How much does it cost to sell on Amazon? This question is haunting us seriously.
We have been thinking, searching and digging for the right answer to tell you how much it actually cost selling on Amazon.
Obviously, there is no precise and accurate answer to it. But we have analyzed each and every cost and mentioned it in the article so you can have a comprehensive idea about the cost of selling on Amazon.
We pointed out every single cost, in order, that you will have to pay when you join Amazon and we divide it into 4 costs.
1st Cost – Joining Amazon Cost
2nd Cost – Setup your Amazon Store Cost (Major cost)
3rd Cost – After Sales Cost
4th Cost – FBA Cost
Let’s find out how much it actually cost to sell on Amazon.
1st Cost – Joining Amazon
Amazon Seller Account
To come onboard Amazon you have to register yourself on Amazon seller account.
There are two seller accounts that Amazon offers individual and professional seller account.
Individual Seller Account:
As the name suggests this account plan is basically for an individual seller or small business.
There is 0 subscription fee, you can set this account for free. The individual account seller has a limit to sell up to 40 items in a month.
However, there is a per-item fee of $0.99 that would be charged on each item sales.
Professional Seller Account:
This is an option for professional sellers. There is a subscription fee of $39.99/month that offers unlimited item listing along with inventory management and gift wrap offer.
2nd Cost – Amazon Store Setup Cost
Before calculating the cost of Amazon fees, we want to show you some major cost that incurred in the process of final listing your product on Amazon that included; setting up the store, inventory, marketing and product launch.
Let’s find out how much it costs to setup Amazon store.
1. Amazon Seller Account Cost
We have mentioned it earlier, here we are mentioning it for the total cost calculation.
As you must have probably know that there are two Amazon seller account.
Basic Account/ Individual Seller – $0.99/item
Professional Account – $39.99/month subscription
Generally, people recommend to individual account to start then switch to professional account. But we recommend you to go for professional account. Here is the reason;
If you do everything right and setup your business with FBA you can easily sell 40 items or more in a month that means you will be end up paying $40/month anyways and you cannot sell more than 40 products.
Other than that pro accounts give good marketing option and analytics that help you to optimize your business.
Well, it up to your preference what you choose. Here we are taking the seller account cost for $40.
2. Product Research Cost
If you are starting from scratch you’ll need to spend some amount on product research to hack your business growth. It would be your first step in online marketplace so there should be no stone unturned.
There are multiple Amazon product research tools that help you to analyze about the current market trends from where you can identify your winner product.
There are multiple Amazon research tool out there such as AMZ tracker, Feedback Genius, Keyword Inspector etc.
Currently, the most sought after research tool is Jungle Scout so we will go for that.
Jungle Scout offers two tools;
For the starting, we recommend to go for Chrome extension light version ($97) it would work amazing for your business.
3. Logo and Box Design Cost
If you are a professional graphic designer then you can skip this cost.
Logo and design of your store plays a crucial role to make your store look presentable and to design your packaging. You can choose the designer by any approach, however the simplest way is to look out for designer on Fiver or Upwork.
The cost is depend on the professional level of the designer you choose it could vary from $5 to $75.
On the safe side we are taking the amount $50 as a logo and design cost.
4. UPC barcode
Amazon’s policy require all of the listing product to have a UPC (Universal Product Code).
From other platform buying barcode could be really expensive. You can use your barcode from Barcodemania that will work for your Amazon store and just cost you around $5.
5. Product Sample /Testing Cost
Before ordering your inventory, you have to test different manufacturers’ product and choose best for you.
To choose the best supplier or manufacturer you’ll have to choose between 3 to 4 samples at least.
Let say, if one sample cost you around $50 for 3 sample, so 50 x 3 = $150.
6. Inventory Cost
The biggest cost you will face would be of the product ordering. You will have to order maximum items under your budget to have a good list of item on your Amazon store.
For the start, minimum 300 items you must have to put on the listing. If an item is costing around $4 then for 300 items you will cost you $1200 to order inventory.
7. Shipment Cost
To ship your product there are two option you have, air freight and ocean freight.
We suggested you to choose ocean freight or shipment by sea because it’s a lot cheaper than shipment by air.
To ship your 300 units by sea you would have to keep aside a budget of $500.
8. Product Photography
Picture of your product is the primary way to entice your customer to make a purchase. Many people escape this cost but we give it higher priority as it the crucial step to make your product look good on website.
