As they say, you have to spend money to make money. Starting your own business selling on Amazon FBA is more affordable than many other businesses. However, there are still startup costs, and it requires careful budgeting. Here is a guide to the cost of starting to sell on Amazon FBA.
Minimum Cost to Start Amazon FBA Business
According to a recent survey, 18% of Amazon sellers started with a budget of less than $500. If you don’t have a lot of capital, here is an overview of the minimum costs to start selling on Amazon FBA.
Amazon Seller Plan | Minimum of $0.99 + Seller Fees Per Item Sold
All sellers need an Amazon seller plan. Plan costs are currently the individual plan, which costs $0 per month + $0.99 per item sold + selling fees, or the professional plan, which costs a flat $39.99 per month + selling fees. An individual plan might be the right choice if you sell fewer than 40 items monthly and don’t need advertising or analytics. The professional plan has many benefits, like advanced reports and analytics, on-site advertising and promotions, and adding multiple users to your seller account.
Amazon FBA Per-Sale Costs
No matter your seller plan, you will pay a wide range of per-item fees when you sell something on Amazon and fulfill your orders through Amazon FBA. Here is an overview of the per-item fees that sellers pay with each transaction:
Amazon Referral Fees
Minimum of $0.30 per item sold. All items sold on Amazon have a referral fee. The fee is a percentage of the sale price, and the rate varies depending on the product category. For example, Amazon device accessories have a referral fee of 45%, while personal computers have a referral fee of 6%. The average referral fee on Amazon is 15%, and the minimum referral fee is $0.30 per item sold.
Amazon FBA Fees
Minimum of $2.47 per order fulfilled. Fulfillment by Amazon is one of the easiest, most affordable ways to manage inventory and fulfillment when selling online, but there are still associated costs and fees. There are two FBA fees: shipping fees for fulfilling orders and storage fees for your inventory. Inventory fees are charged monthly based on the average cubic volume of space your products use in an Amazon fulfillment center. Inventory fees range from $0.48 to $2.40 per cubic foot and triple over the holiday season.
Fulfillment Fees
Fulfillment fees are based on your orders' shipping size and weight, with additional charges over the holiday season. There is also a separate fulfillment category for apparel items. FBA Small & Light orders can ship for as little as $2.47, while oversized and heavy orders can cost upwards of $150 per pound.
Additional FBA Fee
Depending on how much and long you store items in an Amazon fulfillment center, additional fees may exist. Additional Seller Fees Depending on the types of products and services you offer, there are other potential Amazon seller fees, including costs like:
- Rental book service fees. If you sell textbook rentals on Amazon, there is a service fee of $5.00 per rental.
- High volume listing fees. If you have many non-media items in your Amazon store that have not sold in 12 months, Amazon may charge $0.005 per item in catalog fees.
- Refund administration fee. If you refund a paid order to a customer, Amazon refund the referral fee. However, they will subtract a refund administration fee from the amount. The price is either $5.00 or 20% of the referral fee, whichever is less.
- Miscellaneous seller fees. Depending on the type, size, category, season, or other factors of your specific inventory, additional Amazon seller fees may apply to your business.
Summary of Costs to Start Selling with Amazon FBA
The good news is that getting an Amazon seller account and starting to sell products using Amazon FBA is highly affordable and does not require a significant investment. However, the wide range of fees and costs significantly affect your per-item and per-order prices and profits. To help you price your products correctly, you can use Amazon’s Revenue Calculator to compare fulfillment methods and associated costs. With an individual plan, you can sign up and start selling items on Amazon FBA for a minimum of ~$4.00 per item.
Amazon Programs and Incentives
Amazon has several programs to help new sellers be more successful on the platform. Many of these programs require an investment, but they offer valuable ways to launch and grow your Amazon FBA business. Some of the programs are:
New Seller Incentives
New sellers can benefit from several Amazon programs, including Amazon FBA, Amazon Brand Registry, and Amazon Coupons. Sellers who join these programs can get free Amazon credits for shipping, advertising, or other bonuses.
Perfect Launch
Perfect Launch is an Amazon program designed to help sellers make the most of their first 90 days on Amazon. It provides in-depth education and resources to help you understand and use Amazon FBA, Amazon Brand Registry, Amazon Prime, automated pricing, and other seller tools. On average, Perfect Launch sellers generate more than 6% more revenue in their first year.
SAS Core
SAS Core is more expensive but takes advantage of Amazon’s experts to give you individual guidance, recommendations, and special programs and deals. For $1,600 per month + 0.3% of your sales, you can get personalized operational support, guidance, strategy, and unique opportunities for your Amazon FBA business.
Conclusion
Nearly one-third of Amazon FBA sellers launch their business with less than $1,000 in capital, making it an extremely affordable way to establish a retail business. Choosing the right products and offering them at the right prices is the key to success with Amazon FBA, and you can get started with a small amount of investment capital.