I have been a Fulfillment by Amazon seller since 2009 full time and over the years, I have dealt with the frustration of items that are priced far too low for fair market value. There are a couple reasons why sellers would choose to intentionally sell merchandise on Amazon at a loss, but that is not the purpose of this article. Here we will look at the costs associated with selling on Amazon as an FBA seller and how to properly price your used books to make a profit from those sales.
Fixed Costs for Selling on Amazon
Amazon has a couple fixed costs for FBA sellers. The first fee is called a variable closing fee. This fee is charged per item sold and for book sales remains $1.35 per item regardless the retail price. The next fixed cost is the pick and pack fee which was recently increased to $1.00 per item. Please note that prior to 2012, this fee was lower and some of the lower prices reflect those older fees resulting in a loss to the seller.
Variable Costs for Selling on Amazon
There are a couple variable costs you need to consider with the FBA program. The first cost is the cost of your book. Most sellers buy in large lots and simply divide the total cost of the lot by the number of books in the lot and use that amount as the product cost. This is also how I personally fixed this cost as well. Each lot will have varying items and costs and will be recalculated per lot listed. Another variable cost is the commission charged by Amazon for the retail price of the book that you set. For books, this “referral fee” is 15% of the gross retail price (a $5.00 retail price will result in a $0.75 referral fee). As you adjust your retail price, you will need to recalculate the referral fee to avoid a loss. You should also consider the shipping costs of the item, based on individual weight. This will also vary from item to item.
Setting a Profit amount per Item
When I list a lot of books (typically 5,000 at a time), I create a spreadsheet that calculates my retail price for me based on the weight of the book and the desired profit that I want to make from each book sale. I prefer to earn at least $1.00 for each book I sell. The range I charge, at a minimum, per book starts at $5.00. At this rate, after all the fees to get to the sale, I am left with just about a dollar in profit. If you come to Amazon to develop a business, focus on your own sales, not competing to take the biggest loss to sell first. Stick to your plan and make money and you will grow a successful business.
