How much does it cost to start an Amazon FBA in 2024?

Introduction

Are you considering selling on Amazon in 2024 and worried about the cost? Good news: you don’t need much money to start. This blog provides a complete guide to starting on Amazon with a budget of around $2.000 or more. We'll explain the cost structure involved in selling on Amazon. Understanding these costs can help you set realistic financial goals and prepare for success.

　　First, how do you sell on Amazon?

To sell on Amazon, many sellers create and brand their own products using the private label model. This approach involves four key steps:

• Research: Analyze Amazon data to identify products with high demand and low competition.
• Source: Partner with a supplier to manufacture a branded version of the product.
• Launch: List your product on Amazon and select a fulfillment method, either Fulfillment by Amazon (FBA) or Fulfilled by Merchant (FBM).
• Advertise: Utilize Amazon PPC to promote your products both on and off the platform.

Initial Fees to Start Selling on Amazon FBA

1. Product Costs

The largest initial expense will be your inventory. The cost here can vary significantly depending on what you choose to sell. For example, purchasing small, lightweight items in bulk from overseas suppliers like those in China might be cheaper per unit but may require buying large quantities.

• Minimum Budget: $500 - $2.000 for initial inventory
• Recommended Budget: $2.000 - $5.000+ for more flexibility and better quality inventory

2. Amazon Fees

Amazon charges a variety of fees, including:

• Amazon selling plan fee: Amazon offers two selling plans: the Professional plan and the Individual plan. The Professional plan($39.99/month) is popular among sellers for its extensive benefits that aid in business management and growth. The Individual plan is suitable for those selling fewer than 40 items per month.

• Referral Fees:A percentage of each sale (usually around 15%).
• FBA Fees:These cover fulfillment and shipping costs and vary based on product size and weight.
• Inventory Storage Fees: These fees are calculated based on the volume (cubic feet) of your items and are typically charged monthly. The rates can vary depending on the time of year, with higher fees often during peak seasons like the fourth quarter. These fees help cover the costs associated with maintaining warehouse space and managing inventory.
• Estimate: 30-40% of your product's selling price

3. Shipping to Amazon

Costs here depend on the distance, weight, and size of your shipments.

• From Supplier to Amazon: If you're importing, consider freight costs, customs duties, and other import fees.
• Estimate: $0.50 - $2.00 per unit (highly variable)

4. Marketing and Advertising

Amazon PPC (Pay-per-click) ads are crucial for increasing visibility. Budget for this from the beginning.

• Initial Budget:$300 - $500 per month

5. Product Research and Tools

You might need to invest in tools such as Tool4seller for product research, keyword research, and competitive analysis. Compared to other Amazon seller tools, the monthly subscribe fee of Tool4seller is $19.99 and is cheaper than Helium 10 and Jungle Scout.

• Software Costs: $19.9–$50 per month

6. Professional Services

Consider costs for graphic designers for your product listings, a photographer for high-quality images, or a consultant for setup help.

• Optional Costs: $500 - $1.000 (one-time fees)

7. Business Setup Costs

Costs for registering your business, obtaining necessary licenses or permits, and other legal or administrative fees.

• Estimate:$100 - $300

Total Starting Budget:

　Minimum Viability: Approximately $2.000 - $4.000

　Comfortable Budget: $5.000 - $10.000+

Calculating Your Total Cost and Ture Profit of Selling on Amazon FBA

The above mentions many costs involved in starting to sell on Amazon, but what many sellers actually care about most is how much money they can make selling on Amazon.

Most Amazon FBA calculators are inadequate. Anyone who truly wants to build or run an Amazon business professionally should not rely on these small tools. Expense calculators can be very practical for Amazon FBA sellers to initially assess whether a product idea is viable - but they're far too inaccurate for monitoring their own costs. That puts online sellers at risk of eroding margins and profitability. That's why I recommend using Tool4seller Sales analytics, a professional profit dashboard for Amazon sellers.

 It can automatically extract income and expenses through the API interface provided by Amazon. This means you no longer need to manually download and calculate reports. Order volume, Amazon fees, refunds, Amazon reimbursements, and PPC costs are all automatically included.

Moreover, sellers can not only upload the purchase and logistics costs of goods to the cost center but also add custom costs such as rent, marketing costs, and software fees. After uploading all expenses, Tool4seller will automatically calculate the actual cost, profit, profit margin, and more.

Only by understanding business performance can sellers make data-driven decisions. Through sales analysis, you can view all costs and revenue in near real-time on clear profit statements and charts, and track the entire Amazon business at the account, marketplace, and product levels. This will help you make important strategic decisions and lead to continuous success. 

Sign up Tool4seller now and enjoy 14-day free trial.