When business owners ask, does it cost money to sell on Amazon? the answer is a disappointing yes. Selling on Amazon.com comes at a price – but it also has the potential to boost your brand and revenue. The question is, are you willing to invest in Amazon selling costs?
While Amazon can certainly bring your products in front of more customers, getting there requires a budget.
Is It Expensive To Sell on Amazon?
So, exactly how much does it cost to sell on Amazon, and is it expensive? Amazon’s Seller Central offers two types of pricing, also referred to as selling plans: Individual and Professional. Individual sellers are charged $0.99 per product sold plus additional selling fees. There is an order limit of 40 orders per month.
Amazon sellers pay for the cost of selling on Amazon depending on their plan. Professional sellers pay a monthly fee of $39.99 per month plus additional selling fees. Selling on this plan applies to businesses that want to sell 40 or more products.
Other factors affect the cost of selling on Amazon.com. Sellers also have to pay additional fees like referral fees, shipping fees and inventory fees (if the seller opts to fulfill orders through Amazon.) The question, how much are Amazon seller fees? will be discussed in detail later on in this article. You can also use the Amazon selling fees calculator to quickly assess additional fees for your business.
Marketing services like Amazon Ads or hiring an external Amazon advertising agency can also add to Amazon selling costs. When you ask, is it expensive to sell on Amazon? you need to consider all added costs outside of what Amazon itself charges.
Your selling costs can also change if you plan to hire Amazon marketing experts to grow your store. Third-party service providers like an Amazon advertising agency can cost more, but does give you a better chance at achieving your sales goals.
Before we discuss Amazon Seller fees in detail, let’s examine:
How To Open An Amazon Store
Now that you know the answer to the question, does it cost money to sell on Amazon? let’s take a look at how to open an Amazon store.
Setting up an Amazon store is a straightforward process and Amazon’s Seller page has all the information to get you started. If you’re not hiring an Amazon marketing agency to set up your Amazon store, here’s a quick overview of how to do it yourself.
Step 1: Decide on a Business Model
When setting up an Amazon store, you need to decide whether you are a:
• Reseller – Selling items made by a third party supplier
• Brand owner – Manufacturing your own products and selling them on Amazon
Some businesses are resellers while others are brand owners, but it’s not uncommon to see Amazon sellers who do both.
Step 2: Register For a Seller Account
Once you’ve decided on your business model, you can head to seller.amazon.com to register a seller account. You would need to enter the following information during registration:
• Your business email
• Your Amazon account details
• Government ID
• Tax Information
• Contact number
• A bank account to receive Amazon payments
When you have completed all these, you should now be able to access the Amazon Seller Central.
What Is Amazon Seller Central?
Amazon Seller Central is where Amazon sellers can manage their store, create and modify product pages, assign Amazon seller pricing rules, add product listings and process orders. Amazon Seller Central also has resources on how to sell on Amazon. If you want to use the Amazon selling fees calculator, you need to log in to Amazon Seller Central to do so.
If you are starting a branded Amazon store, you also need to register to Amazon Brand Registry. This allows you more features when creating your product listings including branded storefronts and product pages.
To apply for the Amazon Brand Registry program you need:
• A brand name registered under the U.S. Patent & Trademark Office (USPTO)
• The brand’s USPTO serial number
• Countries you are selling to
• Brand logos as seen on your products and other product images
Note that brand registration is subject to Amazon’s approval and the wait time can take between 24 hours to a month.
Step 3: Create Your Store
You’ll come to know what is Amazon Seller Central once you’ve created your Amazon seller account and used it first-hand. You can hire an Amazon consultant to set this up for you, but you can also do it yourself.
Log in to your Amazon Seller Central account and go to Storefront. Select Create Store and choose your brand name. Then, click on Create Store.
From here, you’ll be prompted to follow the next steps in creating your Amazon store:
• Add brand name
• Add brand logo
• Select a premade layout for your store
A template for your homepage can be:
Marquee – Big images across the entire page featuring your best products
Product highlight – Use an image or video header to feature a best-selling product
Product grid – Show all products per category
Step 4: Add Your Products
On your Amazon Seller Account page, go to Inventory. Here you can select Add Product to upload one product at a time, or you can choose Add Products via Upload if you want to upload multiple products.
If you need detailed steps on uploading products on Amazon Seller Center, you can check out Amazon’s resource page.
Step 5: Launch Your Store
When you’re happy with your store settings and product listings, you need to submit it for approval. Click on Submit for Publishing and wait for Amazon to approve it within 72 hours.
Opening an Amazon store is a huge undertaking. If you are not comfortable with doing every step yourself, then rest assured that there are highly qualified Amazon consultants and Amazon marketing services that can help you accomplish this the right way.
Now that you know the basic steps on how to open an Amazon store, let’s go back to discussing additional Amazon seller fees and other factors for a deeper understanding of the question: What does it cost to sell on Amazon?
What Does It Cost to Sell on Amazon?
Selling on Amazon doesn’t mean just paying Amazon itself. You might need to spend on other services needed for you to build and grow your store. To answer the question, what does it cost to sell on Amazon? we need to categorize costs in three:
The required costs for selling on Amazon are mandatory, non-negotiable costs. This includes:
• Amazon Seller Subscription Plan
• Amazon Seller Fees
• Taxes (if applicable)
• GTIN (Global Trade Identification Number) for generating barcodes
Recommended costs are nice-to-have items but not required. These can be:
• Registered trademark
• Amazon pay-per-click (PPC) ads
• Influencer marketing
Extra costs are optional and can be geared towards building a brand that looks professional and established. These can be:
Categorizing your costs can help you prioritize and set your budget accordingly. At this point, you’re more equipped to come up with the exact amount of what it will cost you to begin selling on Amazon.
How Much Are Amazon Seller Fees?
