How much does it Cost to Sell on Amazon? Setup, Fees, Strategy [2021]


How much does it Cost to Sell on Amazon?

Mind your own business instead of working for others has been a buzz line among many who wanted their own financial independence. Many sellers have chosen Amazon as their marketplace for selling and buying products. While Amazon presents to you a global audience who can get to see your products and procure them, you need to pay some amount too for the sake of getting an international marketplace. 

What is this price you pay? Does it ensure the profitability and does not sink you down? How do you need to plan for the same? If you want all these answers, you are on the right page.

Amazon Selling Account: Which Selling Plan Will You Choose?

Amazon offers two selling plans- Individual and Professional

Individual Plan

  • Sign up for free
  • There is no monthly charge. Pay $0.99 per item you sell on Amazon
  • Selling fees
  • Sell up to 20 product categories

Professional Plan

  • Sign up for free
  • A monthly charge of $39.99
  • Selling fees
  • Sell up to 20+10 product categories
  • Your products get featured in Buy Box section. Many customers hit the Buy Box for their own benefit which boosts your sales.
  • This plan accelerates brand development and sales, and it helps in promotions and ads.
  • Save time significantly by adding multiple products to your lists as spreadsheets.

It is recommended that you use the Individual plan if the number of sales is less than 40. For, the amount you pay to Amazon is $39.6 (40*$0.99). The amount exceeds $39.99 if you are selling more than 40 items. Thus, the monthly plan would save your money in the professional plan.

If you are confused, you can start with the individual plan. As you get more features and flexibility, you can upgrade to the Professional Plan.

Amazon Sale Rated Fees

PER ITEM FEE

There is a charge of $0.99 accounted for every unit of a product you sell, if you are using the Individual Plan.

REFERRAL FEE

Amazon charges you this fee every time you sell a product. A small price that you pay for getting the international customer base. It is a percentage of the total sales price and is usually fixed at 15%, although this may vary. It can be as low as 6% on some items, however it can go up to 45% for Amazon accessories.

If you are a new seller, choose the product you would sell judiciously to ensure minimum percentage charged as referral fee.

SHIPMENT FEE

You need to calculate the shipping and freight charges for bringing the product from the supplier to the warehouse and to the customers. This also depends on the dimensions of the product. This varies from $3.99 to $46.50 per item. Professional sellers have to bear the shipping charges on their own.

CLOSING FEE

The closing fee is variable and depends on the product category you are dealing in.

How much does it Cost to Sell on Amazon as an Individual?

If you are opting for the Individual Plan, you have the following amount to pay to Amazon-

  • $0.99 per item sold
  • 15% referral fee (although it can vary depending on the product)
  • A closing charge depending on the product category

To give you a clear idea, let us take an example of selling a book-

Suppose you sell the highest limit of units- 40.

You set the price at $10. Your gross income is $400.

Out of this, you pay-

  • $39.6 as individual fee per item
  • 15% of $10, that is $1.5 for each item, amounting to a total of $60 as referral fee
  • A closing charge of $1.8*40=$72

Thus, the amount payable to Amazon stands at $171.6 and your net income is $ 228.4.

FBA vs FBM Costs and Which to Choose?

FBA means Fulfilment by Amazon, where amazon takes care of delivery. While FBM means Fulfilment by Merchant, which means that you as a seller will have to sell it and ship it as well. 

Amazon FBA fees include all the services that lets you sit at ease and concentrate more on business improvement. Amazon FBA takes care of pick and pack, delivery charges, shipment and storage in the warehouse. 

Whether you are a newbie, or a sharpened seller, you might not have the time to handle the transportation of all these goods or provide the necessary customer support. It is no wonder that such entrepreneurs benefit much from this scheme.

Perks of Using Fulfilment by Amazon

Make money, grow fast and win your customers’ hearts with FBA service. 

Increase your online sales by improving your products’ visibility before a wider audience. Get a Prime logo on your product and boost sales as a majority of the customers want superfast delivery. Get trusted customer service and delivery supports from Amazon without bothering about the details. 

Send your products to Amazon inventory and get all the services done from picking, packing, shipping and storage. Your FBA products are available for a one-day free delivery. So, you can connect to a huge base of loyal customers. Compete for the Buy Box and get the Add to Cart option listed. 

