fulfillment plans: Fulfillment by Merchant (FBM) and Fulfillment by Amazon (FBA).
With FBA, sellers are subject to charges based on the weight and dimensions of their product.
The great thing about this program is that you can focus on other aspects of your business while Amazon takes care of the hard work: all things logistics and customer service.
In a nutshell, this is what FBA offers you:
- Collection and packing of your products
- Customer service
- Product returns
- FBA storage
The latter service will generate Inventory storage fees, which are charged every month and are based on the daily average volume for the space your products occupy in the Amazon shipping centers.
In 2021, these inventory storage fees range from USD $ 0.75 per cubic foot (for a standard-size item), up to USD $1.20 per cubic foot (for an oversized item). If you sell dangerous goods, these fees can increase up to USD $2.43 per cubic foot for an oversized item.
These charges are determined by seasonality. So, expect a considerable increase in storage fees at the end of the year (October-December).
Learn more about Long-term storage fees here.
With Fulfillment by Merchant (FBM), Amazon charges customers fixed shipping rates based on the product and shipping courier they select. This money goes back to the seller in the form of Shipping Credit (this rule applies to both Professional and Individual sellers).
Keep in mind that FBM sellers have to do everything on their own. And, in the long run, it can get quite hectic.
High-Volume Listing Charges
In case you have a very large number of active products within Amazon’s listings that have not sold in 12 months, you will have to cover what is called “Cataloging costs”.
This fee corresponds to $0.001 per eligible listed product and it is charged every month on the SKUs in excess of the initial 1.5 million.
“…if you offer 1.6 million SKUs in December 2021, we will charge you a fee of $100 for the month of December, calculated as $0.001 on the 100,000 SKUs that were above your free allowance of 1.5 million SKUs.”
Amazon Refund Administration Fees
If one of your clients submitted a refund order and you made the necessary arrangements for returning your customer’s money, Amazon will refund you the referral fee that you initially paid.
However, this refund is subjected to a “Refund Administration Fee” and will be applied automatically. This is calculated as lesser than $5.00 or 20% of the referral fee that you initially paid, according to the sold products.
We could consider shipping costs as a side note to the whole topic since they are not particularly a fee by themselves. But if you don’t charge enough for them according to your average volume of sales, they can add up as unnecessary expenses, and turn into unexpected charges.
Avoiding Seller Repay Charges | Additional Tips
We understand it can be quite overwhelming to get around all these charges!
So, to wrap up, here are some tips to get your business running smoothly and to avoid any unpleasant surprises at the end of each month.
Keep a track of your regular and additional selling fees
Make an exhaustive assessment of your monthly, regular charges and, based on each item in your inventory, have a clear record of which fees apply to the products that you sell.
This way you can have a clearer idea of the amount of income you will be receiving per sale, and will never have problems with insufficient funds.
Choose the right selling account for your business capabilities
If you have a Professional seller account, and you’re not making enough sales, most likely these fees are taking away your profits.
Then, you should consider scaling down and changing your selling plan to an Individual seller account. This way, fees will only come up as you sell products.
This tip works the other way around. If your sales are quite high and you have an Individual Seller Account you should, by all means, avoid paying per-item fees and upgrade to a Professional plan.
Make your payments on time
It is always better to have a plan B in case something unexpected happens.
If you don’t have sufficient funds in your accounts to cover the monthly fees, it is better to use your credit card in advance instead of receiving an unexpected fee later.
Also, keep a constant track of the Payments Report section in your Seller Account to stay informed.
Use the Fee Explainer feature in Seller Central to learn more details about your selling fees.
Check out the infographic below to review all the content in this guide: