What is Referral Fee?
Amazon Referral Fee
Amazon's commission on each sale, charged as a category rate on the total sales price with a per item minimum.
The Formula
Referral Fee = max(Category Rate × Sales Price, Per Item Minimum)
The referral fee is Amazon's commission for making the sale. It is charged per item on the total sales price, which includes any delivery charge the buyer paid, and it applies whether the order is fulfilled by Amazon or by you.
Three shapes, not one
Rates are published by category and they do not all price the same way. The shape matters more than the headline rate:
| Shape | How it prices | Effect on margin |
|---|---|---|
| Flat | One rate on the whole price | Fee rises smoothly with price |
| Bracket | The whole price is charged at the rate of the bracket it falls in | A step at each bracket edge |
| Marginal | Each band's rate applies only to the part of the price inside that band | A kink, but no step |
Bracket categories are the trap. Crossing a bracket boundary re-prices the entire item, not just the amount above the boundary. A price rise of a few pence can therefore cost more in fee than it earns in revenue, and net margin can fall as price rises.
The practical consequence is that margin is not monotonic in price. Anything solving for a target margin has to scan the price range for the crossing point rather than assume a smooth curve, because a simple bisection can walk straight past the answer.
Worked example
Suppose a category charges one rate up to £10 and a higher rate above it, on a bracket basis. Moving a listing from £9.99 to £10.01 does not add two pence of fee. It re-rates all £10.01. Check the fee at both prices before making that move, and check Amazon's current schedule for your own category rather than assuming last year's card.
The parts people forget
- A per item minimum applies in most categories, so very cheap items pay a floor rather than the percentage. Some categories, media among them, carry no minimum at all.
- Closing fees are charged per item in media and games categories, on top of the referral fee, and are easy to miss on a low-priced book or disc. The amount differs by marketplace and by media type.
- Shape is per marketplace as well as per category. The same category can be flat in one store and bracketed in another, so a rate looked up for one marketplace does not carry to the next.
- Rates change. Treat the fee schedule as a dated document. When Amazon publishes a new card, keep the old one so historical margins stay reproducible instead of being silently restated.
Where it sits
The referral fee is an Amazon fee, so it belongs in the same column as the fulfilment fee and above contribution margin. It is charged on every sale regardless of fulfilment method, which is why it does not help distinguish FBA from merchant fulfilment when comparing the two.
Examples
- →Suppose a category rate of 15%: a £30 sale carries a £4.50 referral fee
- →In a bracket category, £9.99 and £10.01 can sit on different rates for the whole price
- →A very low priced item can pay the per item minimum rather than the percentage
Related Terms
FBA Fee
The per unit charge for Amazon picking, packing and shipping an order, set by size tier and shipping weight.
Contribution Margin
The money a unit leaves behind after Amazon's fees and cost of goods, before advertising is paid for.
Net Margin
Net profit as a percentage of the sales price, after Amazon's fees, cost of goods, advertising and returns.
COGS
The landed cost of a unit: production plus freight. Amazon never supplies it, so the seller has to enter it.
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