Selling on Amazon isn’t free. Every fee, every expense, and every hidden cost can eat into profits. Without a clear plan, sellers lose money fast.
Amazon charges for everything: listing, fulfillment, storage, and even refunds. So, how much does it cost to sell on amazon?
Based on research, most new sellers spend between $2,500 and $5,000 to start. Those who don’t track costs risk selling at a loss. Every decision, from choosing between FBA and FBM to setting up advertising, affects profitability.
Many new sellers underestimate expenses. They focus on sales but ignore fees. That mistake costs them. Smart sellers plan ahead, optimize costs, and protect margins.
In this content, you’ll learn about Amazon’s selling costs, hidden fees, and strategies to maximize profit. Every detail is backed by data, expert insights, and real seller experiences.
So, Let’s get started.
How Do Amazon’s Selling Models Work?
Amazon offers two fulfillment methods. Sellers can either handle shipping themselves or let Amazon do it. Each option affects costs, profits, and workload.
Fulfillment by Amazon (FBA)
FBA means Amazon stores, packs, and ships your products. They also handle customer service and returns. Fees depend on size, weight, and storage time.
A standard sized item under one pound costs about $3.22 to fulfill. Large and heavy products cost more. Storage fees apply if inventory sits too long.
From January to September, storage costs $0.87 per cubic foot. The price jumps to $2.40 per cubic foot from October to December.
Long-term storage fees apply to products sitting for over 365 days. Sellers pay $6.90 per cubic foot or $0.15 per unit, whichever is greater.
FBA also has removal fees. If you want Amazon to return unsold inventory, it costs $0.50 to $0.60 per unit for standard-sized items. Large items cost more.
FBA is convenient. But it’s not free.
Fulfillment by Merchant (FBM)
FBM means sellers store, pack, and ship orders themselves. Amazon plays no role in fulfillment.
Costs depend on carrier rates, packaging materials, and storage space. Shipping a one-pound item within the U.S. costs around $5.00 to $7.00 with USPS or UPS.
| Cost | FBA ( Monthly ) | FBM ( Monthly ) |
|---|---|---|
|
Fulfillment/Shipping |
$1500 |
$600 |
|
Storage |
$250 |
$35 |
|
Shipping to amazon warehouse |
$400 |
_ |
|
Packaging |
_ |
$120 |
|
Labor |
– |
$200 |
|
Total Monthly Cost |
$2150 |
$955 |
Generally, the approximate monthly cost of FBA is almost double. A significant difference can be found between shipping costs and labor costs.
FBM sellers avoid FBA storage fees. But they must handle lost packages, returns, and customer complaints.
Some FBM sellers use third-party fulfillment centers. These warehouses store and ship products, often at lower costs than FBA. But they don’t provide Amazon’s Prime badge.
What Are the Costs of Selling on Amazon?
Selling on Amazon isn’t free. It’s not even cheap.
Every sale comes with fees, charges, and expenses that can eat into profits. Understanding these costs is crucial. Miss one, and you could lose money instead of making it.
Now, Let’s see several essential aspects of costs:
Amazon’s Selling Plans
Amazon offers two selling plans.
The Individual Plan costs $0.99 per sale. It’s best for sellers moving fewer than 40 items per month.
The Professional Plan costs $39.99 per month. It’s for serious sellers. This plan allows bulk listing, advertising, and lower per-sale fees.
Most high-volume sellers choose the Professional Plan. Paying $39.99 makes sense if you sell over 40 items per month.
An experienced seller once said, “If you’re serious about Amazon, go pro. The savings add up fast.”
Picking the right model and plan saves money. The wrong choice eats profits. Knowing the costs in advance makes all the difference.
Product Listing Fees
Amazon doesn’t charge to list a product. But every sale comes with a referral fee. This is a percentage of the selling price. It varies by category.
Electronics have a fee of 8%. Beauty products incur a 15% fee. Depending on the price, grocery items range from 8% to 15%. Apparel is charged at 17%.
These fees significantly accumulate.
