How Much Does It Really Cost to Sell on Amazon? Do you have enough start-up capital? What are the fees and expenses you will encounter when doing business on Amazon? Next, let the editor show you around, and you can also analyze it based on your own situation.
When considering the costs of selling on Amazon, you definitely have to think about it from a few different perspectives. Here we will discuss two main costs, the cost of sourcing your own brand products, and the cost of selling them on the platform.
1. The cost of purchasing private label products
You can buy products in bulk directly from a manufacturer and then have them put your own brand on the products for you. Selling private label products is a great way to gain a competitive advantage because you are selling a one-of-a-kind brand. With a private label product, you’ll always win the buy box because you’re the only seller offering that exact item. But in addition to knowing all the benefits of private label, you also need to consider the following procurement costs.
Cost per unit (and minimum order quantity) Obviously, the cost per unit quoted to you by the manufacturer is a key point when considering initial start-up costs and operating costs. When choosing products, your goal should be to find the products that have the potential to provide the greatest profit margin within your budget.
While the prices of certain products may appear cheaper due to a lower per-unit cost, be sure to take the minimum order quantity into consideration. If the cost per piece is low but the minimum order quantity is high, you may end up spending more than if the cost per piece is high but the minimum order quantity requirement is low.
Packaging costs
Whether you choose plastic bags, cardboard boxes, or some type of specialty packaging, you need to factor in the cost of purchasing the packaging materials as well as the cost of packaging the product.
Branding costs
You may need to hire a graphic designer to design logos, packaging, etc. for your brand. Alternatively, if you’re on a tight budget, you can also choose to do the graphic design work yourself.
It also costs money to have your logo printed on your product or packaging, so ask for a comprehensive breakdown of the costs.
Loading and shipping costs
Once your product is manufactured, you have to pay for loading and shipping. You can manage the shipping logistics yourself or outsource the work to a freight forwarder, but whichever option you choose, you’ll want to make sure you budget appropriately. Once your products are ready to be shipped to an Amazon warehouse, you’ll need to pay for shipping for that part of the journey as well.
Marketing and promotional expenses
Every successful product on Amazon requires a well-planned marketing strategy. Whether you choose to give away free samples to spread the word or invest in “Sponsored Product” advertising, you should be aware of your marketing budget.
2. Amazon platform fees
Amazon Selling Program Fees
When you sign up for a Seller Central account, you can choose from two different selling plans offered by Amazon. Your options include:
• Individual Plan: $0.99 per item sold (for sellers who sell 40 or fewer products per month)
• Professional Plan: $39.99/month, unlimited products
If you plan to grow your business on Amazon, then you should definitely choose the Professional Seller Plan.
Amazon platform referral fee (Referral Fee)
Think of it as the fee for listing and selling your products in the Amazon store. A referral fee applies to every item you sell on Amazon and is calculated as a percentage of the sales price or a minimum amount (whichever is greater).
Referral rates vary by product category, but for most categories, the referral rate is 15%. The minimum amount fee is $1 for almost every category, with a few exceptions - watches and jewelry have a minimum amount of $2, and a few categories do not have an applicable minimum amount or a strict sales commission percentage to determine the fee.
Variable Closing Fee
Variable settlement costs, also known as variable costs, refer to cost items in total costs that change with changes in output.
This fee only applies to media products such as books, music, videos, DVDs, video games, consoles and software. Amazon's latest fee schedule stipulates that any item sold in the media category will be charged a closing fee of $1.80.
If you choose to use FBA to fulfill your orders, you need to understand all the FBA fees, as well as when and why they are incurred, and factor them into your business planning (you can use the Amazon FBA calculator to help you calculate this).
Whether you have a large start-up fund or very limited resources, be sure to create a detailed budget before you start spending so that you can make the most of every dollar and not be forced to deal with expensive, unexpected costs.
The above is about how much money you need before doing Amazon. I hope it will be helpful to you. If you want to continue to learn about Amazon-related information, please continue to pay attention to us!
