How Much Does it Cost to Sell on Amazon?

Kayla Utsch

May 11, 2021

If you ever wanted to launch an Amazon business, now’s the best time to do it: the world-renowned eCommerce platform has reached an annual revenue of $386 billion in 2020, with its growth expected to continue rising over the following years.

One thing that confuses many first-time entrepreneurs on Amazon–and continues to confuse seasoned sellers–is the long list of selling costs. Fees also vary based on your product and the program you chose (such as FBA or FBM).

To start a successful business on Amazon, you need to get a clear understanding of what the selling costs are and what you can do to save the most money. If not, you might get bad surprises and throw away your budget without realizing it.

What Affects Your Amazon Selling Costs?

The prices you’ll be paying to sell on Amazon depend on various factors. These will include:

Monthly Subscription Fees

Amazon has monthly subscription fees for users depending on the size of its business. The professional seller plan, for example, is for companies selling more than 40 items sold per month and costs $39.99 monthly.

If you’re an individual seller with less than 40 orders fulfillment each month, you won’t have to pay any subscription fees. Instead, Amazon will charge you $0.99 per product sold.

FBA Fees

If you’re selling via Amazon FBA, the prices you pay will all depend on your order type. For example, the larger your order is, the more you’ll have to pay Amazon to fulfill it.

Since FBA allows you to let Amazon’s warehouses manage your orders themselves, there's also a monthly storage fee that you’ll have to pay. You’ll be paying $0.69 per cubic foot from January to September and $2.40 per cubic foot from October to December.

Keep in mind that if your product stays in the FBA warehouse for longer than one year, you’ll have to cover additional charges.

FBM Fees

Unlike FBA, sellers on Amazon’s Fulfilled by Merchant (FBM) program are responsible for fulfilling their own products. One of its main advantages compared to FBA comes in the form of reduced fees.

With FBM, Amazon sellers on the Professional selling plan get to pick their own shipping rates. There is also the benefit of not worrying about paying any warehouse or storage fees.

Referral Fees

Each time you sell a product on Amazon, you have to pay a referral fee between 6% to 20%. The referral fee all depends on the type of product you’re selling within your Amazon store.

For example, if you’re selling any electronic products on your store, you can expect to pay a fee of 8%. If you’re selling clothing items, on the other hand, then you’ll be spending around 17%.

Customer Returns Fees

It’s pretty common for a customer to order one of your products only to return it later. As an Amazon seller, you’ll be in charge of covering costs for any item that the customer returns to your warehouse.

How Much Money do You Need to Get Started Selling on Amazon?

In general, it takes around $500-$3000 to get started selling on Amazon’s marketplace. The money you’ll invest will have to cover the following aspects of your business:

  • Required costs
  • Inventory costs
  • Shipping costs
  • Product photoshoots
  • Tools and supplies

Inventory Costs

Your inventory costs will be the most significant upfront investment for your Amazon business. After all, it’s going to be what you’ll be selling to customers on the platform.

If you're entirely new to selling on Amazon, you may feel reluctant to spend a lot of money on inventory since you don’t have a clear idea of what products will work with customers yet. To avoid running out of cash quickly, we recommend that you just invest around $500-$1000 in the beginning and test out which products will sell.

Product Photoshoots

As you’re running your Amazon business, you can’t settle for subpar photos. Having quality product photos will be essential to getting the customer’s attention and driving the most sales.

Part of your budget will be investing in professional photoshoots so you can make your online products stand out. Your pictures must showcase your product from different angles so the customer can get a clear view of the item and see it in a professional light. Low quality images won’t communicate a high-quality offering.

Advertising Costs

It’s not enough to just upload beautiful pictures to your Amazon store. To drive more sales, you’ll also want to invest in advertising and boost your reach as much as possible.

The good news is that advertising on Amazon is less expensive than other platforms: the current average cost per click on Amazon hovers around $0.35. However, advertising campaigns will take a lot of testing to see what works the best with your audience.

Tools and Supplies

Outside of marketing your Amazon business online, you’ll also be spending a great deal of your time packaging, measuring, and managing your orders (unless you’re on Amazon FBA). As a result, you’ll have to invest in various tools and supplies.

For example, you’ll need to invest in boxes to pack your orders, packaging tape to close them, and a scale to weigh them. A printer to print all of your Amazon shipping labels and documents will also be handy.

8 Ways to Save Money on Amazon Seller Costs

As you can see, the fees for selling on Amazon can add up quickly. That said, you can still minimize your Amazon seller costs and save money with the right strategy in mind. Here’s how:

1. Get a Professional Seller Account

If you’re serious about selling on Amazon, it’s better to sign up for the Professional Seller account at $39.99 per month than the free Individual membership. Since it comes with unlimited listings and extra features to help you sell more on the platform, it will save you more money in the long term.