For example-
Selling a phone for $500 means Amazon retains $40, while a $20 t-shirt results in Amazon taking $4.
Some categories have minimum referral fees. If the percentage doesn’t hit the minimum amount, Amazon takes a flat fee instead. Books, for example, always have a minimum referral fee of $1.80 per item.
This is where margins shrink fast. Selling cheap items can be hurt by referral fees. Selling in categories with high fees is problematic. Margins get tighter.
Advertising Costs
Selling on Amazon without ads is like opening a store in the middle of nowhere. No traffic. No sales.
Amazon offers several ad types. Sponsored Products, Sponsored Brands, and Sponsored Displays.
So, what is the most common? Sponsored Products.
The cost depends on competition. It’s a pay-per-click system. Each click costs money. Low-competition niches might see clicks at $0.30-$0.50. High-competition products can exceed $5 per click.
Most sellers spend 10-30% of revenue on ads. Some even more.
Return on ad spend (ROAS) is critical. Spend $100 on ads and generate $300 in sales. That’s a 3.0 ROAS. But that doesn’t mean a $200 profit. Amazon still takes referral fees. FBA fees. And other hidden costs.
Without proper PPC management, advertising turns into a money pit.
Additional Hidden Costs
Amazon has fees sellers don’t see coming. Until they show up on the invoice.
Returns aren’t free. If a customer returns a product, Amazon refunds the customer but keeps the referral fee. For FBA sellers, there’s a returns processing fee, too.
Storage fees add up. Are products stored for more than 365 days?
That’s a long-term storage fee. At $6.90 per cubic foot, slow-moving inventory gets expensive fast.
Customer service isn’t free either. FBA covers support, but FBM sellers handle their own. Every refund request, complaint, or inquiry means time and effort.
Then there’s shipping to Amazon warehouses. Sellers pay for this upfront. Even before making a single sale. Depending on size, weight, and distance, this can range from $0.50 to $3 per unit.
| Orders | Returns |
|---|---|
|
Amazon Fees Cs Error Items |
$24.50 |
|
AMAZON FEES |
$24.50 |
|
ORDERS |
$24.50 |
|
RETURNS |
$0.00 |
|
TOTAL PROFIT |
$24.50 |
Amazon doesn’t advertise these costs upfront. But they exist. And they eat away at profits if sellers don’t account for them.
What Other Costs Should You Expect on Amazon?
Selling on Amazon goes beyond basic fees. Many sellers only focus on referral and FBA fees. That’s a mistake. Extra costs pile up. Profits shrink fast.
Inventory Costs
Buying products is the first expense. Wholesale suppliers require bulk orders.
It displays multiple products with their price ranges, minimum order quantities, and supplier verification status. Prices vary based on bulk purchasing, with some items starting as low as $0.50 per unit.
Private label sellers spend more on branding and packaging. Some invest in custom molds and designs.
A beginner might start with $500 to $2,000 in inventory. That buys a small batch. Serious sellers invest $10,000 or more. Higher investment means better pricing and higher margins.
In this case, retail arbitrage is a great option.
Some sellers use retail arbitrage. They buy discounted products in stores and resell them on Amazon. It requires constant sourcing. Profits depend on finding deals.
Shipping & Logistics
Shipping from China to the U.S. by sea is cheaper. A standard 200-pound shipment costs about $500. Delivery takes 30 to 40 days.
Air shipping is faster but more expensive. A similar shipment by air costs $1,000 or more. Small sellers avoid air unless urgent.
Amazon also charges inbound shipping fees. Sellers pay to send products to fulfillment centers. A 40-pound box costs around $10 to $15 using Amazon’s partnered carriers.
A seller shared their experience in a Facebook group. Their freight forwarder miscalculated shipping fees. They expected to pay $2,000. The final bill was over $6,000.
Customs and import duties add another layer of costs. Products shipped internationally may face taxes and clearance fees. Sellers must account for these costs before importing.
Advertising & Marketing
Selling without ads is difficult. Competition is high. Amazon Pay-Per-Click (PPC) is the primary advertising method.
