How Much Does It Cost To Sell On Amazon

Are you concerned about the required cost to sell on Amazon but eager to get started? Positive updates! It’s not as much as you may believe. According to research, most new sellers start selling on Amazon for between $2,500 and $5,000, which includes the cost of the products, Amazon fees, and other required upfront expenses.

However, although some Amazon sellers start with as little as $500, others invest five figures or more in their new businesses; both extremes can succeed on Amazon. Knowing the actual cost to sell on Amazon is important for budgeting and planning your e-commerce business.

This article will review the necessary cost of selling on Amazon and investigate how various investments could yield various returns for sellers on the platform.

How Much Does It Cost To Launch an Amazon Business?

Thousands of Amazon sellers were surveyed to determine the precise amount of money they spent when they first started.

• 14% of Amazon vendors began with just $500 or less. 
• Starting with between $501 and $1,000, 9% of Amazon sellers 
• Starting with between $1,001 and $2,500, 16% of Amazon sellers 
• Beginning with $2,501 to $5,000, 23% of Amazon sellers 
• Starting with $5,000–$10,000, 18% of Amazon sellers 
• Starting with more than $10,000, 17% of Amazon sellers 

Do Sellers That Invest More Money On Amazon Succeed?

Investing more capital to launch an Amazon business does not guarantee greater profitability for the seller. In fact, vendors who had less money when they first started typically succeeded more quickly and survived longer than those who had more. Starting an Amazon business costs-

1. Sellers who have a $500 starting capital:

• For five years or more, 22% of them have sold. 
• 47% of them launched and operated their Amazon businesses in less than a month. 
• In less than six months, 66% of them made a profit, and in less than three months, 42% did so. 
• On Amazon, 30% of users list more than 100 things. 
• Thirty percent claim they spend less than four hours a week on their business, and fifty percent say they spend less than twenty hours.

2. Sellers who began with $10,000 or more:

• For five years or more, 23% of them have sold. 
• 73% of them needed more than six weeks to launch their Amazon business. 
• Of them, 43% said it took them between six months and two years to earn a profit, while
• 32% said they did so in less than a month. 
• Over 250 products are listed by 20% of Amazon users. 
• 10% of respondents claim they work 60 hours or more a week on their business, and 70% say they work more than 20 hours.

What is The Required Amount To Begin Selling On Amazon?

The cost to sell on Amazon is divided into the following three categories in the remaining portion of this article:

• Required charges: You must pay these fees and additional costs to start selling on Amazon. 
• Recommended costs: Although you can launch a profitable Amazon business without these line items, you are advised to do so. 
• Additional expenses: These are the expenses that, while they can assist you in launching your firm, are optional for someone just starting.

What is The First Step in Selling On Amazon?

The majority of Amazon sellers choose the private label business model, in which they produce and brand their products to sell on Amazon. This method functions in four simple phases as follows:

• INVESTIGATE – To identify a product with low competition and great demand, utilize Amazon data. 
• SOURCE – To make your own branded version of the product, find a manufacturer who produces comparable products. 
• START – Post the product on Amazon and select whether to ship it using Fulfilled by Merchant (FBM) or Fulfilled by Amazon (FBA). 
• PROMOTE – Use Amazon PPC to advertise and market your products both on and off the platform.

The Expenses Needed To Start Selling On Amazon

The cost of selling on Amazon can vary widely depending on factors such as the product category, shipping costs, and fulfillment method. Before we break down the start-up expenditures for an Amazon online business, we want to decide what kind of initial investment we will offer and how much.

• We’re going to sell it on the US Amazon shop.
• Because the FBA model enables greater scalability in the future, we will offer our product under a private label. 
• Our item has a total landed cost of $4. (Your landed cost is the cost of manufacturing the goods plus the cost of delivering each unit, taxes, etc.)
• Our goal is to achieve a Return on Investment of 100%. 
• The product will be lightweight enough to be shipped by air and standard in size, fitting within a shoebox. 
• To sell, we plan to buy 500 units.

Breakdown of the costs needed to sell on Amazon

The breakdown of the various costs involved in starting an Amazon business is as follows:

In the first part, you will learn about the costs that are necessary and mandatory for you. In the second part, you will learn about the costs that experts recommend. We will also look at some additional costs that are completely optional but can benefit your business.