2. Choose the Right Product Category

The category you choose for your product will play a significant role in how much you’ll be paying in referral fees. If you’re not careful, you may end up spending more money than you have to.

For example, let’s say that you’re selling necklaces on Amazon. If you choose the ‘Jewelry’ product category, you’ll be paying around 20% in referral fees. However, if you opt for the ‘Apparel Accessories’, you’ll be paying 17% instead.

3. Estimate the Right Product Size

Shipping heavy items on Amazon can come at a hefty price. It’s why you want to make sure to estimate your product size every time correctly, so Amazon doesn’t take into account the wrong size of your product and make you pay more for mass that doesn’t exist.

Before you prepare an item for shipping, always double-check that you correctly measure the dimensions. As a bonus, you can also invest in lightweight packaging to reduce the order's weight and save extra money.

4. Partner Up With a 3PL

Handling shipping manually yourself can be a time-consuming process. One of the best things you can do is outsource your Amazon shipping to a Third-Party Logistics Provider (3PL), which will manage your inventory for you.

A 3PL can save you money in the long run by reducing shipping carrier costs for you. Also, working with a 3PL ensures that Amazon isn’t going to reject your product, saving you time and countless headaches in advance.

5. Keep Track of Any Abandoned Inventory

If you’re on Amazon’s FBA program and leave your inventory stranded for far too long, you’ll start getting hit with additional warehousing fees. On top of that, it could also cause you to lose storage space for more products.

Make sure to take a look at your inventory each quarter to ensure that none of your products are stranded for too long. If an item doesn’t sell within six months, be sure to take it out of your warehouse.

6. Invest in Free Packaging Material

A simple way to cut your costs on Amazon is to recycle boxes you already have instead of buying new ones. Not only is it going to save you money from buying new material each time, but it’s also better for mother nature.

7. Sell Your Amazon Products in Bundles

You may have noticed that customers may like to buy complementary items to one of your orders. The problem is that Amazon applies referral and shipping fees for each order, which ends up costing you money.

Instead, you can bundle multiple products in one, so Amazon only charges you once for one customer purchase. You may have to pay slightly more in referral and shipping fees due to the size, but it may be less expensive than the combined fees from separate orders.

On top of that, product bundles ensure that customers get the most out of their orders and your brand. A bundle can improve the customer experience by simplifying their purchase decision.

8. Negotiate With Your Carriers

If you’re frequently doing business with a carrier (such as FedEx or UPS), you should consider negotiating with them to get the best prices on shipping. For example, ask your carrier if they have any discounts for certain order volumes.

Stop Losing Money on Amazon Selling Costs Today

It’s the little things you do that count: by reducing your selling costs on Amazon, you’re not only being more efficient, but you’re also saving money that you can reinvest into your business (such as advertising or improving your product).

However, finding ways to save the most money from Amazon’s selling costs can be a time-consuming process, and there might be other areas of business you’d rather focus on.

That’s where we can help. At Pattern, our team of ecommerce experts help you find the best selling costs for each product you sell on Amazon. Get in touch today and learn what your Amazon costs could be.

Explore Our Ecommerce Resource Library

Find relevant content to accelerate your ecommerce business. Stay on top of industry trends and best practices.

Aug 18, 2022

Ecommerce Innovators Podcast - Covering a New Category

Join us for Ecommerce Innovators, a podcast that brings together the brightest minds in the industry to explore innovative strategies and trends in global ecommerce. We'll analyze what top brands are doing to accelerate their online success and you’ll hear from top executives who are changing the game for their organizations. Our host is John LeBaron, Chief Revenue Officer at Pattern—the premier partner for global ecommerce acceleration.

Listen on Spotify

Listen on Apple

In this conversation withWylie Robinson, CEO and Co-Founder of Rumpl, he talks about growth and innovation. Hear about Rumpl’s evolution since its Kickstarter campaign, valuable advice on starting a new company, key digital strategies, diversifying the product, and Rumpl’s challenges and collaborations.

Ecommerce Innovators Episode Synopsis

Here are 3 takeaways from our conversation with Wylie Robinson:

Introduce an emotional connection to your customer. Wylie shared one way Rumpl stays ahead of its competition is by using emotions. How many blankets do you have in your household? Some people say around 10-15 blankets. Can you name the brands of your blankets? Most people can only name a handful of brands, if any. For Rumpl, emotional connection is the company’s secret sauce. They create emotional connection through partnerships, great storytelling, and investing in the brand.

Innovation brings challenges. A few years ago, Rumpl rolled out a brand new product line made of recycled materials. Upon release, there were huge issues with old products, pricing, etc. For almost six months, Rumpl didn’t even move their new products to the market. When innovating, don’t be discouraged if challenges arise. You aren’t alone!

