Amazon Merch Fees In 2022 (What Are They + Other FAQs Answered)
As an experienced Amazon seller, one of the most common questions I get asked is: "What are the fees for Merch by Amazon?"
Navigating Merch costs can seem complex for new sellers. In this detailed guide, I‘ll explain everything you need to know about Amazon Merch fees in 2022.
You‘ll learn:
- Exact rates for referral fees, production costs, and shipping charges
- Tips for minimizing fees and maximizing royalty profits
- How Merch fees compare to Amazon FBA and other programs
- Changes to Merch fees over time
- Answers to frequently asked questions
Whether you‘re just starting out or are a seasoned Merch seller, understanding fees is crucial for making the most of this platform. Let‘s dive in!
What is Merch by Amazon and How Does it Work?
Before we look at the fees, let‘s quickly cover the basics of how Merch works.
Merch by Amazon allows you to upload and sell t-shirt designs on Amazon‘s marketplace.
As the seller, you handle the creative work of designing shirts. Amazon takes care of everything else including production, shipping, and customer service.
When a customer places an order, Amazon prints the t-shirt on-demand and ships it out. You earn a royalty on each sale after Amazon‘s fees are deducted.
It‘s an extremely popular service with over 1 million t-shirt designs now listed on Amazon. But to maximize profits, navigating Merch‘s fee structure is vital.
Here‘s a simple overview of how the fees work:
[Insert summary infographic of Merch fees]Now let‘s look at each fee in more detail.
Types of Amazon Merch Fees
Selling on Merch involves 3 main types of fees:
1. Referral Fee
This is Amazon‘s commission fee for facilitating the sale. It ranges from 15% to 20% based on the product sold:
- Short sleeve t-shirts – 15%
- Long sleeve t-shirts – 20%
- Hoodies & sweatshirts – 20%
For example, if your short sleeve t-shirt sells for $20, Amazon takes a $3 referral fee (15% of $20).
Referral fees are deducted from your royalties whenever a sale is made. The remainder is paid out monthly.
2. Production Cost
This covers the base cost for Amazon to manufacture and print the t-shirt on-demand. Production costs vary by item:
- Short sleeve t-shirts – $3.24
- Long sleeve t-shirts – $4.26
- Hoodies & sweatshirts – $7.35
The production cost is fixed regardless of size, color or design complexity. This fee is deducted upfront before royalties are calculated.
3. Shipping Fee
Amazon charges a shipping fee for each order fulfilled based on:
- T-shirt type
- Customer‘s selected shipping speed
Here are the standard shipping rates as of 2022:
| Product | Shipping Cost |
|---|---|
| Short Sleeve T-Shirt | $3.99 – $5.99 |
| Long Sleeve T-Shirt | $4.99 – $6.99 |
| Hoodies & Sweatshirts | $6.99 – $8.99 |
Orders over $25 get free shipping. Otherwise standard delivery is $3.99 – $5.99, and expedited shipping ranges from $4.99 – $8.99.
Shipping fees are deducted before seller royalties are calculated.
Now that you understand the main fee categories, let‘s look at some real examples.
Calculating Fees on Merch Sales
To show how fees impact royalties, here are a few examples:
T-Shirt Priced at $20
- Referral Fee: 15% x $20 = $3
- Production Cost: $3.24
- Shipping Fee: $4.99 (standard)
- Total Fees = $11.23
- Royalty = $20 sale price – $11.23 fees = $8.77
For a $20 short sleeve t-shirt, the seller would earn $8.77 in royalty profit after Amazon‘s fees.
Hoodie Priced at $35
- Referral Fee: 20% x $35 = $7
- Production Cost: $7.35
- Shipping Fee: $6.99 (standard)
- Total Fees = $21.34
- Royalty = $35 sale price – $21.34 fees = $13.66
The royalty profit on a $35 hoodie would be $13.66 after fees.
Long Sleeve T-Shirt Priced at $25
- Referral Fee: 20% x $25 = $5
- Production Cost: $4.26
- Shipping Fee: $0 (free shipping over $25)
- Total Fees = $9.26
- Royalty = $25 sale price – $9.26 fees = $15.74
With free shipping, the royalty on a $25 long sleeve increases to $15.74.
As you can see, pricing higher and offering premium items can help maximize profit margins after fees.
Next let‘s look at some ways to further minimize fees.
Tips for Reducing Fees on Merch
Here are 8 proven tips to help minimize fees and increase royalties:
1. Drive External Traffic
Instead of relying solely on Amazon search, focus on driving traffic to your listings from outside sources like social media, Google ads, influencers etc. This increases full price sales and avoids discounts.
2. Optimize Your Merch Account
As you move up to higher Merch tiers, you unlock increased royalty rates and lower referral fees. Improve your account to reach these higher tiers quicker.
