What selling on Amazon UK actually costs
Amazon UK is still the biggest single shop window available to a British small business, and its fees are priced accordingly. Before you send a single unit to a fulfilment centre, map every charge you will face, because they stack in ways that catch first-time sellers out.
- Professional selling plan: £25 a month plus VAT, worthwhile as soon as you sell more than a few dozen items
- Referral fee: Amazon's commission on every sale, typically around 15% of the total the customer pays including postage, with lower rates in a few categories such as consumer electronics
- FBA fulfilment fee: a per-unit pick, pack and delivery charge set by size and weight band
- Monthly storage fees, which rise steeply from October to December, plus aged-stock surcharges on inventory that sits unsold for months
- The extras that become essentials: Sponsored Products advertising, returns processing in categories like clothing, and prep or labelling services
Amazon also bills UK-established sellers through its UK entity these days, which means fees carry 20% VAT. If you are VAT registered you can reclaim it; if you are not, treat it as a real cost in your sums.
A worked example: the £24.99 product
Take a hypothetical kitchen gadget selling at £24.99 with free delivery, fulfilled by Amazon. These figures are illustrative rather than quotes, and rates change, so always confirm current numbers in Seller Central. The shape of the sum, though, is realistic.
- Sale price: £24.99, which includes £4.17 of VAT owed to HMRC if you are registered
- Referral fee at 15%: about £3.75
- FBA fulfilment fee for a small standard parcel: roughly £3
- Storage, inbound shipping and prep averaged per unit: around 60p
- Landed product cost from your supplier: £8
That leaves roughly £5.50 per unit before advertising. Run Sponsored Products at a fairly normal 20 to 25% cost of sale on the orders ads generate and the blended margin thins quickly. A useful rule of thumb: if your landed cost is more than about a third of your selling price, the Amazon maths gets uncomfortable.
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How the Buy Box is actually won
Amazon now officially calls the Buy Box the Featured Offer, and the overwhelming majority of purchases go through it. When several sellers offer the same listing, Amazon's algorithm decides whose offer sits behind the Add to Basket button. It weighs total price including delivery, fulfilment method, promised delivery speed, seller metrics such as order defect rate and late dispatch rate, and stock availability.
FBA offers usually beat merchant-fulfilled offers at the same price because Prime delivery is baked in. Resellers competing on shared listings live and die by repricing software; if that sounds exhausting, that is because it is.
If you sell your own branded product you hold the Featured Offer by default, but Amazon can still suppress the buy button when your price looks high against comparable products or against your own price elsewhere. Price consistency across your channels matters more than many sellers realise.
Products that should not bother
Amazon is not a universal answer. Some products simply cannot carry the fee stack, and knowing that before you buy stock is the cheapest lesson in ecommerce.
- Items selling under about £10: even with Amazon's reduced Low-Price FBA rates, fees consume most of the margin
- Heavy or bulky low-value goods, where fulfilment and storage charges dominate the price
- Unbranded generics in crowded categories, where established sellers will undercut you within weeks
- Products in gated categories you cannot realistically get approval for, such as some medical or food lines
- Brands you do not control: if anyone can source the same stock, expect a race to the bottom on a shared listing
FBA or fulfil it yourself?
FBA earns the Prime badge, improves your Featured Offer chances and removes the daily post office run, which is why most serious sellers use it for their fast movers. It is a poor fit for slow-selling lines, oversized items and anything made to order, where storage fees and per-unit charges pile up on stock that is not turning.
Merchant fulfilment (FBM) keeps margin and control in your hands, and Seller Fulfilled Prime is achievable if your dispatch performance is consistently excellent. In practice, many UK sellers run a hybrid: FBA for the bestsellers, FBM for the long tail, and FBM as backup when FBA stock runs dry or check-in is delayed.
Key Takeaway
Before listing anything on Amazon UK, run the full fee stack on one product: £25 plus VAT monthly, roughly 15% referral fee on the total the customer pays, FBA fulfilment and storage charges, plus advertising. If your landed cost exceeds about a third of your selling price, margins collapse. Win the Featured Offer with FBA, sharp total pricing and clean seller metrics, and avoid sub-£10, bulky or unbranded products entirely.
Treat Amazon as a channel, not the business
Amazon owns the customer relationship: you get an order, not an email address or permission to remarket. Enrol in Brand Registry if you own a trade mark, use A+ content to lift conversion, consider the Vine programme for early reviews, and review true profitability per SKU every month rather than trusting topline sales.
The healthiest pattern is Amazon for discovery and a direct site for repeat purchase, where both your margin and your data improve. If you want help modelling the numbers for your own product or setting up a marketplace channel properly, our team is happy to work through it with you.