Pay attention to reviews. When Rumpl launched, they thought that the original puffy blanket would be purchased mainly outside. Through reviews, Wylie learned most people actually snuggle up with their blankets at home on the couch. This was a great learning for Rumpl, and helped them understand their customers. Reviews are a great tool to gather data and receive feedback about your products.

Listen to the full episode for free on Apple Podcasts, Spotify, or wherever you get your podcasts.

Aug 16, 2022

Amazon Revenue Scorecard: The Data Brands Need to Succeed on Amazon

How do you rank on Amazon?  Find out now.

For far too long, brands have lacked a data-driven methodology to gauge the health of their ecommerce presence relative to their competitors.  As the top ecommerce accelerator, Pattern knew its proprietary technology and data could solve this for brands, so we leveraged our AI, rich Amazon seller information, and millions of cross-category data-driven insights to provide all brands with the information they need to succeed on Amazon and beyond.

The result—the Amazon Revenue Scorecard.  The scorecard provides a powerful way for leaders to simply and transparently assess how their ecommerce strategies are performing relative to their competition and where they can optimize to maximize their brand’s ecommerce revenue potential.

What an Amazon Revenue Scorecard Measures

The Amazon Revenue Scorecard was developed by Pattern’s data scientists to holistically measure the ecommerce performance of a brand’s top products across three key drivers—traffic, conversion, and price—and 18 dimensions that impact a brand’s ecommerce revenue growth. The result is a score from 1-10 that helps brands in an ever-increasing array of industries measure their performance relative to their competitors.  Strategically, an Amazon Revenue Scorecard is a rating index that provides real-time data to highlight missed revenue growth opportunities.

Why an Amazon Revenue Scorecard Matters to Executives

An Amazon Revenue Scorecard analyzes your top 25 ASINs to identify strengths, weaknesses, and gaps in revenue growth potential on ecommerce marketplaces. With a rank score of 1-10 in each revenue performance metric, it helps you understand the full picture—identify problem areas quickly and lean in on strengths. The higher the score, the more revenue you’ll generate on an ecommerce marketplace.

The key levers in the score are traffic, conversion, and price, which are the key variables in the ecommerce equation for all brands. As the top ecommerce accelerator, Pattern knows that the ecommerce equation (traffic x conversion x availability x price = revenue) is essential for brands to succeed on ecommerce. Therefore, it is imperative that brands continue to monitor the health of each input in order to have long term success.

Here we breakdown the three key drivers of a brand’s scorecard:

Traffic: Evaluate Marketplace Ecommerce Traffic

Traffic is the first strategic lever to drive revenue on marketplaces. Without generating more ecommerce traffic to your listings, you don’t have a hope of increasing marketplace revenue. A traffic score breaks down and rates your ecommerce traffic in the following key areas:

  • Paid Traffic — the effectiveness of a brand’s advertising efforts, including keyword strategy, ad programs, and ad tactics

  • Organic Traffic — how well a brand is capturing organic traffic within its category

  • Marketplace Coverage — how many global marketplaces (Amazon, eBay, Walmart, etc.) a brand’s products are being sold in

Conversion: Calculate Conversion Opportunities on Marketplaces

Conversion is the second strategic lever to drive revenue on marketplaces. Once potential buyers interact with your product, they have to be compelled to convert on the listing. The conversion score breaks down and rates your marketplace conversion into five key areas:

  • Listing Titles, Bullets, and Description — the degree to which a brand is utilizing best practices for titles, bullet points, and descriptions

  • Listing Images and Videos — how well a brand is using high-quality and optimized multimedia to convey product features and benefits

  • Content — how well a brand is conveying its voice and branding across the marketplace

  • Ratings & Reviews — how well a brand’s products are being accepted by marketplace shoppers according to ratings and reviews

  • Competitiveness — the degree to which a brand effectively utilizes promotional elements on its product pages

Price: Monitor Price Across Marketplaces and Sellers

Pricing is the third strategic lever to drive revenue on marketplaces. Without consistent pricing across marketplaces and sellers, your profits will steadily erode and you’ll have a hard time winning the Buy Box on Amazon and other marketplaces. The price score breaks down and rates your ecommerce price into four key areas:

  • Channel Conflict — the likelihood that an online marketplace will undercut a brand’s brick and mortar retail partners on other platforms and channels

  • Number of Sellers— the number of unique entities selling a brand’s products on a given marketplace

  • Product Compliance — a measure of the stability of the price of a brand’s products on a given marketplace

  • Cross-Channel Consistency — an assessment of the price consistency of a brand’s products across ecommerce marketplaces and D2C websites

Don’t leave your share of the global ecommerce market to chance—analyze ASIN and competitor performance now.

