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.

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MAP Pricing vs MSRP: What's the Difference? (blog header)
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MAP Pricing vs. MSRP: What's the Difference?

“MAP” and “MSRP” are two of hundreds of acronyms floating around in the world of ecommerce, and they’re two of the easiest to confuse and misunderstand. While MAP and MSRP do play similar roles, they also have key differences that can work in tandem to support and protect your brand on marketplaces.

So what are MAP and MSRP and why do they matter? Here’s what you should know: 

What is MAP?

MAP (or minimum advertised price) is the minimum amount that a manufacturer or wholesaler recommends resellers advertise their products for. MAP pricing policy is essentially a one-way boundary you set to protect your brand, protect the margins of your resellers, and maintain fair competition across all of your distribution channels.

When setting a MAP policy strategy, remember the important things you’ll want your MAP policy to do are:

  1. Protect the interests of your brick-and-mortar resellers, giving them the margins they need to display and carry your product as well as sell it.

  2. Stay small enough that it discourages resellers from heavily discounting your products and keeps competition fair.

  3. Accurately reflects on the brand image and value you want to reflect.

“Advertising” and “recommends” are the key terms here. MAP policies should only recommend the price that is advertised online or in-store for a product, not attempt to fix the actual selling price of the product—that’s illegal—or recommend the actual selling price. That’s MSRP’s job.

Benefits of MAP

MAP not only keeps competition fair, but allows you to control your brand identity and promote consumer trust of your product and brand. Here are some of the benefits of having MAP policies:

  • Better brand protection and control

  • Creates a level playing field for retailers

  • Reduces bad customer experiences

  • Provides an accurate performance analysis

How Can Brands Effectively Enforce MAP?

It’s critical that MAP policies are structured in such a way that a brand avoids violating anti-trust laws. One way brands can effectively enforce MAP is by simply monitoring online product prices across digital channels to identify fluctuations in the market. 

At Pattern, we help brands not only develop a MAP policy, but also enforce it. Enforcing MAP policies and gaining marketplace control includes finding unauthorized sellers, which Pattern’s data finds. Once Pattern finds the unauthorized sellers, Vorys eControls (Pattern’s legal partner) steps in and handles the takedowns of unauthorized sellers, continuous enforcement of brand management, and reseller policy enforcements.

What is MSRP?

MSRP (or manufacturer’s suggested retail price) is how manufacturers standardize pricing across their resale channel and determine what price is fair for their product. The key difference between MSRP and MAP is that MSRP is the actual price manufacturers set and recommend retailers charge for their goods while MAP is the advertised price. 

MSRP doesn’t necessarily have to be the final price of a product—it’s most often a starting price—but it is determined by taking into account all of the costs associated with the distribution and manufacturing process for a product and the margin amount resellers need in order to make a profit. MSRP also establishes value. For example, if a brand wants to build a premium brand, the MSRP can reflect the actual or perceived value of their product.

Benefits of MSRP

Setting up an MSRP for your product includes the following benefits:

  • Maintains brand equity

  • Establishes brand and product value

  • Standardizes costs across marketplaces

How Can Brands Effectively Enforce MSRP?

Like MAP pricing, MSRP has to be set up as a one-way policy and not an agreement between a manufacturer and a reseller to avoid landing a manufacturer on the wrong side of the law. It’s a recommendation, not a contractual bind. As mentioned for MAP policy, Pattern helps brands effectively enforce MSRP with our proprietary data and expertise to protect their brand. 

How Do MAP and MSRP Work Together?

MAP and MSRP have different applications that may prove useful in different scenarios. For example, MAP policies are typically more useful in marketplaces where competition is fierce and price erosion happens easily if sellers are left unchecked. Ideally, however, MAP and MSRP are a dynamic duo that work together to serve the interests of your brand, support your resale channels, and protect your resellers.

Setting an MSRP establishes value for your product and lets your resellers know you’re serious about controlling channel conflict, maintaining pricing equity, and protecting their margins so they’re more confident setting pricing at the MSRP level.

