Retailers often target the Amazon marketplace because of the opportunities it offers to sellers. However, what concerns most retail startups are the selling costs of setting up a Professional account in Amazon.
Various significant factors affect seller costs on Amazon, and we’ll break down each of them to set up a calculation method.
The Two Types of Amazon Seller Accounts
Opening up a seller account on Amazon has corresponding fees, and it’s down to two categories.
Cost: $.99 per item sold
Individual seller plans are for those who plan to sell less than 40 items in a month. This account is suitable for unbranded sellers who don’t require advanced tools to advertise or sell their products. They’re often referred to as the “Pay as You Go” type of sellers.
This selling plan allows sellers to list their products on Amazon and opt for in-house fulfillment services.
Cost: $39.99 per month
Professional seller plans are more suitable for those who sell more than 40 items in a month. This seller type often wants to advertise a unique brand and its products. If you’re targeting to rank month after month on the product variation constantly, you can use advanced selling tools provided by Amazon.
Amazon allows Professional sellers to add single or bulk product listings in multiple categories, and you can easily manage inventory with in-store reports. The marketplace platform also provides features to attract shoppers with on-site advertising tools and set your own shipping fees for non-media products or even run promotions including free shipping deals. And, of course, you also have the option to make use of Fulfillment by Amazon (FBA) services.
How To Calculate Seller Costs on Amazon
These are the three categories in calculating Amazon seller costs:
- Professional Sellers Account- $39.99 per month
- Sourcing a private label product- $100 per product
- Inventory costs (min. 500 units at $4 each)- approximately $2,000
- Promotionals- $200
- UPC code- $250
- Sponsored ads- $300
A low budget ad spend is at $10 per day, which you can use to advertise products and promotional items to boost monthly sales.
- Registered Trademark for Private Brand Owners- $350
If you’re selling branded products, you can make your product brand official by registering under Amazon’s Brand Registry.
- Product Design & Photography- approximately $500
You have the option to invest in designing your product logo, improving image quality, and adding infographics on product listings.
Here are other common factors that affect seller costs on Amazon:
- Location hub of seller products
- Packaging expenses to Amazon (for FBA services)
- Total number of units
- Product weight, size, and category
- Selling a registered brand
- Promotional budgets
- Utilizing Amazon tools
Professional sellers can spend about $2589.99 in a month, having 500 pcs. of a single private label product on inventory, excluding Amazon’s recommended and extra costs. It can reach approximately $3,739.99 if the additional charges are included.
For as much as $4,000, you can already sell advertised products on Amazon and start growing from there.
Find out more about your options on how to scale up in the retail business. Contact Retailbound today!