Part 1: Necessary or Mandatory Costs to Sell on Amazon.

1. Samples: Around $100 Each 

Samples are essential when obtaining a private-label product to sell through Amazon FBA.

Samples are the best approach to confirm quality and proceed with the best provider because there may be a big discrepancy between the product’s actual quality and the specifications you find on Alibaba or other online manufacturing sources.

Once you’ve located possible providers, we advise obtaining a sample from the top three to keep expenses down. (You are responsible for covering both the product’s manufacturing and delivery costs.)

As a general guideline, each sample will cost $100; however, the exact amount may vary depending on the product. The journey from the supplier to your door will take five days or fewer. The three samples that are suggested will cost about $300.

After you get the samples, you select the one that most closely resembles the product you have in mind.

2. Inventory: Around $2,000

You’re all set to buy your stuff after selecting your provider!

The majority of suppliers that you find on various platforms will have a minimum order quantity (MOQ). Our experience shows that 500 units is the typical MOQ. Therefore, we’ll take into account the cost of buying 500 units for our estimates. (If you can work out a lesser quantity with a supplier, you can do so, but typically speaking, it means they will charge you more for each item; in other words, it might not be worth it.)

In addition, the total cost of our product, including shipping, will be $4 per unit. With 500 pieces at a price of $4 each, our anticipated starting inventory will be $2,000. 

3. Professional Seller Account Fees: $39.99 Per Month

You will have to pay Amazon for the right to offer things on their website, regardless of what you decide to sell. Either a Professional Seller Account or an Individual Seller Account can be used for this.  You must pay $0.99 for each item sold through the Individual Account and $39.99 per month for the Professional Sellers Account.

Opening a professional account will be more cost-effective if we reach our monthly sales target of over 40 units.

4. UPC CODE: $30

A valid barcode is required to create a “FNSKU” (Fulfilment Network Stock Keeping Unit), an Amazon-exclusive barcode that needs to be placed on each product’s packaging in order for you to begin selling on the website.

In addition, Amazon’s TOS stipulates that you must obtain a GTIN (Global Trade Identification Number), which is typically a UPC, in order to get your FNSKU.

In 2018, Amazon’s TOS was modified to require that barcodes originate from GS1, the top global provider. A single GTIN/barcode is now available from GS1 for just $30.

So now, if we count the total cost that you actually need, it will be $2,570.

$2,570 IS THE TOTAL “NEEDED” COST TO SELL ON AMAZON.

Additionally, Amazon consulting experts recommend that you include the following costs in your budget to help position your Amazon business for success.

Part 2: Recommended Costs to Sell on Amazon

5. Sponsored Advertisements Budget: $300 ($10 Daily For 30 Days)

To support a successful product launch, your first sales on Amazon will need to come from Amazon PPC ads. Customers will only be able to find your goods if they are on one of the last pages of the search results. After all, they will be fresh.

Using Amazon Advertising to promote your goods can help them appear on the first page of search results. Your sales can increase rapidly with this tactic.

Assume for the moment that you have a $10 daily lower-end budget for your advertising initiatives. (Amazon recommends this as the default amount.) Assuming a 10% conversion rate, you should get between 20 and 30 clicks on your product per day, translating into two to three sales. Using PPC will help improve impressions and clicks to your product listing, yet this isn’t a stat that applies to everyone.

Ensuring your listing is completely optimized is a crucial step before launching advertisements. Your advertisements won’t result in sales if your products are poorly photographed or lack information, which will cost you money.

6. Registered Trademark: $350

Brand owners need to have a registered trademark in order to register their brand with the Amazon Brand Registry. (Note: To sell on Amazon, you do not require a trademark.)

Amazon has a program called Brand Registry, where sellers can register as the owner of a brand trademark. This program gives sellers access to extra features and selling rights like A+ content, Amazon Stores, and cutting-edge advertising goods like Sponsored Brands Ads and Sponsored Display Ads and assists Amazon in designating their product as “official.”