MAP is the second half of setting a pricing policy. Setting a MAP price for your product, in addition to an MSRP, further standardizes pricing across your resale channel and gives legitimate resellers a fair environment to compete in while setting boundaries against unauthorized sellers harming your brand.

MAP combined with MSRP creates a stronger level of brand protection, giving your brand more sustainable, profitable growth.

Maintain Brand Control With Pattern

MAP policies can be tricky to draft, because there are so many legal lines to tiptoe around and so much nuance that goes into pricing. They can also be tricky to enforce without the right tools. At Pattern, partnered with Vorys, we have the tools and resources to help you maintain brand control on all marketplaces. 

As an ecommerce accelerator, Pattern can help you identify MAP violators and regain control of your brand online so that your image and your resellers are protected. To learn more, contact us today.

Athlon Optics Walmart.com Launch Has Record Setting Sales within 3 Days
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Athlon Optics Walmart.com Launch Has Record Setting Sales within 3 Days

Athlon Optics sells scopes and other optical accessories like binoculars for anyone who may be hunting, shooting recreationally, or competing.  After achieving significant success on Amazon, the brand wanted to launch on Walmart. As a growing marketplace with huge growth forecasts, Athlon saw their competitors already staking claim on walmart.com and saw opportunities for increasing their sales.

As a prestigious brand in its category, with loyal consumers, Athlon does so much with very few resources. With less than twenty employees in the entire company, managing everything from customer service to product development, their ecommerce team needed support to scale to a new marketplace.  And, they needed a partner who had a relationship with and deep understanding of walmart.com to accelerate their growth. Pattern is a one-stop shop for Athlon, providing the resources and expertise, so Athlon could also save budget and stop outsourcing so many different aspects of their marketplace business.

Athlon Optics Prepares for a Seamless Launch

Sometimes brands who transition from 1P to 3P with Pattern have no proprietary sales, marketplace data or content such as product images, video, or optimized copy. These circumstances create a more hands on transition for Pattern and may interfere with launch expectations. 

But Athlon was the consummate partner and overly prepared to transition to 3P– buttoned up, organized, and ready to take on walmart.com’s list of launch needs. Athlon provided all the required assets on time and was very organized.  The images were shot, formatted, and categorized as A+ content that Pattern ported over.  This process dramatically reduced wait times and lag times within the platform.  Plus, since the content was optimized for marketplaces, all images, copy, and listing information uploaded in the first pass. 

Pattern’s Walmart Expertise Leads to Success

But the content worked because of Pattern’s resources and marketplace expertise.  Pattern provided Athlon with a very clear outline of needs and expectations for seamless launch and this process has become a playbook for other brands on walmart.com.  The team’s mutual partnership and Pattern’s diligent follow up with and detailed attention to Walmart processes and logistics prevented Athlon from getting lost in the weeds. 

Three Days is All it Takes

The successful, thorough, and quick transition to 3P with Pattern secured Athlon most likely the fastest ramp-up periods for any brand on Walmart.com.  

Together we achieved success such as:

  • 'Best in class' turnaround–98% faster onboarding than average brand on Walmart.

  • First sale within the first week of landing at Walmart. 

    • Unprecedented turnaround considering the ramp up usually needed to gain momentum and traction with reviews on Walmart. 

  • Exceeded initial first month growth projection by 34%.

Athlon was so impressed by the ease and simplicity of its launch and execution on Walmart that the brand wants to grow our 3P relationship with other marketplaces such as Amazon Canada and Target+.

And, in the meantime, look out for Athlon Optics in Walmart Deal Days in 2022.  A huge win for any brand tied to organic advertising and new traffic opportunities across all media.

Pattern Helps Brands Expand Marketplaces 

Pattern has the 3P partner experience and deep expertise on Walmart and other global marketplaces to help a brand expand their footprint to maintain sales momentum and a competitive edge. Pattern, an ecommerce accelerator, takes on the responsibility of your stock and provides the expert resources needed to successfully launch and continue to grow your revenue on global marketplaces. 

