Interested in selling on Amazon but worried about how much it will cost you? Good news! It’s not as much as you might think.
Based on Jungle Scout’s research, new sellers spend approximately $3,836 to start selling on Amazon — including product costs, Amazon fees, and other necessary initial investments.
However, many Amazon sellers get started with $500 or less, while others pour five figures or more into new business — both extremes capable of finding success on Amazon.
We’ll cover the essential costs of selling on Amazon, and explore how different investments could result in different profits for Amazon sellers.
How much money does it cost to get started selling on Amazon?
Jungle Scout — an all-in-one platform for selling on Amazon — surveyed thousands of Amazon sellers to find out exactly how much money they spent when they got started on Amazon.
- 17% of Amazon sellers started with $500 or less
- 12% of Amazon sellers started with $501 – $1,000
- 13% of Amazon sellers started with $1,001 – $2,500
- 17% of Amazon sellers started with $2,501 – $5,000
- 22% of Amazon sellers started with more than $10,000
Do sellers who spend more money find more success on Amazon?
Spending more money to start an Amazon business does not always mean more success for the seller. In fact, sellers who started with less money tended to find success faster and have lasted longer than those who started with more money.
Cost of starting an Amazon business
Sellers who started with $500 or less:
- 33% have sold for five years or longer.
- 67% got their Amazon business up and running in less than six weeks.
- 70% turned a profit in less than six months, and 46% turned a profit in fewer than three months.
- 26% list more than 250 products on Amazon.
- 66% spend fewer than 20 hours per week on their business, and 18% say they spend less than four hours per week.
Sellers who started with $10,000 or more:
- 13% have sold for five years or longer.
- 75% took longer than six weeks to get their Amazon business up and running.
- 31% turned a profit in less than six months, while 40% said it took them six months to two years to turn a profit.
- 13% list more than 250 products on Amazon.
- 60% spend more than 20 hours per week on their business, and 14% say they spend 60 hours or more per week.
How much money do you need to start selling on Amazon?
The remainder of this article breaks down the costs to sell on Amazon into the following three categories:
- Required costs: These are the required fees and other essential expenses you must pay to start selling on Amazon.
- Recommended costs: You can start a successful Amazon business without these line items, but it’s recommended that you make these investments.
- Extra costs: These are the costs that can help boost your business early on, but are unnecessary for someone just starting out.
First, how do you sell on Amazon?
The majority of Amazon sellers opt to manufacture and brand their own products to sell on Amazon — a business model called private label.
Here’s how this method works in four steps:
- Research: Use Amazon data to find a product category with high demand and low competition.
- Source: Find a supplier that manufactures similar products to create your own branded version of the item.
- Launch: List the product on Amazon and use Amazon’s in-house fulfillment network, Fulfillment by Amazon (FBA), to ship the products on your behalf.
- Advertise: Use Amazon’s advertising system, Amazon PPC, to promote and advertise your products on and off Amazon.
The rest of this article explains the costs involved with these steps. If you want to dive deeper into selling on Amazon, check out our free guide. It teaches you everything you need to know!
Required costs to start selling on Amazon
Before we break down the start-up costs for an Amazon business, we want to establish the type and quantity of products we’re planning to offer for our initial investment.
- We will sell on the Amazon U.S. store. (And we are based in the U.S.)
- We will sell our product as a private label product, using the FBA model, as it allows for greater scalability in the future.
- The total landed cost of our item is $4. (Your landed cost is the cost to manufacture the product plus per unit shipping costs, taxes, etc.)
- We will aim for 100% Return on Investment.
- The product will be standard size (fits in a shoebox) and will be light enough to ship by air.
- We will purchase 500 units to sell.
- We plan to give away 50 units for promotions.
Samples: $100 each
When sourcing a private label product to sell using Amazon FBA, samples are imperative.
As there can sometimes be a significant difference in the quality of the product and the specifications you see on Alibaba or other manufacturing sources online, the best way to verify quality and move forward with the best supplier is to order samples.
Once you find potential suppliers, we recommend getting a sample from the top three to keep costs low. (You will pay for the cost to manufacture the product plus the shipping cost.)
A rule of thumb here is that each sample will cost you $100. That’s from the supplier to your doorstep in five days or less. If you order the recommended three samples, expect a cost of $300.
Once you receive the samples, you choose the sample that best fits your vision for the product.
Inventory: approx. $2,000
Once you choose your supplier, you’re ready to purchase your product!
