Initiating any eCommerce business may be a difficult task because the wide variety of costs can make it hard to determine the amount of capital that is required to get started.
By reducing the costs that are typically associated with starting an eCommerce business, Amazon has, thankfully, made it simpler than ever before for prospective business owners to have their own Amazon storefront.
On the other hand, there are certain costs that you will have to pay in order to get your Amazon store up and running.
So, if you are curious about how much it costs to open an Amazon store,
Keep reading,
In this guide, we will discuss all of the expenses that you will need to take into consideration when you start selling on Amazon.
How Much Does it Cost to Open an Amazon Store?
There are several initial setup costs that you need to consider when starting an Amazon store. Here’s an exploration of the upfront expenses involved in establishing your presence on the Amazon platform:
1. Amazon Seller Account Fees: A Detailed Overview
When you are setting up an Amazon store, one of the crucial decisions you’ll make is choosing between an Individual Amazon Seller Account and a Professional Seller Account. Each option caters to different seller needs, and understanding the differences is critical to making the right choice for your business.
Individual Seller Account Features
No Monthly Fee:
An Individual Seller Account doesn’t have a monthly subscription fee. This makes it suitable for casual or new sellers who don’t anticipate high sales volumes.
Per-Item Fee:
Instead of a monthly subscription, individual sellers pay a fee of $0.99 for each item sold. This fee is charged on top of referral fees and varies based on the product category.
Suitable for Low-Volume Sellers:
The Individual Account is ideal for sellers who plan to list a few items occasionally or those testing the waters before committing to higher sales volumes.
Example: If you are a hobbyist jewelry maker, decide to sell your handmade earrings on Amazon. You don’t anticipate selling a large quantity each month, so you opt for an Individual Seller Account. With this account type, you don’t pay a monthly fee but incur the per-item fee for each pair of earrings you sell.
Professional Seller Account Features
$39.99/Month Subscription Fee:
A Professional Seller Account comes with a fixed monthly subscription fee of $39.99. This subscription allows sellers to list an unlimited number of products, making it cost-effective for high-volume sellers.
No Per-Item Fee:
Unlike the Individual Account, there’s no additional per-item fee. This is advantageous for sellers moving a significant volume of products each month.
Advanced Features:
Professional accounts unlock access to advanced selling tools, analytics, and bulk listing options. This is beneficial for sellers managing extensive inventories and running strategic marketing campaigns.
Example: If you are selling a variety of gadgets. With a high sales volume, you choose the Professional Seller Account. Even though you pay a fixed monthly fee, the absence of per-item fees is cost-effective for your business. The advanced tools provided help you manage your extensive product catalog efficiently.
Key Considerations for Choosing
Sales Volume: If you’re selling at most 40 items a month, an Individual Account might be more cost-effective. For higher volumes, the Professional Account becomes more economical.
Cost Structure: Consider your budget and the cost structure that aligns with your anticipated sales volume. Evaluate whether the fixed monthly fee or per-item fee is more suitable for your business model.
Tool Access: Assess whether the advanced tools and analytics offered with a Professional Account are essential for your business operations.
Long-Term Plans: If you foresee scaling your business and anticipate selling more than 40 items monthly, a Professional Seller Account is a more scalable option.
So, the choice between an Individual and Professional Seller Account depends on your business model, anticipated sales volume, and long-term goals. Carefully evaluate your needs and budget constraints to make an informed decision that sets your Amazon selling venture on the right track.
2. Cost of Referral Fees
The referral fee is a primary aspect of selling on Amazon, representing the cost Amazon charges for each product sale. It’s essential to comprehend how this fee is calculated and how it can impact your overall selling costs.
Determining the Referral Fee Percentage
Amazon’s referral fee is a percentage of the total sales price, typically around 15%. However, this percentage varies depending on the product category. For instance, it could be as low as 8% for personal computers or as high as 45% for Amazon device accessories.
Minimum Referral Fee Threshold
If the calculated referral fee percentage is lower than $0.30 based on the item’s price, Amazon imposes a minimum referral fee of $0.30. This ensures that, regardless of the percentage, sellers pay a minimum fee for each sale.
For example, if your product is priced at $1.00, and the referral fee is calculated to be $0.15 (which is below the $0.30 threshold), you’ll be charged the minimum referral fee of $0.30 instead.
Discounted Prices and Referral Fees
When sellers offer discounts on their products, perhaps through claim codes at checkout, Amazon adjusts the way it calculates the referral fee. The fee is then based on the sale price after the discount, not the pre-discounted price.
For example, if you sell an item originally priced at $20, and the standard referral fee is 15% ($3), offering a 50% discount through a claim code reduces the sale price to $10. In this case, you’re charged a referral fee of $1.50, which is 15% of the discounted price.
It’s crucial to note that when using discount codes, the referral fee is calculated at the discounted price, providing a cost advantage for sellers offering promotional deals.
