Many people strive to start online business. But instead of spending much time and money on selling goods by themselves, many of them prefer Amazon. It makes the whole process much more comfortable, especially if you have a limited budget. But how much does it cost to sell on Amazon? Is it affordable or requires pouring tons of money? Does Amazon charge too much? Here you can learn all the aspects of promoting products on Amazon.
Amazon Selling Account – Which Selling Plan to Choose?
Amazon offers two selling plan options: Individual and Professional. Individual membership provides the following features:
- Free sign-up
- A fee of $0.99 per item
- No subscription fees
- Selling fees
- 20 product categories
Professional Membership offers the following conditions:
- Free sign-up
- A subscription fee of $39.99 per month
- Selling fees
- 20+10 product categories
Amazon suggests that individual membership is suitable for people who trade up to 40 products per month. If you plan to trade more than that, you should stick to a Professional plan. Let us compare the fees. If you use an individual program and merchandise at least 40 items, you will pay the total item fees of $39.6 .
It does not differ much from the Professional seller fees. But once you sell, for instance, 45 items, you should pay $44.55 per month. That is why the individual plan is only beneficial if your sales volume is small.
Yet, the differences between selling accounts do not end here. The professional plan gives you the following opportunities:
- Your products can feature in the Buy Box section. Since most people buy goods by clicking on Buy Box , you get more sales in case your products show up in this section.
- You can unlock 10 more product categories.
- You can use promotions and ads, which result in rapid brand development and more sales.
- You can upload multiple product lists using spreadsheets, which saves your time significantly.
As you see, the professional seller account has much more opportunities. If you hesitate about what plan to choose in the beginning, you can register an individual account. Once you see that you need more flexibility and features, you can upgrade your professional membership within a few clicks. You can downgrade your plan as well.
Amazon Sale Related Fees
How much does Amazon charge sellers? There are lots of Amazon sellers fees that fall into several categories. There are 4 types of commissions, depending on your membership plan. Let us observe them in details:
Amazon charges $0.99 per product from individual sellers. Professional merchants should pay a subscription charge instead.
All sellers pay referral fees. The platform charges them for each product they sell. The commission varies from 3% to 96% . The actual percentage is based on the type of goods. Amazon charges a minimal referral fee of $0.30 for most of the product types.
Variable Closing Fee
It applies to all media-related products. You should pay $1.8 per sale.
Your Amazon commissions do not include shipment costs. On the other hand, you should still pay for product delivery. The prices depend on the shipment type and the size of your goods. Amazon provides individual sellers with shipping credits. These credits are the same as your buyer pays for the delivery. Amazon can cover from $3.99 to $46.50 per item. If the credit does not cover the expenses, you should include the rest. Professional sellers have to cover the shipping costs on their own.
How much does it Cost to Sell on Amazon as an Individual?
Let’s do some calculations on the fees. Let’s imagine you sell 40 books per month as an individual shopper.
You set the price of $15 for a paperback novel. Your gross income is $600 . Let us count the fees:
- The per-item charge is $0.99×40= $39.6
- The referral fee is 15%= $2.25×40=$90
- The closing charge is $1.8×40= $72
Thus, you will have the total fee amount of $201.6 , which is 33.3% of gross income, and your net income will equal $398.4.
FBA vs FBM Costs and Which to Choose?
You should arrange the shipping process at the start. Amazon offers you two ways of managing your shipment.
The first one is FBA (Fulfillment by Amazon). With FBA, Amazon provides you with shipping services. It allows you to store your items in Amazon warehouses until they are sold. Amazon staff then takes care of shipping your goods to your customers.
This method has several advantages:
- Your goods can be placed in the Buy Box, which increases your sales.
- Your brand is associated with Amazon, which makes buyers trust you more than ever. They are sure they get the best quality due to Amazon services.
- Amazon Prime can feature your products. It allows you to increase your revenues drastically due to the exclusive shipping options for premium buyers. People will be eager to buy your items if you provide fast and free top-quality shipments.
FBA will be the best option if you have no time and resources to handle shipment on your own. It is also a preferable option if you plan to trade lots of heavyweight and big-sized items. In this case, paying Amazon FBA Fees will be more cost-efficient than holding multiple warehouses and hiring all the staff on your own.
The second program is Fulfillment by Merchant. In this case, you manage the shipment and provide customer support on your own. You should stick to this method if your sales are small-volume, and if you trade expensive, exclusive products.
- You get more control over your business
- You are less dependent on Amazon changes
- You get a higher profit from each item sold due to fewer fees
What are the Extra Costs of Selling on Amazon?
There are several expenses you should consider besides Amazon fees. They do not directly relate to Amazon but are obligatory if you want to benefit from the platform. These expenses include product samples, barcodes, trademarks, and branding.