Learn more about Pattern’s expertise and partnership on Walmart.  Contact us today.

Amazon A+ Content
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Amazon A+ and Premium A+ Content: Pros and Cons Brands Need to Know

Long gone are the days when Amazon listings were limited to a simple product description, five bullet points, and eight pictures. As the platform, and number of sellers, has grown, sellers have had to be more and more strategic and eye-catching to increase traffic and conversions on their listings.

Brands on Amazon have plenty of attractive options available to design their Amazon storefront, which reside in two of Amazon’s content tools: A+ Content and Premium A+ Content (or  A++ Content).

Here’s the pros and cons of brands using A+ Content vs. Premium A+ Content:

What is Amazon A+ Content?

Amazon A+ Content is a standard feature available to all Amazon Sellers and free as one of the many benefits of Amazon Brand Registry. 

With A+ Content, a product listing can have more than a plain text description and standard photo reel–it can include high quality multimedia photos and videos alongside eye-catching information to share the product story, and not just the product appearance.

Some noteworthy features that Amazon A+ offers are:

  • Multiple, varied images of a product

  • Strategically concise introduction

  • Video

  • Bullet points

  • 360° product views

  • Matrix comparison charts

  • “What’s in the box” section

What is Amazon Premium A+ Content?

Amazon Premium A+ Content, or Amazon A++ Content, is a tool that goes a level beyond basic A+ Content, giving brands the ability to showcase their product’s most important features and benefits with a modern, visually appealing structure. 

In August 2022, Amazon announced Premium A+ would be available on Seller Central for free usage during a promotional period. Previously, Premium A+ content was available only by invite for brands using Vendor Central and could cost anywhere from $250K and $500K per product. 

With Premium A+ content, a brand visually communicates using imagery and video, and relies much less on text due to strict character limits for product descriptions. According to Amazon, implementing Premium A+ content can increase your sales by 20%.

For the first time ever, Premium A+ expands the usable real estate of the page, using the entire width of the screen for a sophisticated and modern feel.

Some noteworthy features that Premium A+ offers are:

  • Video

  • Full-width imagery

  • More space

  • Clickable Q&A

  • Interactive comparison charts

  • Carousel modules

  • Mobile-friendly and voice-friendly product pages

  • Testimonials

Pros and Cons of Amazon A+ vs. Premium A+ Content

Although their purposes are similar, there are some key differences between A+ Content and Premium A+ Content. Here are the pros and cons for each tool:

Basic Amazon A+ Content

Pros:

  • Free and unlimited use for all Vendors.

  • An effective tool to enhance customer experience and product listings.

Cons:

  • Less features than Premium A+.

  • It's not as visually appealing as Premium A+.

Premium A+ Content

Pros:

  • There are 16 extra modules to choose from that are media-rich and make an impact.

  • You have two more available module slots than Basic Amazon A+.

  • Overall, there are more possibilities for hyper-engaging content.

  • You can expect a sales rate increase of up to 20% with Premium A+, according to Amazon.

Cons:

  • Amazon has positioned Premium A+ content as more of an exclusive tool, requiring eligibility based on past content to qualify for Premium A+ content. 

  • Character limit restrictions are more strict than Basic Amazon A+.

Elevate Your Amazon Content with Pattern

Ultimately, both of these tools exist to help you and your brand provide customers the best online shopping experience possible. Although Premium A+ offers plenty of exciting new options for enhancing customers’ buying experience, it may not be for everyone. Optimizing your Amazon listing with A+ or Premium A+ Content can provide the best opportunity to build a strong reputation for better brand-recognition and customer affinity. 

Our creative and digital marketing experts at Pattern can help brands use A+ Content and Premium A+ Content to increase conversions and give buyers an amazing experience.

Learn how Pattern can help you increase conversions on Amazon. Contact us