How much does it cost to sell on Amazon? This question is haunting us seriously.
The cost of selling on Amazon starts from buying one of the Amazon seller fees.
Amazon offers two seller accounts that are individual ($0.99/item sold) and premium ($39.99/month).
Premium plan comes at $39.99 per month + per item fee varied by product category.
Individual plan comes free, but you cannot sell more than 40 items in a month, and you will have pay to $0.99 on each item sell + per item fee varied by product category.
So, if you sell 40 items in a month then selling on Amazon will cost you $39.99 a month eventually.
But, does it only cost $39.99 to sell on Amazon? I do not think so!
Amazon Selling Fees
Apart from seller account fees, there are other cost that you must know to become an Amazon seller. As per our calculation you must have $2500-$3000 in hand as a Amazon selling fees.
I have been thinking, searching and digging for the right answer to tell you how much does Amazon charge to sell on its platform.
Obviously, there is no precise and accurate answer to it. But I have tried to analyze every single Amazon fees and mentioned it in the post.
At the end of this post, you will have a comprehensive idea about the actual Amazon seller fees.
I have pointed out every single cost, in order, and divided into 4 costs that you will have to pay as Amazon selling fees.
Let’s find out how much it actually cost to sell on Amazon.
1st Cost – Amazon Seller Fees – Joining Amazon Cost
Product database is one of the coolest features of this tool.
Amazon Seller Account
As I have mentioned earlier, to come on-board Amazon, you have to pay Amazon seller fees by registering yourself on its seller account.
There are two seller accounts that Amazon offers individual and professional seller account.
Amazon Individual Seller Account:
As the name suggests this account plan is basically for an individual seller or small business.
There is no Amazon seller fee in this account, 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 as Amazon selling fees.
Amazon 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 offers.
Amazon seller fees are dependent on what seller account you choose for selling on Amazon.
2nd Cost – Amazon Store Setup Cost
Before calculating the selling on Amazon fees, I 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 what does Amazon charge to set up a store.
1. Amazon Seller Account Fees
I have mentioned it earlier, here is the total cost calculation.
As you must have probably known that there are two Amazon seller accounts.
- Basic Account/ Individual Seller – $0.99/item
- Professional Account – $39.99/month subscription
Generally, people recommend to individual account to start then switch to a professional account. But I recommend you to go for a professional account. Here are the reasons;
If you do everything right and set up your business with FBA you can easily sell 40 items or more in a month which means you will end up paying $40/month anyways and you cannot sell more than 40 products.
Other than that pro accounts give good marketing options and analytics that help you to optimize your business.
Well, it up to your preference what you choose. Here I am taking the professional seller account cost for $40.
2. Product Research Cost
If you are starting from scratch you’ll need to spend some amount of product research to hack your business growth. It would be your first step in online marketplace so there should be no stone unturned that’s why I am including this cost in Amazon selling fees.
There are multiple Amazon product research tools that help you to analyze the current market trends from where you can identify your winner product.
There are multiple Amazon research tools out there such as AMZ tracker, Feedback Genius, Keyword Inspector, etc.
Currently, the most sought after research tool is Jungle Scout so I will go for that.
For the starting, I recommend going for Jungle Scout Web App ($39/month) it would work amazing for your business.
Check out the the detailed Jungle Scout Review.
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 play 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 depends on the professional level of the designer you choose it could vary from $5 to $75.
On the safe side, I am taking the amount $50 as a logo and design cost.
4. UPC barcode
Amazon’s policy requires 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 the 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 samples, so 50 x 3 = $150.
6. Inventory Cost
The biggest cost you will face would be of the product order. 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 of 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 options you have, air freight and ocean freight.
I suggest choosing 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 I give it a higher priority as it the crucial step to make your product look good on the 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.
I have come up with two product launch platform that is recommended by successful Amazon sellers.
It is an absolute amazing launch that provides 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 come to your website you get brighter chances to come on first page.
Its packages are a bit expensive but a starter $297 package would be effective if it 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 the budget is usually very tight, I 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 tend to delay and take more time than usual.
Keep in mind that Amazon takes 2-week to clear your payment and it takes around 6-week in the next shipment.
You have some cash in hand to keep the business running. There is not a fixed amount how much you should have but at the initial stage, 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 cost around $2250.
After you are done with account setup and product listing. Your store is now live on Amazon store.
Once your store is live, then the Amazon selling fees depend on the product category that you need to pay every time you make a sale.
3rd Cost – After Sales Cost
Amazon Referral Fees
Note: If you are selling as an individual, the $0.99/item is a separate cost from referral fees.
The referral cost varies from an item and product categories.
It goes from 7% up to 45%, depends on the product category and size. On average Amazon charges 15% referral fees on most of the categories.
Check your product category referral fee here.
The percentage of the 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 fee of $1.80 for every sold item.
For Non-media product: The referral fees will be charged on total price received from the 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 Amazon FBA fees divided into two categories;
- Packing, Handling & Shipment Fees
- Monthly Storage Fees
For Packing, Handling & Shipment
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 are also different for standard and oversize.
Here is also the example of FBA fees for a 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.
How to Reduce Amazon Cost
Here are some tips may help you in reducing the Amazon cost.
Send Less Costly Items to send on Amazon fulfillment centers
Because FBA fees are based on product size and specification.
Amazon charges fees on size and weight, not on the price of the product. At the start, send fewer items to check on what frequency the people are buying your items then manage your shipment accordingly. Keeping up your products in the fulfillment centers would seriously affect your profit margins.
Focus on Volume
Shipment services such as FedEx and UPS now charges more on volume rather than on weight. So, if you need to sell multiple items on the same location try to ship them in small boxes instead of making one large shipment. You will find a significant change in your profits in a short time.
Keep an Eye on Amazon Dashboard
With the updated IPI (Inventory performance index), Amazon seller can easily check their inventory performance on their dashboard. It helps the seller to take productive actions based on the inventory activities and get the ideas to increase the store rating.
The dashboard highlights the issues with the colorful visuals so that sellers can create a proactive approach before the trouble arrives.
It also provides a suggestion on how to improve the IPI that gives three suggestions.
- Restock Recommendation – A suggestion about when to refill the stock.
- Standard Inventory Actions – Highlights all issues in the listing to optimize product availability.
- Excess Inventory Suggestions – Helps in advising when the inventory is excessive then the requirement.
I have tried to go to the ending point of finding out how much does it cost to sell on Amazon. I have considered all the necessary Amazon fees that should be included in the costing area.
The cost to sell on Amazon is highly dependent on the product niche and category you are planning to enter.
Nonetheless, by analyzing the research and each and every cost I 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 and make money on Amazon.
Let us know in the comment if you think about any other cost that I have missed!