Pattern Helps Brand Accelerate Beyond Competitors on Amazon and Other Ecommerce Marketplaces

The Amazon Revenue Scorecard has been an integral and exclusive part of Pattern’s offering to its partners and is now available for all brands to assess their success on ecommerce marketplaces like Amazon. The standard is a measurement of the key drivers that impact revenue growth and it matters to brands since you need to see where your missed opportunities are and where your competition is outranking you.

Pattern can break down your brand’s revenue score on Amazon so you can command the maximum share of the exploding $6 trillion ecommerce market. 

Executives interested in receiving your brand’s Scorecard can do so here.

Surprised by your score?  Contact Pattern today and we will dive into the data.

Aug 11, 2022

How Amazon Sponsored Products Boost Brand Revenue

If you’re looking to improve your performance on Amazon, honing in on your ad strategy is one of the best ways to start getting your products in front of more eyes and increasing sales. Because they’re disguised as traditional products within search, Sponsored Product ads should be the cornerstone of your Amazon ad strategy. They’re able to capture consumers’ eyes in more organic ways to drive traffic, and, ultimately, revenue growth, for your brand on Amazon.

Traffic is a key component of Pattern’s ecommerce equation: revenue: traffic x conversion x price x availability. When you can optimize your strategy to get more of the right traffic to your listings, you’ll be able to spend on initiatives like ad strategies in a smarter way to drive better product performance on Amazon.

Here’s why Sponsored Ads, in particular, are a great move for any brand selling on Amazon:

Improve Organic Rank Over Time

Many brands hesitate to invest in Amazon ads like Sponsored Products, preferring to increase product rank organically instead of worrying about paying a long-term cost. We know, from our vast experience accelerating brands on the platform, that Amazon wants to promote and boost high performers. So, to get more traffic, drive revenue, and spend your ad dollars in a smart way, you’ll need to “show” Amazon’s algorithm that your product is worth promoting in the first place. 

Pattern’s ad strategy takes a particularly deliberate approach to tracking and feeding this virtuous cycle. Your listings’ success in conquesting each keyword leads to more growth, lower costs, and better listing rank over time—as your Sponsored Products get higher traffic and perform better over time, you’ll start rising in rank over your competitors and be able to reduce your overall spend on ad placements. As your brand continues to win conquests over your competitors, you’ll get even more traffic, and the cycle continues.

Give You a High ROI

When executed correctly, Sponsored Ads on Amazon are one of the smartest and most cost-effective ways to drive traffic to your product listings. For a snapshot of the value, here’s how Amazon ads compare to Google

  • Amazon ads return an average of 10% conversion, as opposed to Google ads, which convert at 3.75%

  • 54% of product searches happen on Amazon now, rather than Google.

  • The cost-per-click (CPC) is significantly lower for Amazon ads—$0.96, as opposed to $2.69 for Google’s display ads.

What this tells us is that spending money advertising on Amazon, rather than on Google or other channels, has a twofold benefit: products are more likely to get in front of consumers who are in the mindset to buy, and you’re able to save on your overall ad costs by getting more bang for your buck with every click.

Capture Top Search Area

Sponsored products are taking up more and more real estate on Amazon’s search results. You can see as many as four sponsored listings before the top organic results for any given search, giving brands without an ad strategy a significant disadvantage in winning consumer attention.

Our teams have learned that 80% of sales go to listings with the highest placement on search, and it’s a key aspect of our Sponsored Products strategy for brands. Advertising the right amount on top of search placements is a balancing act to make sure you're leaning in the right amount to maximize results. If your organic listings aren’t already primed and fully optimized for top keywords your consumers are searching with, Sponsored Product ads should be at the top of your list for strategies to win their eyes and traffic to your listings. 

Because they show up at both the top of search and rest of search, they can get the attention of your best audience—consumers searching for products like yours with the intent to purchase now.

Win Traffic from Competitor Listings

Sponsored Product ads can also appear on the listings of products related to yours—in other words, your competition. As a consumer scrolls through a listing and isn’t finding what they’re looking for, you can be poised in a perfect position to capture their interest and bring them to your listing instead.

This traffic is particularly valuable—besides being ready to buy and actively looking for a product like yours, these consumers have the potential to switch brand loyalty from your competitor to you. 

Optimize Product Listing Traffic with Pattern

Building an effective Amazon ad strategy can be a daunting task for many brands, but it doesn’t have to be. By partnering with an ecommerce accelerator like Pattern, you can get the full benefit of true Amazon expertise without having to learn and do it alone. We have all the global resources brands need to succeed, including expert teams and proprietary technology. We help you drive the right traffic to your listings, at the right time, to improve your revenue and performance on Amazon.

Find out how Pattern can help you grow your traffic and revenue on Amazon. Schedule a call here.