Every click costs money. The average cost per click (CPC) is $0.81. Some niches, like supplements or electronics, have CPCs over $2.
A seller posted their ad spend breakdown in a forum.
They spent $1,500 on PPC in one month. Their sales hit $6,000.
And Guess what happened!
Profit margins dropped from 30% to 10%.
Some sellers use external ads. Facebook and Google Ads drive traffic to Amazon listings. It costs more but boosts rankings.
Software & Tools
Successful sellers use software to analyze data. Manual research takes too long.
Helium 10 costs $29 to $229 per month. Jungle Scout starts at $29. Keepa tracks price trends for $20 per month.
Some tools automate repricing. Amazon’s market shifts fast. Competitors adjust prices daily. Automated repricers help sellers stay competitive.
Tools aren’t mandatory. But they save time. Time is money.
Refund & Return Costs
Amazon refunds buyers. But sellers lose money. Amazon keeps 20% of the referral fee. If the product is damaged, sellers may never resell it.
High return rates destroy profits. Some categories, like clothing and electronics, have return rates of over 20%.
Fraudulent returns are another problem.
Some customers return used or broken items. Similarly, some even return empty boxes. Sellers take the loss.
Sales Tax & Compliance Costs
Failing to register for sales tax can lead to fines. States track online sales more aggressively. Penalties add up fast.
A seller ignored tax compliance for two years. Then, they got hit with a $10,000 bill from state authorities.
International sellers face VAT (Value Added Tax) in Europe. Non-compliance leads to listing bans. Some sellers hire tax professionals. Others use tax software. Either way, it’s another cost.
Strategies to Minimize Selling Costs
Amazon fees can significantly impact profit margins for many sellers on the platform. As a result, being strategic about pricing and expenses is crucial for maintaining competitiveness.
Smart sellers cut costs wherever possible.
Here are several essential strategies that you need to follow to minimize selling costs:
Negotiating Better Supplier Deals
Lower product costs lead to bigger profits. Suppliers rarely list their lowest price upfront. Negotiation changes everything.
Volume discounts make a difference. Buying 500 units costs less per item than buying 50. Suppliers expect bulk orders. They adjust prices for serious buyers.
Payment terms affect pricing. Paying upfront gets better rates. But splitting payments reduces risk. Some suppliers accept 30% upfront and 70% after production.
One seller shared their strategy. They messaged five suppliers on Alibaba. Asked for their best price on 1,000 units. Then used the lowest quote to negotiate with others. Ended up cutting costs by 20%.
| Country | Annual Minimum Wage (USA $) | Adjusted for Employer Social Insurance Contributions (USA $) | % Difference Against China |
|---|---|---|---|
|
China |
2472 |
3337 |
100% |
|
India |
689 |
740 |
22% |
|
Indonesia |
1087 |
1187 |
36% |
|
Malaysia |
3107 |
3534 |
106% |
|
Philippines |
1515 |
1648 |
49% |
|
Thailand |
3012 |
3169 |
95% |
|
Vietnam |
1296 |
1581 |
47% |
Manufacturing costs vary by region. Chinese suppliers dominate. But Vietnam and India offer competitive prices. Checking multiple markets saves money.
Shipping costs add up. Sea freight costs less than air. But it takes longer. Smart sellers plan ahead. Faster shipping means higher expenses.
Optimizing Product Listings to Reduce PPC Spend
Amazon ads drive sales. But they burn cash fast. Poor listings waste ad spending.
High-quality images increase conversions. Low-quality pictures make shoppers leave. Amazon recommends at least 1,000-pixel images. Professional photos boost click-through rates.
Keyword optimization matters. Using the right words in titles and bullet points improves organic ranking. Fewer ads are needed. More sales come for free.
A seller tested two listings. One had a keyword-stuffed title. The other had a clean, readable title. The readable one got better results. High rankings. Lower ad costs.
PPC bids drain profits if not optimized. Broad keywords attract clicks but don’t always convert. Long-tail keywords cost less and convert better.
Negative keywords save money. They block irrelevant searches. A seller selling hiking boots blocked “fashion boots” and cut wasted spend by 15%.