Suppliers you find on Jungle Scout’s Supplier Database, or on Alibaba, will generally have a Minimum Order Quantity (MOQ). In our experience, MOQs tend to be 500 units. So, for the purpose of our estimates, we’ll consider the cost to purchase 500 units. (You can order a lower quantity if you’re able to negotiate this with a supplier, but generally that means they will charge you more per item; in other words, it may not be worth it.)
We are also assuming our product will cost $4 per unit, including the product cost and shipping. At $4 per unit times 500 units, our expected initial inventory will amount to $2,000.
Promotional giveaways: $200
When starting out on Amazon, many sellers choose to drastically reduce the price of their products in order to bring in much-needed early sales.
The best way to do this is by creating a promotion or coupon in Amazon Seller Central offering a discount of 50% or more. Then, you list the product using Jungle Scout’s Launch feature. Once you’ve done that, your product will appear on the discount site Jump Send.
As discount shoppers purchase your product, your quantity of sales climbs, helping Amazon better identify your product and give it a higher position in the search results. You also might receive a few reviews from the giveaways.
This will cost you, at minimum, the cost of each of the units you give away, plus fees.
Amazon Professional Sellers Account: $40/month
Whatever you choose to sell, you’ll have to pay Amazon for the ability to list products on its site. You can do this with either an Individual Sellers Account or a Professional Sellers Account.
The Individual Account costs you $0.99 per item sold, and the Professional Sellers Account is $39.99 per month.
Let’s plan, and hope, to sell more than 40 units per month, in which case a Professional Account makes more economical sense.
Furthermore, a Professional Sellers Account is needed in order to do things like generate promotional codes, which you’ll need for the giveaways we mentioned above.
This is a cost you need to consider, but you will not need to spend this capital up front, as it will be deducted directly from your Seller’s account (not your bank account).
UPC code: $250
In order to start selling your product on Amazon, you will need a recognized barcode in order to generate an ‘FNSKU’ (Fulfillment Network Stock Keeping Unit), which is Amazon’s proprietary barcode that must be printed on the packaging of all of your products.
And to get your FNSKU, Amazon’s TOS requires you to get a GTIN (Global Trade Identification Number), usually in the form of a UPC code.
In 2018, Amazon changed its TOS to state that your barcodes must be from GS1, the leading global provider. The costs to do this include a $250 initial registration fee and a $50 annual renewal fee for up to 10 barcodes.
Total for “Required costs to sell on Amazon”: $2,790
Recommended costs to sell on Amazon
The following are expenses we recommend adding to your budget to help set your Amazon business up for success.
Sponsored ads budget: $300 ($10/day for 30 days)
As you generate sales with your promotional giveaways (and get more reviews with follow-up email campaigns), you will see an increase in the organic ranking for your main keywords. Another tactic to consider for your product launch is to run sponsored ads (also known as Amazon PPC).
This strategy can quickly improve your sales.
Let’s assume you’re running ad campaigns with a lower-end budget of $10 per day. (This is the default amount Amazon suggests.) According to AdBadger, with this budget, you can expect roughly 20-30 clicks on your product each day, resulting in 3-4 sales.
Here are some excellent resources on setting up and managing your Amazon PPC campaigns:
- Session #13 of the Million Dollar Case Study: an introduction into Amazon PPC strategies and product launches
- Session #19 of the Million Dollar Case Study: advanced PPC tactics for when you need to maximize those campaigns for profit
- How to leverage Amazon PPC for better rankings and more data
Registered trademark: $350
The Brand Registry is a program offered by Amazon where sellers can register as the trademark-holding owner of a brand. It helps Amazon identify your product as “official” and awards you additional benefits and selling privileges.
However, sellers need to apply for a trademark and wait for it to be approved before being able to access additional features of Brand Registry. And the trademark process can take several months.
But, if you launch your product without a trademark, other sellers could list similar products on your listing. Therefore, your best bet is to invest early and get the trademark process underway. That way, you can get your brand registered as soon as possible.
Just make sure you do your research when you create your brand to ensure you will be able to apply for a Trademark without infringing on any existing trademarks or brand names in the future.
How much does a trademark cost? If you do it through a local IP attorney, it costs roughly $350. This is what Jungle Scout paid for the trademark for our Jungle Snugs product.
Total for “Recommended costs to sell on Amazon”: $650 (plus required costs)
Extra costs to sell on Amazon
The following are costs you do not need to incur in order to start selling on Amazon. But, investing in these areas could help you present a more polished product and launch with a quicker path to success!