Because of additional fees, Amazon selling costs are never the same for different businesses. The answer to how much are Amazon seller fees? would vary depending on your products, your Seller plan and fulfillment set-up.
Fees in addition to the monthly fee (for Professional sellers) or per-sale fee (for Individual sellers) can include referral fees, inventory fees and other added cost of selling on Amazon.com.
Here is a detailed breakdown of fees that affect Amazon seller pricing
Referrals fees vary depending on the product category, but they can range from 8-20 percent of the total sale price.
Sellers pay fulfillment fees depending on whether they are shipping products by themselves or using Fulfillment by Amazon (FBA). Amazon FBA means that your products are stored in Amazon’s fulfillment centers and Amazon itself takes care of packing, shipping and providing customer service for these products. Amazon offers sellers an FBA Revenue Calculator to get an estimate of fees and compare it with the cost of shipping products yourself.
Inventory fees apply to sellers who choose Fulfillment by Amazon. These fees are classified as:
• Monthly Inventory Storage Fee – Fee is charged for all items stored in the Amazon fulfillment center. It is charged between the 7th and 15th of the month. Fees vary depending on item size (Standard vs Oversized) and are measured per cubic foot.
• Long-term Storage Fee – Charged for items stored for 365 days or more
• Removal Order Fee – Charged when sellers want items to be shipped back to them or disposed of. The fee is charged per item.
• Returns Processing Fee – Charged when customers return an order
• Unplanned Service – Charged when sellers are unable to follow packaging and shipping requirements and Amazon has to fix the problem
Miscellaneous fees include:
• Rental book service fees: Applies when you are renting out books ($5 per rental).
• High-volume listing fees: For sellers with high volume, non-media listings that have not sold in the past 12 months, Amazon charges $0.005 per listing.
• Refund administration fees: For customer refunds, Amazon charges a refund fee.
Not sure which fees apply to you? You can use tools like an Amazon selling fees calculator to get a reliable estimate and find out exactly how much Amazon seller fees are for your particular business. This is especially helpful when you plan to use Amazon FBA.
If you would rather get an Amazon consultant to make sure you’re paying for the right fees and making profit, then hiring an Amazon marketing agency can be an ideal solution. Hiring an expert ensures that your Amazon seller pricing is competitive yet profitable.
Advertising on Amazon
How much does it cost to sell on Amazon when you factor in the marketing campaigns you need to invest in to boost sales?
As an Amazon seller, you have the option to advertise your store on Amazon via Amazon PPC ads. More specifically, you can invest in running Amazon ads for your brand or product when users search for them on Amazon. These are seen as “Sponsored Ads” or “Recommended Products.”
Running Amazon ads will certainly increase your Amazon selling costs, but you only pay when a shopper clicks on your ad.
Amazon’s PPC advertising falls under two categories:
• Sponsored Brands – appears on product pages and search results and can show any product from a registered brand
• Sponsored Products – appears on product pages and search results, showing a specific product (can be from a brand or a reseller)
Cost of Advertising on Amazon
For Amazon PPC, you can set your own budget for how much you want to pay for every ad click. This is why there is no fixed amount for Amazon ads – it would depend on your bid and whether it’s competitive enough to result in a profitable return on investment (ROI).
Understanding ACoS Amazon
ACoS, or the Advertising Cost of Sale, is a way to measure how much you spent on Amazon ads versus how much you sold.
The ACoS Amazon formula is:
Ad Spend/Ad Revenue * 100
To illustrate, let’s say you spend $300 on ads and made $600 from those ads. To get your ACoS Amazon value,
300/600 * 100 = 50
You ACoS is 50 percent, which means for every $0.50 spent on ads, you earn $1 in sales.
So, what is a good ACoS on Amazon?
Most Amazon sellers aim for 30 percent ACoS or lower, but it would depend on your business and industry. Some niches do sell more than others, so you do need to take that into consideration.
Regardless of whether or not you hit that 30 percent or lower ACoS, you need to remember a common rule:
Your profit margin should be higher than your ACoS. This is why you need to calculate your profit margin and compare it against your ACoS. If your profit margin is lower than your ACoS, it means you’re losing money from Amazon ads.
Calculating Your ACoS vs Profit Margin
For a better understanding of costs, you need to calculate your profit margin first and then compare it with your ACoS. The profit margin computation is:
(Value of Sale – Item Cost)/Value of Sale
Value of Sale: The product’s selling price
Item Cost: The product cost + Amazon seller fees
Let’s take a look at the example below:
($200 – $50) / $200
profit margin: 75 percent
If your profit margin is 75 percent and, let’s say, your ACoS is at 50 percent, then you are making money from your ads and you have a good ACoS value. This is an example of what is a good ACoS on Amazon.
To get help understanding ACoS Amazon computations and be able to determine what is a good ACoS on Amazon, you can get an expert from an Amazon advertising agency for better results with your Amazon ads. With the right Amazon marketing services, you can easily get the best ACos for your business.
On the Road To Amazon Seller Success
Now you have an in-depth answer to the question, does it cost money to sell on Amazon? Your next step is to determine how much you are willing to invest in starting an Amazon business.
You don’t have to be an expert in how to sell on Amazon when starting out. Luckily, there are many free resources from Amazon and other Amazon marketing experts that can educate you on launching a highly successful Amazon store.
If you want the best results from your Amazon marketing strategy, you can hire an Amazon marketing agency like Thrive. Our strategic and winning eCommerce marketing strategies include Amazon marketing services that can help you fast-track your success and establish your brand in Amazon’s highly competitive marketplace. Thrive is highly recommended by industry expert Neil Patel as one of the Top 5 agencies for Amazon PPC, so you don’t just have to take our word for it.
Contact Thrive and our team of Amazon marketing experts today to get started.