Understanding the intricacies of Amazon’s referral fee system empowers sellers to make informed pricing decisions.
Whether adjusting prices, offering discounts, or choosing product categories, sellers can strategically navigate referral fees to optimize their overall profitability on the platform.
3. Cost of Fulfillment by Amazon (FBA) Fees
If you choose to use Amazon’s FBA service, there are additional fees for storage, packing, and shipping. These fees vary based on the size and weight of your products.
Types of Fulfillment by Amazon Fees
There are two main types of FBA fees: fulfillment fees and monthly inventory storage fees.
Fulfillment fees: These fees are based on the size and weight of your product, as well as the channels you use to sell them. They cover the cost of packing and shipping your orders, as well as Amazon’s customer service.
Monthly inventory storage fees: These fees cover the cost of storing your products in Amazon’s warehouses. The amount you pay is based on the size of your products and how long they are stored.
Fulfillment Fees for Standard-Size Products
Fulfillment fees for standard-size products vary depending on the weight of the product. The weight tiers are as follows:
- 6 ounces or less: $2.70
- 7 ounces to 15 ounces: $3.20
- 16 ounces to 1 pound: $3.70
- 1 pound to 2 pounds: $4.00
- 2 pounds to 3 pounds: $4.30
- 3 pounds to 4 pounds: $4.70
- 4 pounds to 5 pounds: $5.10
- 5 pounds to 6 pounds: $5.50
- 6 pounds to 7 pounds: $5.90
- 7 pounds to 8 pounds: $6.30
- 8 pounds to 9 pounds: $6.70
- 9 pounds to 10 pounds: $7.10
Fulfillment Fees for Oversize Products
Fulfillment fees for oversize products are more complex and are based on the product’s weight and dimensions. You can use Amazon’s FBA fee calculator to estimate the fulfillment fees for your oversized products.
Monthly Inventory Storage Fees
Monthly inventory storage fees are based on the size of your products and how long they are stored.
- Standard-size products: $0.75 per cubic foot per month
- Oversize products: $10.00 per cubic foot per month
- Storage fees are also higher during holiday months, from October through December.
Multi-Channel Fulfillment (MCF) Fees
If you use FBA to fulfill orders for products that you sell on your own website or another platform, such as eBay or a Shopify-based store, you will be charged MCF fees. MCF fees are higher than the fees for orders that are fulfilled through Amazon.
How to Estimate Your FBA Fees
Amazon offers several free tools and calculators to help you estimate your FBA fees. The FBA Revenue Calculator, for example, allows you to input your product information and sales channels to view real-time cost comparisons.
Additional Considerations
Dangerous goods: Products labeled as “dangerous goods” are subject to additional fees.
Long-term storage fees: Long-term storage fees are charged in addition to monthly storage fees for products stored at an Amazon fulfillment center for more than a year.
Overall, FBA fees can vary depending on a number of factors, including the size, weight, and value of your products, as well as the channels you use to sell them. However, Amazon offers a number of tools and calculators to help you estimate your fees and make sure that FBA is a cost-effective solution for your business.
Read our guide on How To Reduce Your Amazon FBA Fees.
4. Cost of Product Photography
Investing in compelling visuals is integral to succeeding on Amazon. Here’s a breakdown of potential costs for various visual elements:
Product Photography:
Professional product photography costs can range from $200 to $1,000 or more, depending on the complexity of the shoot and the photographer’s expertise.
Product Image Editing:
Editing services to enhance and optimize your product images typically range from $5 to $20 per image.
Mobile Pic to Amazon Ready:
Converting mobile pictures to Amazon-ready images may cost between $5 and $15 per photo, ensuring compliance with Amazon’s image requirements.
360 Product Photography:
Creating 360-degree images for your products can cost anywhere from $20 to $ 50 per image, offering an immersive view for customers.
Lifestyle Product Images:
Lifestyle photography, showcasing products in real-life scenarios, may range from $300 to $1,000 based on the complexity and style.
Product Package Design:
Designing your product package may cost between $100 and $300, depending on the complexity and the skills of the graphic designer.
Example: If you’re launching a new line of cosmetics on Amazon, budgeting $800 for professional product photography, $15 per image for editing, and an additional $500 for lifestyle images could provide a comprehensive and visually appealing product presentation. While costs may vary, these investments contribute significantly to your product’s market appeal and customer engagement, potentially resulting in higher conversion rates and increased sales on the platform.
5. Cost of Trademark Registration for Enrolling in Brand Registry
Securing your brand through trademark registration is a crucial step for long-term brand security, especially when enrolling in Amazon’s Brand Registry. While optional, the benefits of protection against counterfeit products and brand hijackers make it a worthwhile investment.
Trademark registration costs vary depending on the region, and it’s essential to factor in these expenses:
USA: $459 for ten years.
UK: $399.
India: $319.
European Union: $1299.
Japan: $569.
Canada: $599.