Photo are huge representation of your product, you cannot compromise here on quality because you need 8 picture of an item for the listing.
You can hire professional photographers whose cost varies from $50 to $300 depending on the professional level.
You should keep a budget of around $150 that would be fine to give you great pictures of your items.
9. Launch and Marketing Cost
A perfect launch and marketing is extremely crucial to give a kick-start to your Amazon store.
There are hundreds and thousands of similar store out there like yours. So, you need to stand out among them and make a killer first impression.
To get on the first page of Amazon searches you need to get some quick sales. Promotional giveaways are the best option to do that but you’d better run it on a hosted platform.
We have come up with two product launch platform that is recommended by successful Amazon sellers.
It is an absolute amazing launch that provide a productive giveaway model. They actually dig deep down to find out your target audience from your Facebook ads who are actually interested in your product and separate them from those who are just discount hunters.
That will help you increase your rank on Amazon because Amazon tracks down the Facebook users profile and when quality buyers comes to your website you get brighter chances to come on first page.
Its packages is a bit expensive but a starter $297 package would be effective if its fits in your budget.
This launch service is also very productive, they run your launch campaign and target your customer with email marketing after they made a purchase and also insist them to leave a review on your store that is extremely important for Amazon store.
Its starter package starts from $29 per month on annual billing which is very reasonable as well as effective.
In the case of setting up a store, where budget is usually very tight, we would rather choose Jumpsend starter package for launch service.
10. Cash flow (optional cost)
No matter what business you step in there is always some required for purchases. In online business payments are tend to delay and take more time than usual.
Keep in mind that Amazon takes 2-week to clear your payment and its take around 6-week in in next shipment.
You have some cash in hand to keep the business running. There is not a fix amount how much you should have but for initial at least $200 – $250 should be in your hand for cash flow.
So all in all, the cost of setting up your store putting your items on Amazon listing would be cost around $2250.
After you are done with account setup and product listing. Your store is now live on Amazon store.
Once your store now there are multiple sellers fees depending on your product category that you need to pay every your make a sale.
3rd Cost – After the Sales Cost
Amazon Referral Fees
Note: If you are selling as an individual buyer $0.99/item is separate cost from referral fees.
The referral cost varies from item and product categories.
It goes from 7% up to 45%, depends on the product category and size. On an average Amazon charges 15% referral fees on most of the categories.
Check your product category referral fee here.
The percentage of referral fee is charged on the total sales price that has been taken from the customer.
For Media Product: The referral fees will be charged the product (Software, video, games, music and videos) sales prices.
Media product sellers have to pay a closing fees of $1.80 for every sold item.
For Non-media product: The referral fees will be charged on total price received from customer (including shipping and gift wrapping cost).
The tax is an exception from total price so the referral fee will not be charged excluding the tax.
If you sold a watch for $10 and charged the shipping for $3 and applied sales tax of $1. The referral fee for the watches is 15% and it will be charged on the amount $13 that would be $1.95. Amazon will ignore that $1 of sales tax.
4th Cost – Amazon FBA Fees
If you sell through FBA program, then Amazon will charge you for its services of boxing, packaging, shipping and customer support fees.
The FBA cost divided into two categories;
Packing & Handling Fees: This is the fees of entire process from picking the product to shipping it.
Monthly Storage Fees: The fees amazon charge on managing your inventory in its fulfillment center.
The picking, packaging and shipping fulfillment fees structure is categories into two product sizes;
Standard-size products: Less than 21 pounds
Oversize products: greater than 21 pounds
Check out the image below for standard and oversize product rate as per their rates.
The fulfillment storage fees also different for standard and oversize.
Here is also the example of FBA fees for different type of product.
If you are planning to enter into Amazon marketplace by FBA, make sure to understand each and every cost of the product category that you are planning to sell.
We have tried to go to the ending point of finding out cost of selling on Amazon. We have considered all the necessary cost that should be included in costing area.
The cost to sell on Amazon is highly dependent the product niche and category you are planning to enter.
Nonetheless by analyzing the research and each and every cost we can say with some confidence that the cost to sell on Amazon would be around $2500 – $3000.
If you are planning to enter into the giant marketplace of eCommerce then you must should get into this market with at least a budget of $2500 to run serious business on Amazon.
Let us know in the comment if you think about any other cost that we have missed!