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On the web, you can find a lot of information about how much money you need to start a business on Amazon FBA.
I have read through all these articles and found out that there is a lot of different information. Among them also wrong information.
Some claim that you need more than $2500, others claim that you can start a business on Amazon with less than $1000.
In this article, you will really find out how much Amazon FBA will cost you.
Before we dive in, there is one more important information. Whether you start with $1000 or $5000, the more budget you have, the easier you will make some profits.
The reason for this is that the more money you have for promotion, the faster you can sell your products.
After a period of time, your search rankings will improve and you will start making profits.
If you have less money for advertising, it will be harder for you to sell your products.
Accordingly, it will take more time for your organic search rankings to improve and for you to achieve your ROI.
Here is an overview of all Amazon FBA costs:
Let's dive right in.
As for any business activity, you have to set up a company for Amazon FBA. The expenses depend on several factors. One of them is, for example, whether you hire a lawyer or not.
The fee for an LCC varies between $100 and $500, with an average fee of $127. There are other additional costs that you can see in the table below:
|DIY||Lawyer||Online Incorp. Website|
|Cost of Service||$0||$1,000 - $1,500||$99 - $900|
|State Fees||varies by state||varies by state||varies by state|
|Registered Agent||$0 - $125/year||$200 - $500/year||$100 - $300/year|
|Operating Agreement||$0 - $200||$0 - $500||$50 - $100|
|EIN||$0 - $100||$50 - $100||$50 - $100|
|Annual Report||varies by state||varies by state||varies by state|
|TOTAL(exc. State fees, RA, + AR)||$0||$1,050 - $2,100||$199 - $1,100|
People often say that you have to pay an accountant or that you need an accounting software to keep track of your costs and earnings.
Of course, it is important to keep an eye on your costs. But an accountant or accounting software is not necessary. For beginners, a simple Excel spreadsheet is sufficient to record income and expenses.
Therefore the costs for bookkeeping is $0.
If you really want to have an accounting software, I recommend this software for $112 per year.
If you want to sell on Amazon, then you definitely need an Amazon seller tool. You won't be able to avoid these costs. That's because if you don't have a tool, you won't find good products and then you won't sell anything.
The price is between $49 and $397 per month depending on which tool you choose.
As a beginner, you only need the tools for $49. The subscription for $397 a month is for Amazon pros who make 7-figures a month.
You could calculate the costs for the logo and the design with $0. Of course, you can create a logo by yourself and don't worry about your own design.
But you shouldn't do that.
In this case, it's about the look of your product. And this should be as good as possible, because otherwise it will be very difficult to sell your products at all.
So if you are really good at creating a logo and a design, you can, of course, do it by yourself.
The cost for the logo is usually around $15, the cost for the design is around $50.
In general, there is no fixed Minimum-Order-Quantity. However, you will hardly find a supplier who will sell you two or three units.
The Minimum-Order-Quantity of most sellers on Alibaba is 500 units. With a little bargaining power, you can bring this down to 250 units.
If you are lucky, you might find a supplier who can sell 50 units. However, for the purposes of this article, we assume a Minimum-Order-Quantity of 250 units.
There are some Alibaba alternatives where you can order smaller Minimum-Order-Quantities.
Now, of course, it depends on how much your product costs. A very cheap product is $0.04.
An expensive product costs about $30 to $40 per unit.
With a Minimum-Order-Quantity of 100 units, the price would be between $4 and $3000 to $4000 (without shipping).
To get to the point, the purchase price of your products depends on the Minimum-Order-Quantity, price, and your business model.
Usually you have to pay between $500 and $2000 for your first order excluding shipping.
However, keep in mind that a small order may reduce the absolute costs, but the cost per unit will increase.
So from an economic point of view, it would be better to order a larger quantity to reduce the cost per unit.
You have to order a sample. Try to order only samples that already are branded and have your logo on them to reduce extra costs.
The price including air freight is around $50.
You can ship your inventory either by sea or air freight. The costs vary, as they depend on the dimensions and weight of your product.
Usually, shipping is about $500-$1000.
On Freightos you can calculate the costs for air freight and sea freight for every product.
To sell on Amazon you need a UPC code. This barcode costs about $5.
If you can work with a camera, you can do this job by yourself. But the quality of your photos should be REALLY good.
In fact, interested customers first take a look at the product photos and then decide if they want to buy the product or not.
So your pictures are an ultimate success factor. If you take bad photos, you have to hire a professional photographer. The costs are about $150.
The fees depend on your Amazon Seller account and your merchant form (FBM/FBA).
There are two types of Amazon Seller accounts.
Professional seller account
I would strongly recommend that you opt directly for the professional seller account.
In this case, the costs are about $39.99 per month.
Learn more about Amazon FBA fees here.
In fact, the most important thing is that you sell your stuff. To do so, you have to promote your product.
You can promote your product on Amazon, but also on other channels like Facebook.
For beginners, I recommend concentrating on Amazon. If your product is better than your competitor's products, you will get better organic rankings on Amazon over a longer period of time.
As mentioned in the beginning of this article, you need to invest in advertising. Keep in mind that you should definitely have enough money for advertising.
The more money you have, the faster you will start making profits.