- TL;DR — Quick Guide for 5 Essential Costs for Selling on Amazon
- A Crucial Cost Many Sellers Overlook – Referral Fees
- Some Statistics – How Much Does it Cost to Start Selling on Amazon For Real?
- Does Spending More Initially = Bigger Chance of Success?
- True Mandatory Costs to Start Selling On Amazon — $x+$69.99
- Optional Costs to Start Selling On Amazon — ~$650
- Bottomline — How Much Money Do You Need To Begin Selling on Amazon?
Sellers are the driving force behind Amazon’s remarkable growth story. In fact, it’s a well-known fact that most of Amazon’s expansion is attributed to third-party sellers. The fees that Amazon charges these sellers, encompassing commissions, fulfillment charges, shipping costs, and other associated seller services, amounted to a staggering $21.38 billion during the last quarter—a 20% surge from the previous year.
Whether you’re already a part of the Amazon selling community or contemplating stepping into this dynamic marketplace, understanding the associated costs is vital in shaping a profitable selling strategy. Let’s break down Amazon’s current selling fees and demystify what it takes to thrive in this bustling marketplace.
Worried about the price tag that comes with starting an Amazon venture? Don’t be! Contrary to what you might assume, it’s not an exorbitant amount.
Extensive research done by various independent sources reveals that for most new sellers, diving into Amazon business typically demands an initial investment ranging from $500 to $5,000. This encompasses product expenses, Amazon fees, and other necessary upfront investments.
However, it’s heartening to know that many Amazon sellers kick off their journey with an investment of $500 or even less.
On the other end of the spectrum, some ambitious entrepreneurs invest five figures or more in their new Amazon endeavor, and both paths can lead to success on this vast platform. We’ll delve into the essential costs of selling on Amazon and explore how different investment levels can potentially translate into varying profits for sellers in the Amazon marketplace. Let’s get ready to navigate the exciting landscape of Amazon selling!
TL;DR — Quick Guide for 5 Essential Costs for Selling on Amazon
Alright, let’s break down the money talk when it comes to selling on Amazon. Depending on how much stuff you sell, Amazon has a few ways of making sure they get a piece of the pie.
1. First up, if you’re a pro-seller moving more than 40 items a month, Amazon asks for $39.99 every month. But if you’re a bit more low-key, selling under 40 items monthly as an individual seller, you dodge that subscription fee.
2. Now, whenever you sell something, Amazon takes a bit more. For the pros, there’s no extra fee per item, but if you’re an individual seller, each item you sell costs an additional $0.99.
3. Then there’s the shipping gig. If you handle shipping yourself, Amazon’s shipping rates apply to certain things like books, music, DVDs, and more, sold by pros. But for individual sellers, it’s all products. The cost of shipping depends on what’s being sent and the shipping service picked by the buyer. If Amazon takes care of the shipping through their services, they’ll charge you for that too.
4. Every time you sell an item, you also owe Amazon a referral fee. It’s a small percentage of the item’s price. Some types of items have a set minimum fee, so you pay whichever is higher: the referral fee percentage or that minimum fee.
5. Lastly, there’s a variable closing fee for media items, like books or DVDs, for both individual sellers and pros. So, that’s the financial rundown. Stay sharp, future Amazon sellers!
A Crucial Cost Many Sellers Overlook – Referral Fees
Let’s talk about a crucial thing when it comes to selling stuff on Amazon—referral fees. Amazon takes a slice of the pie every time you sell something, meaning they get a percentage of the price.
This percentage varies depending on what you’re selling. For example, if you’re selling your old computer, Amazon takes a small slice, about 6%. But if you’re selling accessories for Amazon devices, they take a bigger slice—around 45%.
For media stuff like books or music, it’s a bit different. Amazon takes about 15% of the total selling price. That includes both the item’s price and any extra charges.
Now, here’s a cool thing to note. In some categories, there’s a minimum fee, like a floor price. Imagine, no matter what, you need to give Amazon at least $1 for each item you sell. For watches or jewelry, it’s a bit more, at $2.
But guess what? When it comes to media products, like the latest best-selling book, there’s no set minimum fee. However, do remember that there might be some extra charges tied to selling media items. Keep that in mind as you venture into the world of selling on Amazon!
