Are you thinking about starting an Amazon FBA business, but are unsure of what kind of capital is required?
Starting any business can be daunting, and the range of expenses can make it hard to figure out how much money you need to get started.
The good news is that Amazon has made it easier than ever for aspiring entrepreneurs to start an eCommerce business by cutting down on traditional startup expenses.
No longer do you need an office, warehouse, or support staff to start your own eCommerce business, and can instead get up and running with a very lean operation.
However, there are of course some expenses you will incur to launch your Amazon FBA business.
So, in this article, we’ll break down all the costs you’ll need to consider so you can take the plunge into eCommerce with your eyes wide open.
And, towards the end of the article, we’ll also discuss some strategies for minimizing your expenses to put every dollar to use for maximum impact.
Let’s crunch some numbers! 🤓
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How much money do I need to start selling on Amazon?
The unhelpful – yet realistic – answer to this question is… it depends.
There are a lot of variables in play meaning the startup costs of an FBA business can vary massively.
But to try and give helpful context and guidance, throughout this guide I’ll refer to both a minimal and an optimal budget.
The minimal budget will cover everything you absolutely need to get started selling on Amazon.
Then of course the optimal budget will cover the ideal scenario where you can invest fully in a quick, fully-fledged launch.
We will be focusing on the private label business model – building your eCommerce brand that can one day be sold as an asset.
You can get started for a lower budget with other business models like wholesale or arbitrage but they can have lower profit margins, take longer to grow, and aren’t as easy to sell for a big exit.
What budget do most people start with?
In Jungle Scout’s Amazon Seller Report, thousands of Amazon sellers were surveyed and the results showed that:
- 17% of sellers started with $500 or less
- 12% of sellers started with $501 – $1,000
- 15% of sellers started with $1,001 – $2,500
- 21% of sellers started with $2,501 – $5,000
- 13% of sellers started with $5,001 – $10,000
- 22% of sellers started with more than $10,000
As you can see, plenty got started with what many would consider a ‘low budget’.
What you will find with an Amazon FBA business is that – like any other business – the key to success is not resources, but resourcefulness.
So whether you find yourself at the bottom of that ladder with under $500 right now, or at the top with over $10,000 the key is to be fixated on success and find ways to make your financial dreams come true.
A bigger budget of course will help create more opportunities both in the products you choose to sell and your ability to fully advertise them.
But an Amazon FBA business is also a business where a bigger budget can create unnecessary bloat and slow down growth if wrong decisions are made.
So even if you do have a bigger budget, I’d encourage you to go through this guide and assess what expenses you really do need in the early stages to keep your operation as lean as possible.
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A summary of Amazon FBA startup costs
Want the TL;DR of the startup costs needed for an Amazon business without reading this whole 5,000-word guide? We got you.
In the table below we’ve summarized each core category of expense into minimal and optimal budgets to give you a quick idea of what you might need.
If you want to understand the breakdown and context of what’s included in each section, click the category to skip to that section.
If you don’t have a big enough budget right now, remember there’s a timeline to these expenses and you don’t need all of the cash upfront.
A timeline of Amazon FBA startup expenses
Let’s imagine that you decide today that you’re going to start an Amazon FBA business and plot out a simplified summary of when these expenses would be needed.
|Subscriptions – Product Research||Week 1|
|Inventory – 30% Deposit||Week 3|
|Design – Packaging Design||Week 3|
|Legal – LLC Formation||Week 4|
|Inventory – 70% Balance||Week 8|
|Design – Amazon Listing||Week 9|
|Inventory – Shipping Costs||Week 12|
|Marketing – Launch Costs||Week 13|
Understanding this timeline of when the money would actually need to come out of your bank account gives you the confidence to get started whilst generating more startup funds.
Ok, let’s break down all the costs you need to consider category by category.
The first thing to consider – and be careful with – is subscriptions for things like software tools and your professional seller account.
There are a lot of things you don’t need when first starting such as bookkeeping and analytics software.
You need to be laser-focused on getting launched as quickly as possible and only incur expenses you absolutely need to make that happen.
Remember, every dollar spent on an unnecessary expense is a dollar that can’t be invested into products and growth.
So what do you need?
Amazon Seller Account
You can’t sell on Amazon through a standard buyer’s account so you will need to register for a Seller Central account.
You’ve got two subscription options – an ‘Individual’ account or a ‘Professional’ account.
This terminology is a bit confusing as you can choose either option whether you are a business entity or an individual seller (more on legal entities soon!).
The key difference is that the Individual plan incurs no monthly fee, but instead charges each time you sell an item.
The Professional account is a flat monthly fee of $39.99 and gives extra benefits such as advertising access, and also doesn’t charge a per-unit fee.
The best option here is to subscribe to the Individual plan when creating your account.
If you want to keep costs minimal – leave it as an Individual account until you start making 40+ sales per month – enough sales to justify the monthly subscription fee.
However, an optimal approach would be to switch to an Amazon Professional sellers account a few weeks before your product launch to get access to advertising features and set up campaigns in advance.
|Amazon Seller Account||$0||$39.99|
Product Research Software
When trying to identify good product opportunities you have two options: search manually, or use software to speed up the process.
A manual search is not impossible – you can head to Amazon, search category by category, and use the Best Seller’s Rank to identify high-volume opportunities.
However, this will leave you flying blind on a lot of other key metrics such as overall competition and opportunities to differentiate.
For the relatively small cost of product research software, you can dramatically speed up the research process and also be sure you’re making decisions based on a wide range of accurate data.
Our product research software of choice is Helium 10 and you can save 20% here.
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I would recommend the Platinum Plan at $79 (after discount) as this gives you full access to all the tools you’ll need for a successful launch.
Whilst skipping this might seem like an easy way to cut costs, it can save you tens of hours each month.
