2 New Amazon Fee Discount Programs to look into!

Periodically a new Amazon fee discount program will launch to encourage sellers to add product listings in strategic categories. These promotions generally give you a commission discount in exchange for offering products in a category below a certain price. Any new product priced near the threshold should be lowered to benefit from the Amazon fee discount. Two of these fee discount promotions have popped up recently and I want to share them with you:

For more information about Amazon fees and other accounting, headaches visit our recent post.

“Get a referral fee discount on eligible grocery products”

This promotion was just launched on 4/26/18 and is good through 10/14/18. Here’s Amazon’s blurb and then I’ll give you the financial breakeven analysis: For a limited time (until October 14, 2018) you can take advantage of a referral fee discount on all Grocery & Gourmet products priced at or below $15. Amazon has lowered its referral fees from 15% to 8%, earning you 7% back to reinvest in your business. You can find which products are eligible in your selection by checking the Fee Preview column on the Manage Inventory page. This is a sweet deal if you sell any products that fall under the Grocery/Gourmet Category! These could be:

• Cold Beverages, Warm Beverages, Snacks, Breakfast, Candy & Chocolate, Cooking Staples, Baking, Baby Food or Flowers & Plants

Here’s the breakeven analysis:

Stated simply: If you are currently priced anywhere between $15.01-16.25 you should consider lowering your price to $15.00. This will allow you to take advantage of the Amazon fee discount program driving volume and gross margin. This would be a great time to launch new products in this category because you can afford to spend more on advertising and get traction more quickly.

“Get a Fee Discount for adding ASINs priced $7 and below”

This second Amazon fee discount program was launched on 4/10/18 and is good for NEW low-priced ASINs added before 8/15/18.  Here’s Amazon’s lengthy blurb and then I’ll give you breakeven analysis again.

Dear Seller, We are offering you a referral fee discount to help you add low-priced selection that is not available on Amazon.com. To be eligible for this promotion, ASINs must fulfill the following criteria:

1. The total sales price is $7 or below. The total sales price includes the item price and any shipping or giftwrap charges.
2. You have created the ASIN between April 10, 2018 (PST) and August 15, 2018 (PST)1. 
3. The item is not listed in Grocery or Media categories.

For items with a total price of $3.50 and below, you will get a discount of $0.50 on the referral fee. Items with a total sales price of $3.51 to $7.00, you will get a discount of $0.30 on the referral fee. For example, on categories that have a $1 minimum fee, you will pay a fee of $0.50 on eligible ASINs priced $3.50 and below, and a fee of $0.70 on eligible ASINs priced between $3.51 to $7. See below for more examples of how to calculate your fee in GLs for eligible items with a 15% referral fee and a $1 minimum fee.

1. When the total sales price is $1.00, the current fee would be $1.00, and the discounted fee will be $0.50, a savings of 50%.
2. When the total sales price is $3.50, the current fee would be $1.00, and the discounted fee will be $0.50, a savings of 50%.
3. When the total sales price is $5.00, the current fee would be $1.00, and the discounted fee will be $0.70, a savings of 30%.
4. When the total sales price is $7.00, the current fee would be $1.00, and the discounted fee will be $0.70, a savings of 30%.

You will get a discount on qualifying sales through June 15, 2019 (PST). The discount will be applicable to sales within 7 days after you list an eligible item.1 To add new offers, visit the Manage Inventory (https://sellercentral.amazon.com/inventory) page in Seller Central. Thank you for selling on Amazon, Amazon wants to give you a small raise on all new items priced below $7.00 but you should only look to lower your price if you are about to launch an item with a total between the following ranges:

• $7.01-7.30 – If your product would have been priced in this range drop your price to $7.00 and you’ll come out better given Amazon’s discount while driving more volume.
• $3.51-4.00 – If your product would have been priced in this range drop your price to $3.50 and you’ll come out better given Amazon’s discount while driving more volume.

I hope this helps you navigate these 2 new Amazon fee discount programs!

For more information about e-commerce accounting visit some of our other posts.