Reduce Referral Fees in Select Product Categories
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In this post, we will discuss how you can reduce your referral fees in select product categories on Amazon. By understanding the eligibility criteria, price thresholds, and availability of reduced referral fees, you can maximize your net proceeds per sale and increase your profits in the Amazon store.
Eligibility for Reduced Referral Fees
To be eligible for reduced referral fees, you need to set a low price for products in certain categories. By doing so, you can decrease your referral fees and increase your net profits from each sale. The categories that offer reduced referral fees include beauty, baby, health, personal care, grocery, and gourmet products.
Categories with Reduced Referral Fees
In the mentioned categories, the standard referral fee is 15%. However, if you set the total price of any item in these categories below $10, you will only have to pay an 8% referral fee. It’s important to note that baby products exclude baby apparel, but personal care products include personal care appliances.
Price Thresholds for Reduced Referral Fees
Products in the grocery and gourmet category with a total price at or below $15 are also eligible for the reduced 8% referral fee. This is not a discount or promotion but rather a lower referral fee rate for lower priced products in these categories.
Availability of Reduced Referral Fees
The reduced referral fees for the mentioned categories are available in the US, Canada, Mexico, the UK, Germany, France, Italy, and Spain. Amazon applies the reduced referral fees to your sales automatically when the total sales of an item are at or below the price threshold. This is applicable for both fulfilment by Amazon (FBA) orders and self-fulfilled orders.
How Reduced Referral Fees Work
When the total price of an item falls within the price threshold, the reduced referral fee rate is applied automatically. The total price includes the item price, and any shipping or gift wrapping charges, and excludes applicable taxes. In case of discounts, deals, coupons, or promotions that meet the price threshold, reduced referral fees are also applicable.
Examples of Reduced Referral Fees
Let’s consider some examples to understand how reduced referral fees work. If you have a grocery item priced at $15.01, you would normally pay a referral fee of $2.25 for each sale. However, if you charge customers $15 for the product instead, you would only pay a referral fee of $1.20 for each sale. This increase in net profits per sale allows you to reinvest in your business.
Similarly, if you have a baby, beauty, or health and personal care product priced at $10.30, the referral fee would be $1.55 for each sale. But if you charge customers $10 for the item, your referral fee would reduce to $0.80 per sale, resulting in an increase of net profits per sale by $0.44.
Price Adjustment for Increased Profits
To maximize your net profits per sale, you can consider adjusting your prices according to the price thresholds. For example, if the current total price of your grocery and gourmet products is between $15.01 and $16.23 in the US, adjusting the price to $15 will result in increased net profits per sale.
Similarly, if the current price of your product in baby, beauty, or health and personal care categories is between $10.01 and $10.82 in the US, a price adjustment to $10 will lead to higher net profits per sale.
Checking Referral Fee Savings
To check your referral fee savings, you can follow these steps:
- Select the menu icon in the top left corner of Seller Central.
- Hover over Inventory and select Manage Inventory.
- If your products are priced at or below the price thresholds for reduced referral fees, review the estimated fee per unit sold column to see your savings.
You can also download the referral fee preview report from the inventory reports page to view the referral fees for all items in your catalog. This way, you can keep track of your referral fee savings and make informed pricing decisions.
Conclusion
Reducing referral fees in select product categories on Amazon can significantly impact your net proceeds per sale and increase your overall profits. By understanding the eligibility criteria, price thresholds, and availability of reduced referral fees, you can strategically price your products and maximize your earnings in the Amazon store. Remember to check your referral fee savings regularly and adjust your prices accordingly. Happy selling!