However, before they can use more Brand Registry services, sellers must file for a trademark and wait for it to be approved. The trademark process can take several months to complete.

Other sellers in your industry may be brand-registered and utilize the many advanced capabilities of today’s cutthroat marketplace. As a result, starting the trademark application procedure and investing early are your best options. This will allow you to register your brand as quickly as feasible.

Conduct thorough research before developing your brand to ensure that you can apply for a trademark without violating any current trademarks or brand names in the future.

What is the price of a trademark? It costs about $350 if you go through a local intellectual property lawyer. Using www.uspto.gov, you can even apply for a registered trademark on your own for around half the price of using a trademark service or an attorney. 

APPROXIMATELY $650 IS THE TOTAL “RECOMMENDED” COST TO SELL ON AMAZON (PLUS NEEDED FEES).

Additional Cost to Sell On Amazon

You do not have to pay the following expenses to begin selling on Amazon. However, making these investments could enable you to launch a more successful product and a more polished presentation.

• Design Work: $200
  

A graphic designer may do wonders for your brand’s legitimacy. For your product listing, they may assist you with infographics, product inserts, packaging design, logo creation, and photo touch-ups.

Even if it’s hard to value good design, well-designed packaging elevates a product and makes it suitable for a higher price range.

• Product Images: $300

Your product must stand out from the competition, especially when you are competing against other sellers who might be offering comparable products. Excellent pictures and utilizing Amazon A+ content design (an advanced feature that can enhance your product listings) can enable you to do this.

Thus, even though we’re classifying photography as an “extra,” pick this one if you can only afford one more expense! The entire “extra” cost to sell on Amazon is $500 (plus necessary expenses).

How Can the Price of Products Selling on Amazon Be Lowered?

If these prices seem excessive, we have several strategies to reduce your selling costs on Amazon.

• Think About An Alternative Business Plan
  

A model other than a private label can be used.

For instance, you can make your handcrafted goods, engage in retail or online arbitrage, or sell secondhand books on Amazon or other stuff around your house. (Arbitrage refers to buying products to resell on Amazon from somewhere else, such as a physical store or another online marketplace.)

After seeing initial success with these business strategies, a lot of vendors moved to the private label approach.

• Look For A Product That Has A Cheap Cost Per Unit. 

In our example, we started with 500 units of a commodity that cost $4 completely landed.

You can spend $0.50 on reputable, high-potential products on Alibaba. Consequently, assuming a $0.25 delivery fee per unit would reduce your initial inventory costs to $325 (500 units multiplied by $0.75).

When you factor in the samples ($300, as previously indicated) plus the $40 Amazon seller’s fee, your upfront commitment comes to $665.

This represents roughly one-fifth of the typical startup costs for an Amazon private label company.

MAKE IT HAPPEN ON YOUR OWN!

 Time is another important variable. It will cost extra to get started if you are short on time and resources and unable to complete activities like product research, design, photography, and setting up product listings yourself.

Try to handle as many of the pre-launch tasks as you can. This is especially important if you’re a new seller or an established seller introducing a new product.

Outsourcing should begin once the product has launched and is selling quickly off the shelves.

Items That Are Not Recommended For Purchase

Investing in your Amazon business can take many forms, but some expenses are more important than others. Generally speaking, we advise against investing in:

• Legal Fees
  

It is not necessary to register a business to sell products on Amazon. While many profitable Amazon sellers choose to create a legal framework for their company, they usually do so later in the process, when it’s both essential and profitable.

• Own Webpage

A standalone website can prove beneficial in the future, especially if your brand grows beyond one or two products. But initially, it’s an unnecessary diversion because maintaining your website requires money, effort, and resources.

Instead, use resources to promote and optimize your product listing on social media. You may take advantage of Amazon PPC services or Sponsored ads to increase traffic to your product listings.

In other words, if you’re just getting started, put this one on hold for the time being.

Minimum Amount Needed To Start Selling On Amazon

According to the study results above, Amazon sellers claim to have invested an average of $3,836 to launch their businesses.

According to the above breakdown of fees, sellers can launch a private label business with Amazon FBA for between $2,790 and $3,940 (assuming necessary expenditures + $650 suggested costs and $500 additional costs).