If you have ever wanted to start an Amazon business, now is the most significant moment to do so: the world-famous eCommerce platform is predicted to generate $386 billion in yearly revenue in 2020, with its growth expected to continue in the following years. The extensive list of selling charges perplexes many first-time Amazon entrepreneurs–and continues to baffle seasoned sellers.
Fees differ depending on your product and the program you select. To begin a profitable Amazon business, you can go now to the Amazon website; you must first understand the selling prices and what you can do to save the most money. If you don’t, you can be in for some unpleasant surprises and end up blowing your budget without even realizing it.
What affects the costs of selling on Amazon?
Various criteria determine the prices you’ll pay to sell on Amazon. These will include the following:
- Fees for Monthly Subscriptions
Users must pay a monthly subscription fee to Amazon, which varies based on the company’s size. The professional seller plan, for example, costs $39.99 a month and is designed for businesses that sell more than 40 goods per month. You won’t have to pay any subscription costs if you’re an individual seller who fulfills less than 40 orders each month. Instead, you’ll be charged $0.99 for every good sold by Amazon.
- Fees for FBA
If you sell through Amazon FBA, the prices you pay will vary depending on the sort of purchase you place. For example, the larger your order, the more you’ll have to pay Amazon to complete it.
FBA allows you to delegate order management to Amazon’s warehouses; you will be charged a monthly storage fee. From January to September, you’ll pay $0.69 per cubic foot, and from October to December, you’ll pay $2.40 per cubic foot.
- Fees for FBM
Unlike Amazon’s Fulfilled by Merchant (FBM) program, merchants in the Fulfilled by Merchant (FBM) program are responsible for fulfilling their orders.
Compared to FBA, one of its key advantages is the lower fees. Amazon sellers on the Professional selling plan can choose their shipping costs with FBM. There’s also the advantage of not worrying about warehousing or storage fees.
- Referral Fees
When you sell a product on Amazon, you must pay a referral fee of 6% to 20%. The amount of the referral money is determined by the sort of product you sell on Amazon. If you sell any electrical products in your store, you should expect to pay an 8% fee. If you’re selling clothing, though, you’ll be spending roughly 17% of your profit.
- Fees for Customer Returns
It’s very uncommon for a customer to place an order for one of your products only to have it returned later. As an Amazon seller, you’ll be responsible for covering the price of any returned items to your warehouse.
The most major upfront expense in your Amazon business will be inventory expenditures. It is, after all, what you will be selling to clients on the platform. If you’re new to selling on Amazon, you might be hesitant to invest a lot in inventory because you don’t know what products would appeal to shoppers.