If you sell to Amazon wholesale, your profit is decided long before a shopper clicks Buy. It is decided by your Amazon vendor terms.

These terms set what Amazon pays for each unit, which fees you pay back, how long Amazon takes to pay and what happens when something goes wrong. Many brands sign them without checking each line.

This guide walks through every major line in a typical vendor agreement, in plain words. For each one you will see what it is, how it is charged and where vendors lose money.

What Are Amazon Vendor Terms?

Amazon vendor terms are the money and the rules in your deal with Amazon. They apply to brands on Vendor Central, where Amazon buys in bulk and sells to shoppers itself. Modern Retail puts wholesale vendors at about 40% of the products sold on Amazon.

iNymbus, which builds tools to recover vendor deductions, says these charges are agreed inside the Vendor Manager Agreement, or VMA, and negotiated each year. Rates are usually a percentage of the shipped or received cost, and Amazon applies them automatically when it pays you.

Amazon also has a standard Vendor Terms and Conditions document. A public filing by one supplier refers to it, and shows that a separate negotiated agreement can override it for certain purchases.

It helps to think of your terms in two groups:

• Money terms: cost price, fees, allowances and payment timing.

• Rule terms: shipping and prep rules that bring penalties when missed.

Why Your Terms Decide Amazon's Margin: Net PPM

Amazon's team judges your account by a number called Net PPM, short for net pure profit margin. Reason Automation, a data firm for Amazon vendors, gives the formula as shipped revenue, minus shipped cost of goods, plus vendor terms, minus sales discounts.

Here is the simple version. Say Amazon buys a product from you for $50 and sells it for $100. Amazon's margin is 50%. If your terms add $5 of funding, the margin becomes 55%.

That is the key point. Every term you agree to adds to Amazon's margin, not yours. Reason Automation notes that Net PPM leaves out Amazon's own shipping and fulfilment costs, so it is not Amazon's full profit.

Amazon Vendor Terms, Line by Line

1. Cost price

This is what Amazon pays you for each unit. Most other lines are a percentage of it.

Raising it is hard. Consultants told Modern Retail in 2025 that price increase requests were often met with silence or a flat no.

MerchantSpring adds that Amazon's systems regularly send vendors requests to lower cost on certain products. It also says Amazon may propose a price protection agreement when you cut a cost, which lets Amazon claw back the difference on stock it already bought at the higher price. Many vendors decline.

2. Base co-op (also called accrual)

Co-op, also called Contra-COGS, is money vendors pay to share the cost of marketing and promotions, says iNymbus. It is taken as a percentage of cost when Amazon pays you.

A MerchantSpring guide says the rate is often about 5% to 10%.

Reason Automation's team says Amazon counts this accrual toward its margin whether or not the money is spent. That is why the ask can rise even when last year's funds went unused.

3. Marketing development funds (MDF)

MDF is a pool of your money set aside for Amazon marketing programs such as ads, promotions and merchandising, according to iNymbus.

MerchantSpring says many vendors get little detail on what they receive. It suggests asking for placement reports, or moving part of the money into programs where you can measure results.

4. Damage allowance

This fee covers the cost of handling damaged goods. Reason Automation describes it as Amazon handling damaged products instead of the vendor, for a percentage fee.

Sources quote different rates. iNymbus says 1% to 3% depending on category, while MerchantSpring says 5% is common. Your own rate depends on your category and your damage data.

MerchantSpring quotes a former Amazon Vendor Manager who advises asking for Amazon's damage and return reports, then fixing the causes, such as packaging, to argue for a lower rate.

5. Freight allowance

If you use Amazon's freight network to move goods to its warehouses, Amazon charges a percentage for it. Reason Automation lists this in the same accrual group as damage allowance.

iNymbus warns that some vendors are charged the rate on orders where they paid for freight themselves. Check for that.

6. Payment terms

This is how long Amazon takes to pay after it receives your goods. Reason Automation lists Net 60, Net 90 and 2/30 Net 60, often called Quick Pay. In trade language, 2/30 Net 60 means a 2% discount if paid within 30 days, otherwise payment is due in 60.

MerchantSpring reports that in the 2025 round, a common ask was to move from 30 days to 60 days.

There is a catch. Reason Automation says co-op usually accrues within days of Amazon receiving stock, while the payment for that stock may land 60 to 90 days later.

7. Subscribe and Save funding

Subscribe and Save gives shoppers a discount on repeat orders. MerchantSpring says vendors often fund it, and that Amazon may propose a flat charge, such as 3% of sales, to cover it.

Compare that flat rate with the real discount cost on your subscribed sales. If the flat rate is higher, ask for a variable plan or a lower rate.

8. Amazon Vendor Services (AVS)

AVS is a paid support program with a dedicated Amazon contact. MerchantSpring says it is often about 3% of sales or a fixed fee, and that it can be negotiated down.

Reason Automation's CEO says many in the 1P world treat AVS like base co-op, a cost of doing business. He adds that it helps solve issues faster but does not drive growth.

9. Supply chain programs

Amazon offers programs meant to cut its shipping costs. Vendors pay a fee or give a discount to join. MerchantSpring lists PICS and Super-PICS, Full Truckload, VendorFlex and Direct Import.

Reason Automation says pallet ordering suits high-volume products because it reduces receiving errors such as shortage claims. Join only the programs that pay off for you.

10. Returns to the vendor

Amazon can send unsold or damaged stock back. iNymbus says Amazon issues a Vendor Returns Debit Note in Vendor Central and applies the value against your account.