Mexico: $569.
For instance, investing $459 to register a trademark in the USA not only protects your brand domestically but also enables enrollment in the Amazon Brand Registry. This, in turn, empowers you to take decisive actions against the unauthorized use of your brand on the Amazon platform, reinforcing the authenticity of your products and enhancing customer trust. While the upfront costs may vary, the long-term benefits of brand security and control over your listings make trademark registration a prudent investment.
6. Cost of Advertising on Amazon
Investing in advertising on Amazon is crucial for boosting product visibility. Amazon Advertising operates on a Pay-Per-Click (PPC) model, where the cost is determined by the number of clicks your ad receives. While the average Cost Per Click (CPC) stands at $0.81, it’s essential to recognize that this figure varies due to several influencing factors.
Factors Influencing Amazon Advertising Costs
Product Category: CPC varies across different product categories. Highly competitive categories may have higher CPCs.
Keyword Competition: Popular keywords have higher competition, affecting CPC. Strategic selection of keywords is vital for cost-effective advertising.
Ad Placement: CPC can be influenced by the placement of your ads. Top-of-search placement usually has a higher CPC compared to product page placement.
Bid Amount: The bid you set for your ads in the auction system significantly impacts CPC. Higher bids can improve ad visibility but increase costs.
Example of CPC Calculation: Suppose you allocate a $50 budget for an ad campaign, resulting in 100 clicks. To calculate, CPC = Total Ad Spend/Number of Clicks = 50/100 = $ 0.5.
7. Cost of Software and Tools
Allocating resources for software and tools is a strategic investment for Amazon sellers, enhancing operational efficiency and overall business performance. These tools play a pivotal role in analytics, inventory management, and customer service, providing valuable insights and streamlining various aspects of the selling process.
Some Popular Tools and Their Cost:
Jungle Scout: Widely used for product research and market analysis, Jungle Scout offers insights into competitors, sales trends, and product opportunities. Pricing starts at $49 per month.
Helium 10: A comprehensive suite for Amazon sellers, Helium 10 covers product research, keyword tracking, and listing optimization. Plans start at $37 per month.
InventoryLab: Ideal for inventory management and financial analytics, InventoryLab facilitates seamless tracking of sales and expenses. Prices begin at $50 per month.
FeedbackWhiz: Focused on customer feedback and communication, FeedbackWhiz helps manage reviews and automate communication. Plans start at $15 per month.
8. Cost of Shipping to Amazon Fulfilment Centres
If you are an Amazon FBA seller, Shipping costs play a significant role in the overall expenses associated, especially when considering the transportation of your initial inventory to Amazon’s fulfillment centers.
Here are some factors to consider when budgeting for shipping:
Freight Charges (Sea or Air):
Freight charges are a significant component, influenced by the mode of transportation chosen—sea or air. Sea freight is often more economical for larger volumes, while air freight is quicker but comes at a higher cost. The choice depends on the balance between cost considerations and urgency in getting products to Amazon’s fulfillment centers.
Customs Duties and Taxes:
Destination countries levy customs duties and taxes, which are crucial cost factors. Sellers must calculate and budget for these expenses, ensuring compliance with international trade regulations to prevent unexpected charges and delays in customs clearance.
Drayage or Inland Transportation Costs:
Drayage or inland transportation costs encompass the expense of moving goods from ports or airports to Amazon fulfillment centers. Efficient planning and coordination with local carriers are essential to minimize these costs, ensuring a seamless transition from arrival to storage.
Packaging Materials:
Packaging materials are a vital cost consideration affecting both shipping expenses and the protection of goods. Lightweight, space-efficient materials not only reduce shipping costs but also contribute to efficient storage within Amazon’s fulfillment centers.
Insurance and Tracking Fees:
Investing in insurance and tracking is crucial for securing shipments and maintaining visibility throughout the transportation process. While these fees add to the overall cost, they provide peace of mind, ensuring products reach their destination intact and allowing sellers to monitor shipments in real time.
By estimating these costs, you can arrive at a more accurate budget for shipping your initial inventory. Regularly review and optimize your shipping strategy to adapt to changing market conditions and ensure cost-effectiveness in your Amazon selling venture.
These initial setup costs to open an Amazon store are crucial to consider as they form the foundation of your Amazon business. By carefully planning and budgeting for these expenses, you can set yourself up for a successful start on the Amazon platform.
Still, Trying to Figure out How Much It Costs to Open an Amazon Store? eMarspro Can Help
It can take a lot of work to get started on Amazon Marketplace, though. As an Amazon seller, you need to know how to list your items, set prices, protect your business from rivals, and keep your fees as low as possible. With eMarspro, fortunately, the process can be easy and profitable.
With an experienced team of Amazon seller consultants, we can help you launch an Amazon store, optimize your products, and gear your store for success.
Contact us or call us at +1-682-472-4939 to learn more about our Amazon Seller Account Management services!