Design work: $200
A graphic designer is a tremendous asset in adding legitimacy to your brand. They can help you with logos, packaging design, product inserts, photography touch ups, and infographics for your product listing.
And though it’s difficult to put a price on good design, a nice packaging design gives a product a high-end feel and makes it suitable for a higher price point.
For an early product launch, you can find decent rates from talented designers on the Jungle Scout Market.
Product photography: $300
When you are competing against other sellers who may have similar products, it is so critical to have your product stand out from the crowd. Great photos help you achieve this.
So, while we are putting photography in the “extra” section, if you’re going to go with just one extra expense, choose this one!
Having said that, if you’re on a budget or need photos fast, here’s an in-depth guide on how you can take photos using a smartphone and some household items.
Here are the key attributes to get right:
- The best lighting possible
- A white background for the main image
- At least 1000 pixels wide on the longest side of the image in order to meet Amazon’s minimum requirements
- Some photos of the product being used (i.e. lifestyle shots)
- Think about conveying the size or quality of an item with closeups and comparisons
If you think you need professional help for this, you can get high quality product photographs starting from $25-$50 per image. If we assume you need eight images and use the power of negotiation, we can cost this expense at $300.
Total for “Extra costs to sell on Amazon”: $500 (plus required costs)
How can you reduce the cost of selling on Amazon?
Consider a different business model
You can use a different model than private label.
For example, you can sell used books on Amazon or other items around your house, create your own handmade items, or do retail or online arbitrage. (Arbitrage is when you purchase a product from one place — such as a retail store or another online marketplace — to sell on Amazon.)
Many sellers found early success using these business models and eventually switched over to the private label model.
Purchase less inventory — or none at all
You can reduce your startup cost to sell on Amazon significantly if you source your product on Aliexpress instead of Alibaba, since Aliexpress will allow you to order smaller quantities and test the waters before investing in a bulk order.
The downside to this, though, is that you are paying a higher per-unit cost. It also means you are less likely to get customizations and specifications.
If you can, we advise using Jungle Scout’s Supplier Database or Alibaba and spending a little more on your inventory. After all, you are building your own private label brand and it’s important to get this part right.
Find a product with a low cost-per-item
In our example, we chose a product that is $4 fully landed, and we chose to purchase 500 to start.
There are legitimate, high-potential products you can purchase on Alibaba for $0.50. So, assuming a $0.25 shipping fee per unit, you could cut your starting inventory costs to $325 (500 units multiplied by $0.75).
Add in the samples ($300, as mentioned above), the Amazon sellers fee ($40), and launch service ($50), and you are looking at a $715 investment upfront.
This is about one-fifth the average cost to start a private label Amazon business.
Do it yourself!
Another key variable is time. If you’re strapped for time and resources and are unable to perform tasks like product research, design, photography and product listing setup yourself, then it will cost more to get started.
Ideally, do as much of the pre-launch work yourself as you can, particularly if you’re a new seller — or even if you’re an existing seller launching a new product.
When the product has launched and is flying off the shelves, that’s the time to start outsourcing.
Things we recommend you don’t spend money on:
You do not need to incorporate a business in order to sell on Amazon. Although many successful Amazon sellers opt to establish legal structure for their business (like an LLC), they do this further down the road in their Amazon selling journey, when it becomes necessary and financially viable.
Your own website
A standalone site may be useful in the future, especially if your brand expands beyond one or two products. However, it’s an unnecessary distraction in the beginning, as running your own website takes time, money and resources.
Instead, use those resources to drive traffic to your Amazon listing by optimizing your product listing and using Amazon PPC Sponsored ads.
In other words, if you’re just starting out, keep this one on the back-burner for now.
There are a lot of self-proclaimed “Amazon gurus” who will charge you thousands of dollars or more to “teach you” how to sell on Amazon. And while some of these courses are certainly useful — especially for those who enjoy a classroom-style environment — many are not necessary.
At Jungle Scout, we offer comprehensive educational resources for free. Plus, our software package includes a Sellers Academy with dozens of videos teaching you everything you need to know to succeed on Amazon.
So, just how much money do you need to start selling on Amazon?
As we saw from the survey results above, Amazon sellers say they spent an average of $3,836 to start their businesses
And based on our breakdown of costs and fees above, sellers can spend between $2,790 and $3,940 (assuming required costs plus $650 recommended costs and $500 extra costs) to start a private label business using Amazon FBA.