3. Price Above Breakeven
Account for fees in your pricing. Price high enough to earn a profit after fees. Avoid unprofitably low prices.
4. Delete Poor Sellers
Regularly prune designs that aren‘t selling to avoid accruing production costs on inactive listings.
5. Promote Selectively
Use promotions sparingly on slow sellers. Avoid sitewide price cuts that slash margins.
6. Upsell Premium Products
Funnel buyers towards hoodies and long sleeves which have lower referral fees.
7. Leverage Amazon Prime
Prime orders get free shipping. Encourage Prime subscriptions and purchases to avoid shipping fees.
8. Sell More Per Order
Bundled offers and smart cross-selling can increase order values. Higher cart totals get free shipping.
Mastering these strategies takes time but can yield significant fee reductions and bigger royalty checks!
How Have Merch Fees Changed Over Time?
Merch fees and royalty structures have evolved quite a bit since the program first launched in 2016. Here are some of the most notable changes over the years:
- 2016-2017
- No referral fees (only production and shipping costs)
- Higher royalties around 20-25%
- 2018 – Referral fees introduced starting at 8%
- 2019 – Referral fees climbed to 15-20% based on tier
- 2020 – Production costs increased from $2.80 per unit to $3.24
- 2021 – Additional products added like long sleeve tees and hoodies
- 2022 – Referral fee on long sleeves increased to 20%
While fees have increased over time, Merch still offers a very affordable way to start a t-shirt brand compared to other alternatives. But understanding the shifts in fee structure equips you to better plan your pricing and margins.
Next let‘s compare Merch to Amazon‘s flagship FBA program.
How Do Merch Fees Compare to Amazon FBA?
Sellers often wonder whether Merch or Fulfillment by Amazon (FBA) is more profitable. Both programs involve fees, but there are some key differences.
Merch Advantages:
- No upfront inventory costs
- Lower risks for new sellers
- Easier account setup and management
FBA Advantages:
- Much wider selection of products
- Bigger buyer audience
- More control over pricing and inventory
Merch Fees:
- Referral fees (15-20%)
- Production costs per unit
- Shipping fees per order
FBA Fees:
- Referral fees (up to 45% in some categories!)
- FBA pick & pack fees
- Monthly storage fees
- Shipping fees per unit
For beginners, Merch tends to be more affordable and approachable to get started. But FBA offers greater scale potential for established sellers.
At low volumes, Merch delivers higher profit margins on apparel. But at scale, FBA becomes more profitable as referral rates drop and you save on production costs.
So assess your skills and business goals when choosing between these two fulfillment options.
Answers to Common Merch Fee Questions
Here are some of the most frequently asked questions I get about Merch fees:
Are there any fees just to apply for Merch?
Nope! Applying for Merch is totally free. If accepted, you can start uploading designs without any upfront costs.
Do I have to pay for t-shirts I upload before any sales?
No, Merch is print-on-demand. You are only charged fees when a sale is made. There‘s no upfront inventory risk.
How much can I earn selling t-shirts on Merch?
Royalties typically range from $2 to $10+ per shirt sold. Top sellers earn 5-figures per month. Income depends on your volume of designs and sales.
What happens if my design doesn‘t sell initially?
Listings that don‘t sell for 180 days can be removed for free to avoid accruing production fees on inactive designs.
Can I sell my Merch shirts on other sites too?
No, your designs can only be sold exclusively through Amazon as part of the Merch agreement. Other sales channels are not allowed.
Are any tax forms required for Merch income?
Yes, you‘ll need to file a 1099-K form if you exceed $20,000 in sales and 200 transactions in a calendar year.
Who pays for returns on Merch orders?
Amazon deducts return fees from your royalties. So designers don‘t pay anything additional out of pocket.
Hopefully these answers help clarify some common questions around Merch fees and payouts. Feel free to reach out if you have any other fee-related questions!
Final Tips for Merch Selling Success
In closing, here are my top 5 tips for minimizing fees and maximizing your Merch income:
??????Price above breakeven – Always account for fees in your pricing to maintain profit margins.
??????Delete poor sellers regularly – Prune low performers to avoid wasting money on production fees.
??????Drive external traffic – Reduce reliance on Amazon for sales. Market outside the platform.
??????Optimize account tier – Level up tiers quickly to unlock reduced referral rates.
??????Analyze data – Use tools like Merch Informer to track fees and identify areas to optimize.
Learning to navigate Merch fees does take some work. But sellers who master the fee structure can build hugely profitable t-shirt brands on Amazon‘s platform.
I hope this guide gives you confidence in evaluating potential Merch costs and setting appropriate prices. Feel free to reach out if you need any other advice getting started!