You have to test the goods to make sure they are worth selling. Purchasing at least a couple of products from different suppliers will be enough. For example, you are going to sell laser pointers. Make research and select 3-4 best suppliers. Buy the laser pointers and test them so that you can choose the best one. The samples will cost you approximately $50-60 .
Getting the Barcodes
You cannot list products on the platform without the Universal Product Code. You need UPCs for tracking your goods through the whole selling process. You also need a unique UPC barcode for each item you list within Amazon. If you sell products of a particular manufacturer, you have to include the UPCs by this supplier. If it does not provide UPCs or you are going to sell unique products, then you have to obtain the barcodes on your own.
To get them, you have to go to the GS1 US. It is an organization that ensures standards for global business.
Then, you have to count the exact number of barcodes you need. You need an exclusive code for each variation of a particular product (color, size, etc.).
Here are the GS 1 US prices based on the number of UPC you need:
- 1-10 products for $300 (initial $250+$50 annual renewal)
- 1-100 items for $900 (initial $750+$150 annual renewal)
- 1-1,000 items for $3,000 (initial $2,500+$500 renewal)
- 1-10,000 products for $7,800 (initial $6,500+$1,300 renewal)
- 1-100,000 items for $12,600 (initial $10,500+$2,100 renewal)
While selling goods on Amazon, it is necessary to protect your label. You should think of registering a trademark. It will cost you from $225 to $275 for a product type.
Amazon also offers a free Brand Registry option that helps you get rid of your content inaccuracies and any possible infringements within the platform. And to qualify for this option, you have to register a trademark.
Branding has a critical impact on your business success. You should come up with your brand, which includes logo design, naming, and brand positioning. A professional designer can create a logo for at least $100 . If you want consultations on your brand positioning, strategy, and naming, it all will cost a lot more – from $1,000 to $3,000 on average.
How to Start Selling on Amazon
To establish your business, you have to sign up on Amazon. It does not require much effort, and you can do it in a few steps:
- Go to services.amazon com. Press the start selling button. If you want to sign up for an individual membership, you can scroll down a little and press the sign-up link for non-professional sellers.
- You should enter your valid email address and come up with a password. Then, reenter your password and click next .
- Go to your email and get the one-time password to enter your account. Amazon uses it for email confirmation.
- After that, you need to enter your state, address, postal code, and business name. This name is displayed on your seller account. You can change it in your account settings later if you need to. Afterward, you should include your phone number. There is also an optional field for your website if you have one.
- After that, you need to fill in your payment means and tax information. Once you do all these steps, your account is ready for use.
Once you establish your account, it is essential to decide what to sell on Amazon You can use several helpful tools for finding the ideal products for selling:
You can easily compare margins and find the product with the lowest competition on the platform. After you decide on the product, find a supplier, and order the items. Place them on Amazon and then deliver your goods to the Amazon depositories. How much is it to sell on Amazon initially? In the beginning, you should aim for at least 500 items. Aim at the price that is at least 3 times lower than you are planning to sell.
So, if you want to set the price within $30-60 per unit range, you should find the inventory of $5-10 per unit, including shipping costs. The initial investment will reach $2,500-$5,000 on average.
If you learn how to sell on Amazon efficiently, you have all the chances to scale your business and results in 6-figure revenue.
So, does it cost money to sell on Amazon? Yes, it does. What does it cost to sell on Amazon? Let us count the total investment amount based on the money-saving approach:
- Inventory+shipping to Amazon=$2,500
- Product samples=$60
- Trademark Registry=$275
- Professional membership = $40
Thus, to get fast results, you need $6,000 to launch a business. Sure, it is a lot. You can purchase fewer less expensive items for selling, find suppliers that provide barcodes and spend less on branding. It all will reduce your initial investment to $2,000-3,500 .
Is it Profitable to Sell on Amazon?
It is profitable in case you sell the right product with enough diligence. Assuming that selling with FBA fees will take approximately 30% of your income, you will get a reasonable profit margin.
How much Can I Earn by Selling on Amazon?
Your earnings depend on many aspects, including your marketing campaign, investments, products, etc. Statistically, more than 200,000 sellers earn $100,000+ a year.
What are the most Selling Items on Amazon?
The most selling items are electronics. More than 40% of all buyers purchased electronics in 2019.
Is it Easy to Sell on Amazon?
It is relatively easy to sell on Amazon. The platform provides convenient services for business people from all over the world. To trade goods on Amazon, you need to register an account, get the inventory on another platform, and list it on Amazon.
Is it Worth Selling on Amazon?
Amazon is an incredibly popular platform. More than 200 million people visit Amazon every month. The platform produces only 50% of the sales volume. These statistics show that Amazon is the top priority platform for selling items online.
AMAZON SPECIALISTS & EXPERTS, AMAZON CONSULTANTS, AMAZON STORE MANAGEMENT
INDIA | USA | UK | CHINA | SINGAPORE | ISRAEL | SWITZERLAND | DUBAI