Amazon’s A+ Content increases sales by up to 10%. Improved descriptions make products stand out. Higher conversions mean lower ad costs per sale.
Amazon’s Small & Light Program
Small products cost less to ship. Amazon rewards lightweight items with lower FBA fees.
To qualify, products must weigh under 3 lbs. Price must be under $12. Savings are huge for eligible items.
Packaging affects eligibility. Reducing box size by an inch can cut costs. Poly bags work better than bulky boxes for some products.
Low cost items develop in this program. High volume sellers benefit the most. Lower fees mean better profit margins.
Using Third-Party Fulfillment Centers
Amazon storage fees add up. Third party warehouses cost less for long-term storage.
FBA charges $0.87 per cubic foot from January to September. That jumps to $2.40 from October to December. Third-party fulfillment centers offer flat rates.
One seller moved slow-selling inventory to a 3PL warehouse. Stored it for $0.50 per cubic foot. Sent stock to FBA only when needed. Saved thousands.
3PL providers handle fulfillment outside Amazon. They ship faster for non-Prime orders. Some even integrate with Walmart and eBay.
How to Estimate Your Amazon Selling Costs?
Selling on Amazon isn’t just about revenue. It’s about what’s left after fees, shipping, and ads. Profit margins decide success. Sellers who skip cost calculations lose money fast.
Profit Margins & ROI Formula
Profit isn’t guesswork. It’s math. The formula is simple:
Profit = Revenue – (Amazon Fees + Product Cost + Shipping + Advertising + Other Expenses)
Return on Investment (ROI) matters. A good ROI ensures every dollar spent brings back more. The formula:
ROI (%) = (Profit ÷ Total Cost) × 100
Sellers who track ROI know which products make money and which ones drain profits.
Let’s give you an example with $30:
- Amazon referral fee: $4.50
- FBA fulfillment fee: $5.20
- Product cost: $10.00
- PPC cost per sale: $6.00
- Total cost per unit: $25.70
- Profit per sale: $4.30
- ROI: 16.7%
Tools & Calculators (Amazon FBA Revenue Calculator)
Amazon provides a free tool to calculate fees. It helps sellers estimate profit before launching a product.
Using the Amazon FBA Revenue Calculator, sellers enter product details, costs, and selling prices. The tool shows exact fees and potential profit.
Example Calculation for a Sample Product
A seller lists a wireless charger for $25. They check costs using Amazon’s tool.
- Referral Fee: $3.75
- FBA Fulfillment Fee: $4.85
- Product Cost: $7.00
- PPC per Sale: $5.00
Total Cost: $20.60
Profit per Sale: $4.40
ROI: 21.3%
Numbers don’t lie. Profitable sellers track every dollar. Those who don’t? They fail.
Would you like to calculate your revenue? Let’s go ahead and do the calculation.
Amazon FBA Revenue Calculator
Frequently Asked Question(FAQs)
Selling with low costs requires choosing the right plan, fulfillment method, and supplier. FBA, FBM, and Small & Light impact fees.
Dropshipping, print-on-demand, and retail arbitrage require minimal investment. Amazon still charges referral fees and other costs.
Amazon takes around 15% per sale. eBay and Walmart charge lower fees but have different shipping and fulfillment costs.
Monitor inventory, use removal orders, run discounts, or sell through Amazon Outlet to clear slow-moving stock.
MCF costs more than FBA. A standard-size item under 1 lb costs $5.35 through MCF, compared to $3.22 via FBA.
Final Word
Selling on Amazon isn’t just about finding the right product. It’s about controlling costs, optimizing strategies, and staying ahead of fees. Small savings in fulfillment, PPC, and storage add up fast.
Before concluding the content, here is an overall summary-
- Sellers must track every expense to protect profits.
- FBA and FBM impact costs differently.
- Be aware of the hidden fees.
- Cutting costs boosts margins.
Sellers who negotiate better supplier deals reduce their upfront investment. So, before deciding about the product, never forget to research about the product pricing.