Below we’ve taken a table of all categories of referral costs from Amazon’s site to make it more comfortable for you:
|PRODUCT CATEGORIES||REFERRAL FEE||MINIMUM REFERRAL FEE|
|Amazon device accessories||45%||$0.30|
|Baby products (excl. apparel)||8% on items that are $10.00 or less and 15%||$0.30|
|Camera and photo||8%||$0.30|
|Cell phone devices||8%||$0.30|
|Electronics accessories||15% on the first $100 of the price and 8% thereafter||$0.30|
|Furniture and decor||15%||$0.30|
|Home and garden (incl. pet supplies)||15%||$0.30|
|Major appliances||15% on the first $300 of the price and 8% thereafter||$0.30|
|Software and computer/video games||15%||N/A|
|Sports (excl. collectables)||15%||$0.30|
|Tools and home improvement||15%, except 12% for base equipment power tools||$0.30|
|Toys and games||15%||$0.30|
|Unlocked cell phones||8%||$0.30|
|Video and DVD||15%||N/A|
|Video game consoles||8%||N/A|
|3-D printed products||12%||N/A|
|Automotive and powersports||12%, except 10% for tires and wheels products||$0.30|
|Clothing and accessories||17%||$0.30|
|Grocery and gourmet food||15%, or 8% for items priced $15 or less||N/A|
|Health and personal care (incl. personal care appliances||15%||$0.30|
|Industrial and scientific||12%||$0.30|
|Jewelry||20% on the first $250 of the price and 5% thereafter||$2.00|
|Luggage and travel accessories||15%||$0.30|
|Shoes, handbags and sunglasses||15%, or 18% on items priced above $75||$0.30|
|Watches||16% on the first $1,500 of the price and 3% thereafter||$0.30|
Some Statistics – How Much Does it Cost to Start Selling on Amazon For Real?
Based on the publicly available info. on how much money did real sellers on Amazon spent to start selling — you might see this as a bit surprising:
- 17% of Amazon sellers started with $500 or less
- 12% of Amazon sellers started with $501 – $1,000
- 15% of Amazon sellers started with $1,001 – $2,500
- 21% of Amazon sellers started with $2,501 – $5,000
- 13% of Amazon sellers started with $5,001 – $10,000
- 22% of Amazon sellers started with more than $10,000
Does Spending More Initially = Bigger Chance of Success?
You might think the more cash you put in, the better your business will be. But guess what? That’s not always the case.
In fact, here’s a cool twist: Sellers who began their Amazon journey with a tighter budget often hit the success track faster and stayed in the game longer compared to the big spenders. It’s like saying you don’t always need a huge budget to score big in the Amazon game. Sometimes, starting small can be a superpower! 🚀
Here are some interesting statistics to keep in mind:
Sellers who started with $500 or less:
- 22% have sold for five years or longer.
- 47% got their Amazon business up and running in less than a month
- 66% turned a profit in less than six months, and 42% turned a profit in fewer than three months.
- 30% list more than 100 products on Amazon.
- 57% spend fewer than 20 hours per week on their business, and 30% say they spend less than four hours per week.
Sellers who started with $10,000 or more:
- 23% have sold for five years or longer.
- 73% took longer than six weeks to get their Amazon business up and running.
- 32% turned a profit in less than a month, while 43% said it took them six months to two years to turn a profit.
- 20% list more than 250 products on Amazon.
- 70% spend more than 20 hours per week on their business, and 10% say they spend 60 hours or more per week.
True Mandatory Costs to Start Selling On Amazon — $x+$69.99
So the mandatory costs can be very ambiguous. Let’s break it down:
- The one inevitable cost is the professional fee which is $39.99.
- The other one is UPC code which is usually $30.
Before you can showcase your awesome product, Amazon needs a special barcode called ‘FNSKU’ (Fulfillment Network Stock Keeping Unit) to be on your product’s packaging.
To get this FNSKU, Amazon says you need a GTIN (Global Trade Identification Number), usually called a UPC code. It’s like your product’s ID in the Amazon world.
Amazon plays by some rules, and in 2018, they said, “Hey, you need barcodes from GS1!” GS1 is a big global barcode provider. They’re like the official ID card makers for products. Now, GS1 hooks you up with a GTIN/barcode for about $30. That’s your ticket to the Amazon selling party! 🎉
You can also get some cheaper options by searching for GS1 codes on eBay!