Listed below are the major benefits and perks of using Fulfilment by Amazon (FBA)-

  • Focus on your business- the storage and delivery are taken of by Amazon. Focus on strategizing your business growth.
  • Access to Amazon Prime- Premium delivery options enhances customer shopping experience and increases customer demand and loyalty. Prime products are available for a free one-day delivery.
  • Pay as you go- Pay only for the services you use. There is no need to add subscription fee or additional unnecessary fee.
  • Gain Trust- Amazon’s world class packaging, shipping and excellent customer service is highly appreciated. Customers rely on this efficiency and get back to purchasing from you.
  • Hassle free- as your business expands, you need not worry about the logistics and delivery. Amazon does it for you.
  • Get a base of loyal customers- Customers would keep coming back to you as FBA service builds trust with its excellent customer support.

Perks of Using Fulfilment by Merchant

As an FBM seller, you have more control over the shipping rates. 

  • Get more access to your inventory and exert greater control over it.
  • As Amazon fees are based on the dimensions of a product, you might end up paying more for a large sized item with lower profit margins.
  • Don’t worry about the Prime Badges. Even a professional seller can display the Prime Logo on the products without paying the FBA fees
  • Use non-Amazon sales channels to give more discounts on the shipping and supply and use the cost advantage.

What are the Extra Costs of Selling on Amazon?

There are some extra costs included while selling on Amazon-

Test the Samples

It is essential that you buy at least a couple of test samples from the top suppliers of the product you have pinned down on. Choose the best among them, and then start selling it. This will cost you some amount to test the samples.

Barcode

You need to have a unique barcode or Universal Product Code to track the product on the entire selling process.  If you are getting the product from a manufacturer, you have to use the UPC given by the supplier. If the code is not provided, then you will have to obtain it from the GS1 US. A fee is charged on giving the barcode at a price based on the number of products.

Trademark Registry

To protect your product label and preventing infringements, you should register your trademark. The fee depends on the product category.

Branding

Get a logo for your brand. Get it done by a professional designer at about $100.

How to Start Selling on Amazon?

If you know the steps, you are done. It is a cakewalk-

  • Click on Start Selling on services.amazon.com and register for an account. If you want an Individual Plan, you can select the Non- Professional Plan.
  • Fill up the credentials as your email address, name, and set your password and confirm it.
  • Click on Next. You will get a One-Time-Password.
  • Go to your email where the OTP has been sent to confirm your email address
  • Enter your full name and agree to the Terms and Conditions.
  • Press Next
  • You will be taken to a page asking for the details of your location, postal address, phone number, etc. You can change the details later by going to Account Settings option.
  • Fill the optional details if you want to.
  • Enter your business details and the tax information.
  • Once all the credentials have been filled up, your account is created.

Research the product, launch it and start selling on Amazon, to get lucrative earnings.

Use online tools like Jungle Scout, IO Scout, AMZ Scout and others for product tracking and keyword research. Compare ranks, sales estimates and decide on the product. Get the supplier information and spy on your competitors. Delve into business strategies to take your business forward in the cut-throat competition.

FAQ

Is it profitable to sell on Amazon?

30 % of your money earned goes to Amazon. Thus, diligence and strategy are required to ensure that you are a profitable seller on Amazon. Choosing the right product that has demand is important, followed by proper optimisation of product listings and keyword search, price tracking and competitive intelligence.

How much Can I Earn by Selling on Amazon?

Your earning can depend on several aspects like product selection, price tracking, keyword research, image quality and optimisation of listings. Your marketing campaigns too play a role. It all depends on how hooking your product page is and how converting your campaigns are.

Is it Easy to Sell on Amazon?

Amazon is an international marketplace with global consumers. To trade goods on Amazon, you just need to register your account and get a Seller Central account. If you are an FBA seller, you will not even have to worry about the packaging, shipping and delivery of the products to your customer.

What are the most Selling Items on Amazon?

There are several online selling tools to assist you in product research. This helps in finding the most profitable niche and a promising product that has demand and low competition in the market place. Electronic components have a potential customer base with almost 40% of customers opting for electronics goods in 2019.

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