Overstock and damaged goods are two common reasons. Check each return against your agreement and the price applied.

11. Cost support agreements and margin guarantees

Amazon sometimes links a price request to extra terms. A cost support agreement, or CSA, is one route. Reason Automation says a CSA must be agreed by both sides. If you must sign one, it suggests asking for:

• a cap on total value,

• a shorter true-up period, such as monthly,

• a fixed list of products, and

• a short time frame, such as one quarter.

A margin guarantee is another route. Modern Retail reports that it means the vendor repays Amazon if margin falls below a set level, even when Amazon lowers the shelf price itself. Because Amazon sets that price, your bill can grow without any change on your side.

12. Chargebacks

Chargebacks are the rule side of your terms. SPS Commerce says that at Amazon, a chargeback is a deduction for a compliance defect, such as a late or wrong shipment.

It lists seven groups, based on Amazon's own help page: purchase order, advance shipment notice, preparation, packaging, transportation, receiving and direct fulfilment problems.

Fees vary. In one Amazon example quoted by SPS Commerce, a mislabelled case pack led to a $26 fee. You can track your record under Reports, then Operational Performance.

iNymbus adds that co-op and chargebacks are different. Co-op is a contract charge. A chargeback is a penalty. Each has its own dispute path.

13. Provision for receivables (PFR)

This is the line that surprises finance teams. Reason Automation says PFR is a deduction with no invoice or PO number. Amazon holds back part of your next payment when the credits you owe, mainly co-op, are bigger than what Amazon owes you for orders.

It is not a normal dispute item. Reason Automation says it reverses as order volume catches up, and advises forecasting it instead. Seasonal brands and heavy promotion periods can see it grow.

Where to Find Your Terms in Vendor Central

Your terms are spread over several places:

• Your agreements: the VMA sets the rates. Compare every deduction to it.

• Co-op detail: iNymbus says it sits across the Remittance Report, the Chargebacks section, the Vendor Terms report and campaign dashboards.

• Chargebacks: Reports, then Operational Performance.

• Net PPM: Reports, then Retail Analytics, then Net PPM.

If you sell in the UK or EU, ask your Vendor Manager which agreements cover each store. SPS Commerce says European vendors can be handled through local, coordinated or managed negotiations.

How to Check That Amazon Applies Your Terms Correctly

iNymbus lists five patterns behind wrong deductions:

• Wrong rate. Last year's rate stays in place for weeks or months after new terms start.

• Wrong base. The rate is applied to shipped cost when the agreement says received cost.

• Double charges. The same co-op charge appears twice.

• No approval. A deduction is taken for a program you never agreed to.

• Old periods reopened. Amazon re-applies charges already settled.

iNymbus also says the standard Vendor Central dispute window is 30 days from the deduction date, and that late disputes are almost always denied. That makes a monthly check worth the time.

One more test. iNymbus says co-op can be paid but never credited in Net PPM, which weakens your position in talks.

Which Amazon Vendor Terms Can You Negotiate?

MerchantSpring says almost every term has some room, from co-op to freight to payment timing.

Timing matters, though. iNymbus says rates are changed in the annual negotiation. After signing, what you can dispute is whether Amazon applied them correctly.

A common trade is a higher co-op rate in return for faster payment. MerchantSpring says one brand did this because cash flow mattered more than extra marketing spend. Our guide to the Amazon annual vendor negotiation covers the yearly process in full.

What Is Changing in Amazon Vendor Terms Right Now

Costs are high and Amazon is guarding its margin. In 2025, Modern Retail reported that tariffs had complicated annual talks, and that Amazon was slow to accept price increases.

Reason Automation says Amazon entered 2026 focused on profit over growth. MerchantSpring says Amazon pushed for higher accruals and longer payment terms in the 2025 round.

So read every line with your own margin in mind, not only Amazon's.

A Checklist Before You Sign

• Read the VMA line by line and list every rate and what it is charged on.

• Ask what each fee buys, such as placement reports or service levels.

• Model each term against your own margin and against Net PPM.

• Compare payment terms with your cash needs.

• Check damage and freight rates against your own data.

• Cap or time-limit any CSA or margin guarantee.

• Set a monthly check of deductions against the agreement.

Amazon Vendor Terms FAQs

What are Amazon vendor terms?

They are the prices, fees and rules in your Vendor Central deal. They include cost price, co-op, allowances, payment terms and chargebacks.

Are vendor terms the same for every brand?

No. MerchantSpring says every vendor's mix of terms differs. Amazon told Modern Retail that it sets some fees, such as Premium A+, with each vendor one by one.

Can I change my terms during the year?

Rates are usually set in the annual agreement, according to iNymbus. You can ask for a cost price change at other times, but Modern Retail's reporting shows these requests are often slow or refused.

What is the difference between co-op and chargebacks?

Co-op is a cost-sharing charge written into your agreement. A chargeback is a penalty for breaking a shipping or prep rule.

Why is my payment lower than my invoice?

The gap may come from co-op, chargebacks or a provision for receivables. Match each line to your agreement and to Amazon's reports.

Know Every Line Before the Next Round

The gap between a good deal and a costly one often sits in a single line. Shop Culture's founders have worked as category and growth managers at Amazon, Flipkart and Walmart.

If you sell on Vendor Central in the UK or EU and want a clear read of your terms, book a consultation call. You can also read about our Amazon marketplace management and vendor negotiations services.