$x.xx — inventory costs. As we talked about previously – a bigger investment doesn’t always equal success. So make sure TO NOT overstock when you don’t know if the item will even be sellable.
It’s always better to spend $300-500 first to test it out rather than putting $5k for questionable product.
FBA Shipping Fees (only for FBA) — Varies
|Small (1 lb. or less)||$2.41|
|Large (1 lb. or less)||$3.19|
|Large (1 lb. to 2 lb.)||$4.71|
|Large (over 2 lb.)||$4.71 + $0.38/lb. above first 2 lb.|
|Small oversize||$8.13 +$0.38/lb. above first 2 lb.|
|Medium oversize||$9.44 +$0.38/lb. above first 2 lb.|
|Large oversize||$73.18 +$0.79/lb. above first 90 lb.|
|Special oversize||$137.32 +$0.91/lb. above first 90 lb.|
Add $0.40 per unit for clothing items
Shipping Credits That You Get
Imagine you’re running a lemonade stand. When someone buys your lemonade, you’ve got to make sure they get it, right? Well, it’s the same with selling stuff online. You have to send the things people buy to them.
Now, Amazon knows this can cost a bit, so if you handle sending out your own products as a professional seller, they’ll give you some money to help cover these shipping costs. But here’s the catch: you need to know how much it really costs to send your product.
Sometimes, Amazon sets a ‘standard shipping fee’. It’s like them saying, “Hey, for this type of product, we think this is a fair shipping cost.” But what if it costs more to ship than what they say? Well, you’re the lemonade stand owner, and that extra cost is coming out of your lemonade money! It’s important to keep an eye on this, so your lemonade stand (or your Amazon sales!) can stay profitable. 🍋
Optional Costs to Start Selling On Amazon — ~$650
These are purely extra and optional, although they truly might help you sell more and get your product out to the market!
PPC Ads ~$300/mo
Picture this: you’ve got a cool product to sell, but it’s like being the new kid in school. No one knows you yet, and you’re stuck in the back pages of the ‘yearbook’ (or search results).
So, here comes the hero: Amazon PPC ads! It’s like shouting, “Hey, look at this awesome thing I have!” to everyone in the school. But instead of shouting, you’re using these ads to show off your product to Amazon shoppers.
But, hold up! Before we dive into the ads, let’s talk budget. The game plan suggests setting aside $300. That’s $10 a day for a month. Sounds doable, right?
Now, once you’re all set, these ads work like magic. They boost your product up the search results so people can actually see it. Imagine your product going from being at the back of the classroom to the front row!
Now, let’s talk numbers. With a $10-a-day plan, you could get around 20 to 30 curious folks clicking on your product daily. Out of those, maybe 2 or 3 will decide, “Yeah, I want this!” and make a purchase.
But wait, there’s a homework assignment! Before you run these ads, make sure your product’s page is super cool and attractive. Great pictures & optimized images, all the info—everything’s got to be top-notch. If not, all that shouting about your product won’t lead to those satisfying ‘sales cheers’. So, get that ‘listing’ homework done and then let the ads rock!
Also, remember that you can utilize external traffic acquisition methods to your Amazon listing to attract even more people for less $$.
Registered Trademark $350
Getting a registered trademark for your brand costs around $350. If you want to join Amazon’s Brand Registry, having a registered trademark is a requirement. However, remember, you don’t need a trademark just to start selling on Amazon.
The Brand Registry is like an exclusive club on Amazon. It offers benefits like better advertising tools and a more professional product page. To get these perks, you need a trademark. The process to get this can take a few months, so starting early is a good idea.
The benefit? It makes your brand more official on Amazon, and it’s kind of like investing in your brand’s future success. Just be careful not to infringe on anyone else’s trademark when creating your brand. You can get a trademark through a lawyer or even apply for it yourself, which is a bit cheaper.
Bottomline — How Much Money Do You Need To Begin Selling on Amazon?
As you saw from examples above — you don’t need that much! Almost 30% of sellers start between $500 and $1000.
So depending on your product you can do it too without any problems.
If you happen to have any questions about how you can start — don’t hesitate to reach out to us.
P.S. Here’s some extra useful stuff: