Understanding the Cost of Selling on Amazon: Alpha Repricer’s Expert Tips
Selling on Amazon has the most convenient cost threshold. In the beginning, sellers have to invest as ignificant amount amount of money to kickstart their online business on the platform and make their first sale. However, it is not a lot of money that you need to put in. With our expertise and knowledge in the field, we can attest that with very little initial investment, you can still make a lot of sales and succeed. As for large businesses, they have the option to choose custom plans or professional seller plan to take advantage of advanced features. Well, we are here to help you understand all of it.
With a professional approach, let’s explore the cost of selling on a marketplace like Amazon:
Table of Contents:
- Why is Amazon the perfect place to invest as a seller?
- Seller’s Permit to start selling on Amazon
- Amazon charges: According to seller types
- Costs you need to avoid
Why is Amazon the perfect place to invest as a seller?
Amazon is by far the largest platform for people to shop from. 9 out of 10 customers visit Amazon to compare prices or purchase items. The edge Amazon provides to your business is the ability to reach customers worldwide. You have the chance to increase your sales by selling globally. Presently, Amazon has a marketplace in nearly every country. And guess what? It keeps on growing! Amazon is evolving at an unbelievable pace and if you are not selling on it, then you are definitely missing out.
So, how much does selling on Amazon cost? Having worked with various types of sellers and businesses in the e-commerce platforms, here is what we have gathered till now:
Seller’s Permit to start selling on Amazon
It is commonly known as a tax exemption certificate or as we call it, a sales tax permit. It allows you to buy from wholesalers and be free from paying sales tax when you purchase anything related to your business. The fees might differ from one state to another, but you can get your Permit from the country you belong to. What we can tell is that the cost of this seller’s Permit or business license is definitely above $50. It is issued to you by the local government that makes sure you are up to the mark. They also ensure if you are fulfilling their requirements, such as collecting taxes for them and zoning.
The best way to go about it according to us is to get in touch with a tax professional or a legal guide to help you sort out your taxes so that you can easily get your seller’s permit.
Unraveling the Costs of Selling on Amazon
Amazon cost is divided into five parts:
- Seller plan that you choose
- Fulfillment type
- Refferal fee
- Inventory cost
- Operating cost
Seller’s plan: Cost breakdown
The Initial step is to open a seller’s account on Amazon. As much as we know, Amazon offers three kinds of business plans for its sellers;
- Individual plan
- professional plan
- Enterprise plan
New sellers can opt for the individual seller plan that costs $0.99 per sale. Quite convinient if you ask us, especially when you are a newbie who doesn’t want to spend a large about of money even before getting enough sales. However, you have to pay $39.99 each month for the professional selling plan. Might sound a lot but super affordable if you are selling 40+ items every month. As of the Enterprise plan, there is custom pricing, no fixed price. it all depends on how huge your volume is.
Refferal fee:
As seasoned sellers ourselves, it is important that we highlight the smallest of costs. Amazon deducts referral fees on each sale that you make on the marketplace. The referral fee typically varies in between 6% till 45% and charged over the total sales price. Totally depends on the category of your product. Check out the Seller Central Account to understand what referral fees is about and the neccessary information
Fulfillment by Amazon fee:
if you don’t want to get into all the unneccesary costs, our advice would be to consider selling it through FBA. here are the costs you must know about:
FBA fulfillment costs depend on your product’s dimensions and weight.
Standard-sized products: Recent price reductions (as of April 15, 2024) mean fees typically range from $3.02 to $5.55 for items under a pound, with adjustments for heavier items.
Oversized products: Fees begin at $9.12 for smaller oversize products and go up based on weight.
An insightful tip: Do all these charges seem confusing to you? Well, that is because you haven’t studied about the types of sellers on Amazon. Go ahead and read the blog and then come back to this one, you will understand the costing better.
Inventory
Inventory is where you can invest; how you want to. Decide what to sell and then connect with wholesalers and suppliers to get your items. Take our tip: Research well and beware of all the scams that are nowadays happening around you. Most sellers source items from stores like Walmart or Dollar Tree as well. Your inventory can cost you from $10 upwards, depending on what you decide to sell.
Operating Cost
Once you start selling on Amazon, you overlook the cost you spend daily on your business. Even though it’s little, but it still counts. You can divide your running costs into two sections.
- Procurement
- Shipping
The gas you spend on your transport can be added to the procurement expenses. Shipping expenses may include the money you spend on packing material, postage, etc.
Last but not least, Amazon costs you your time!
Amazon is going to cost you your time. As beginners, you need to be patient and invest as much time as you can to grow your business. Even if you are a small seller; putting your time into your business will help you succeed. You will be sitting in front of your computer, doing hours of research on what’s on how’s related to Amazon. A lot of time will be invested in communicating with wholesalers, marketplaces, and procurement, etc. Listing your items and then monitoring your sales is going to require a lot of time too. The main factor comes when you have to reprice your listings according to your competitors. It costs you a lot of your time and mentally drains you.
However, there are a lot of tools to help you out during this journey. You can search for tools that offer inventory management, bookkeeping, monitoring feedbacks. For repricing, automated repricers are in the market to help you maintain your listings and boost your sales. Just like us! We offer instant repricing for your listings and respond each time your competitors make any changes to their prices. You may want to reprice with us in the future.
Costs you need to avoid
Do not waste your money on any courses that charge you a lot and claim to teach you Amazon tactics or sell on Amazon. The price is super high, and you can quickly learn about Amazon from the Amazon seller university or blogs that all the experienced sellers or businesses upload. Sellers can also join groups on Facebook, where seasoned sellers share valuable information regarding Amazon.
To summarize, we have mentioned all the start-up costs to start selling on Amazon. We hope this blog helped you figure out how much you want to invest in your Amazon business and if you want to! After all, it all comes down to what you choose to sell on how you take it from there.
Author
