Merch by Amazon Royalties: A Guide to Unlock the Full Benefits

May 31, 2024

Through Merch by Amazon, you can create and upload designs to be printed on items like shirts, hats, and more. You can earn Amazon royalties from these sales, but it's crucial to understand the program’s full benefits to maximize your earnings.

Continue reading this Merch Jar guide to learn more about Merch by Amazon royalties. 

What Is Merch by Amazon Royalties?

For starters, Merch by Amazon is a print-on-demand platform that lets you create or upload t-shirt designs and promote them with no up-front costs. So when a customer buys products with your designs, you earn royalties.

Merch by Amazon royalties are earnings that you receive for every design you have sold on the e-commerce platform. Your purchase price is the primary factor that determines how much royalties you can receive. You do have other costs that will affect your bottom line, though we’ll get into that a little later.

What Are the Different Tiers of the Amazon Royalties System?

Amazon’s tier system puts a limit on the number of t-shirt designs you can upload and sell to improve the customer experience. But it’s a progressive plan, meaning you can climb to the next level if you fulfill all the conditions of your current tier status.

 Let’s see how it works below: 

  • Tier 10: This tier is for newbies on Merch by Amazon. It means the platform lets you upload and market up to 10 designs. That's it. You can earn a base royalty rate on each design sale.
  • Tier 25: Once you satisfy Amazon conditions in terms of sales, you can climb to tier 25. Now you can upload up to 25 designs, leading to an increase in royalty. Compared to tier 10, your income is slightly higher.
  • Tier 100: When you reach tier 100, it shows that you’re progressing well. You can now upload up to 100 designs, expanding your sales opportunities and earnings.
  • Tier 500: Tier 500 is another great achievement because it allows you to upload 500 t-shirt designs. With loads of unique design ideas, it’s possible to improve your product range.
  • Tier 1000: Reaching this tier is something that you must be proud of since you can upload up to 1000 designs. It’s solid proof that you have smashed sales goals and have a solid track record. 

Keep in mind there are higher tiers available if you’re looking to sell t-shirt designs on an enterprise level, but for most sellers, these are the tiers to aim for. 

Why Do I Need to Understand MBA's Royalties System?

Earlier, you discovered that you receive royalties from every product sold. Here are a few things that affect your commission:

  • Product’s purchase price (your designs)
  • Applicable tax
  • Customer service
  • Returns
  • Exchanges
  • Fulfillment
  • Materials
  • Production
  • Fraud protection

To give you an idea of how much Amazon royalties you can earn from the sale of your designs, check out the calculations below:

Based on the table, it’s clear that high-end designs can give you more income. An example would be the $9.77 royalty on a $25.99 shirt, which is 37.6%. But recall that Amazon deducts some expenses mentioned previously.

Now let’s dive into why you should learn about Amazon’s royalties system:

  • Understanding the actual cost: It’s vital to grasp Amazon’s royalties system, as it helps you gain valuable insights into all business costs. You can see how they affect your profits and calculate your margins.
  • Understanding the margins: When you understand your business expenses, you can develop a pricing strategy that can lead to reasonable profits. Knowing your margins allows you to set competitive prices to improve your bottom line. 
  • Understanding the returns: Customer returns and refunds and other related costs affect your Amazon royalties. Understanding these expenses helps you see how they affect your earnings and design ways to reduce them. For example, you can enhance product quality to increase customer satisfaction.
  • Better inventory management: You can also improve managing your inventory when you understand how Amazon royalties work. For instance, monitoring your sales data, fees, and earnings enables you to identify poor-performing products. You can use the information to adjust your designs.
  • Maximize profitability: In-depth knowledge about Amazon royalties helps you discover opportunities to expand your revenue and profits. You can identify niches that can offer your Amazon business good margins.

What Are Some Tactical Things I Should Know About Amazon Royalties?

Several tactics are available to let you make the most of Amazon royalties. Here are some of them:

Amazon’s Fee Structure

Plunging headlong into Merch by Amazon without understanding the fee structure can be a double whammy of losses and frustrations. So do yourself a favor and familiarize yourself with Amazon fees, such as fulfillment, storage, referral, and other associated costs. This knowledge gives you an idea of how Amazon calculates your commission or earnings.

Category-specific Royalties

Royalty rates and fee structures may be different for specific product categories. Understanding these can allow you to calculate your margins and profits accurately. For example, Amazon has tier levels that let you sell a specific number of t-shirt designs. This can affect your profits because the highest tiers have higher profit margins.

Pricing Strategy

Before you decide on the pricing strategy, look at the relationship between your Amazon royalties and prices. For instance, if you choose to sell your products at the high end, you may miss sales opportunities with people who want bargains. Also, consider the fees that you must pay when you formulate your pricing policy.

Look at what other competitors charge, so you can set an average price that can still give you enough profits.

Fulfilled by Amazon (FBA) vs. Fulfilled by Merchant (FBM)

Amazon offers you two options for product shipping: Fulfillment by Amazon (FBA) and Fulfillment by Merchant (FMB). Each method has its associated costs and fees, so compare the expenses to determine the least-expensive fulfillment approach for your e-commerce business.

Promotional Opportunities

You can utilize a wide range of Amazon promotions to scale your brand, like Lightning Deals or Amazon Advertising. For instance, if you want to grow your sales by offering discounts for a limited time, you can leverage Lightning Deals

On the other hand, Amazon advertising comes in various shapes and sizes. Understand how advertising your Merch works and what tools you can use to promote your products. For instance, Merch Jar is ad software that takes the pain out of Amazon advertising campaigns. It automates your ad campaigns, including choosing the best keywords that can drive massive traffic and improve sales.

Account for Returns

Don’t forget to analyze the impact of returns on your Amazon royalties and profits. That’s because you might pay extra for returns since returned products need further processing and inspection. When you see how these fees impact your royalties, it becomes easy to find ways to minimize them.

Stay Updated

Lawyers say: “Ignorance of the law is no excuse,” meaning you can’t defend your actions because you claim you didn’t know. In the same way, keep yourself in the loop about Amazon’s fee structure so you don’t cry foul when you see a dip in your profits. 

Staying updated empowers you to make the right decisions about your pricing, profits, and sales. For instance, this article on “Merch by Amazon (MBA): Best Insider Practices You Must Know” is an eye-opener on how Amazon ads work.

Pump up Your Merch by Amazon Royalties with Amazon Advertising Software

Whenever you sell a product on Merch by Amazon, you receive royalties. Several factors, like price, fees, customer service, returns, and fraud protection, affect your Merch by Amazon royalties. Also, Amazon has different tiers, each with a specific number of t-shirt designs you can upload or create.

Various promotional Amazon strategies are available to rev up your Amazon royalties. Merch Jar is an Amazon advertising tool that automates the time-consuming tasks of creating and managing ad campaigns. Our software is designed to help you manage and automate your ads, so you can focus on what you do best - growing your business. Register for free to see how the tool works!