With things like this, you need to try and think like a business owner and see it as an investment rather than an expense.
|Product research Software||$0||$79|
|Subscription Expenses Summary||Minimal||Optimal|
|Amazon Seller Account||$0||$39.99|
|Product Research Software||$0||$79|
Starting any business is going to involve some legal expenses, and selling on Amazon is no different.
But, like all the categories we’ll cover there are some expenses you need, and some you don’t.
Firstly, to list a product on Amazon you will need it to have a barcode.
Amazon now insists on sellers using official GS1 barcodes for their products and as such you will need to invest in at least one barcode.
Historically you had to subscribe to an annual plan at $250 to access any GS1 barcodes, but thankfully they now offer a single barcode service at $30 per barcode.
Each different product or variation needs its own barcode. For instance, if you were to launch a yoga mat in three different colored variations, each one would need its own unique barcode.
So if you’re on a tight budget, stick with just one product to begin with.
If you want to start an Amazon FBA business as a bit of a hobby on the side then it’s not necessarily required to form an LLC.
Amazon doesn’t enforce it and you can always start as a sole proprietor and then form an LLC as your business grows.
However, if you’re committed to building an Amazon FBA business – or any new business in general – then you’ll usually be better off forming an LLC right off the bat.
This gives the best separation between personal and business finances and also affords your personal assets some protection.
If you do want to form an LLC, filing costs usually vary from $50 to $150 depending on which state (or country) you file in.
With such an important process you may want to seek expert advice such as that offered by LegalZoom. For as little as $79 LegalZoom will prepare the filing for you and assist along the entire process.
Lastly, for legal expenses, you don’t have to but I’d highly recommend filing a trademark for your brand name.
This will give your brand protection when selling on Amazon and also open up the benefits of Brand Registry.
Once enrolled in Brand Registry you will be able to run powerful Sponsored Brand ads, optimize your listing with A+ Content and have your own branded storefront.
This is a cost you can skip initially if you are on a tight budget, but it’s something you really should try and do as soon as possible both for brand protection and Brand Registry benefits.
When you do decide to go ahead and file a trademark you can either file it yourself or use a service like Trademark Angels to carry out pre-registration checks to ensure you won’t face any opposition.
|Legal Expenses Summary||Minimal||Optimal|
If you’re creating your own private label brand there will be some design work needed to bring it to life.
But, like all the categories we’ll discuss, there are some great options to keep things lean meaning you only have to spend money where absolutely necessary.
Let’s start with the easy one.
Hot take: if a logo takes you more than five minutes to design, it’s already taken too long.
Many will argue a logo is an essential aspect of a brand – and it is. However, it’s very easy for new Amazon sellers to get caught up in the weeds when trying to get launched.
We’ve had BBU students who have had their logo designed, a website set up, and business cards printed before even deciding on what kind of product they are going to sell!
Don’t make the same mistakes. Here’s all you need to do to get your logo created in 5 minutes or less.
- Create a free account at Canva
- Search the library of logo templates
- Pick a simple, text-based logo you like the look of
- Edit the text to your brand name
Worried your logo will be too simple? Tell that to all the huge brands continuing to trend towards simple logo designs in today’s eCommerce world.
Don’t overcomplicate things, save yourself some dollars here and thank me later.
Ok, we’ve saved some money on design, but for an optimal launch, this is where we want to start investing some capital.
One of the quickest and easiest ways to make your product stand out is by designing some attractive custom packaging.
Analyze search results pages when doing product research and look for ways to interrupt the pattern and attract browsers’ eyes. Lots of products the same color? Create your packaging in a contrasting color and boom – eyes on you!
If your budget is very limited then of course you can use unbranded simple packaging with your logo and barcode applied with a sticker.
However, it doesn’t need to cost a fortune to get some packaging designed.
My recommendation is to use Fiverr to find a designer with a strong portfolio.
Send as many inquiries as you can and you shouldn’t have too much trouble finding a good designer who can create a high-quality packaging design for around $100.
Next up, bring your product to life with some high-quality photos.
You have a few options here and the best one for your circumstances will depend on your product and your budget.
If you have a low budget, your best option will usually be to try and negotiate with your supplier to take photos of the product after production.
Most manufacturers have someone on their team that do this for their listings on marketplaces like Alibaba, so it’s usually something that can be included in your package.
You’ll want to give them a shot list of the different ways to photograph your product on a white background and then use those photos to create more engaging infographic-style images.
A middle ground would be to have some high-quality 3D renders done, but this is something that is product dependent and only usually suitable for simple products.
If you have a higher budget or a product that may not be suited to a 3D render you can arrange for your manufacturer to ship you one or two units of your product and do a local photoshoot.
This is particularly useful for lifestyle shots showing your product in use and would be the ideal option for the best output if you have the budget.
Amazon Listing Images
Once you’ve got some photos of your product you’ll want to turn them into engaging listing images.
You don’t want to use any graphic images made by your supplier as they are likely not the greatest quality, and also could be used by their other clients.
You also don’t want to have 7 images of your product on a white background from different angles.
A large proportion of shoppers make their buying decision from images alone, so you need to create listing images with added text, callouts, and story-telling graphics that sell the benefits of your products.
If you’re feeling confident you can take the photos of your product and use Canva to make the images yourself.
The templates section has many premade Amazon listing image templates for you to customize making it more achievable than ever.
|Amazon Listing Images||$0||$200|
|Legal Expenses Summary||Minimal||Optimal|
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One cost that every eCommerce brand owner will incur is of course inventory to be sold. Let’s take a look at the different expenses you can expect here.
First up in inventory costs is your initial product sample(s).
If you’re keeping things simple and just launching one product to begin with you’ll be able to keep things lean here.
Ideally, you’ll want to order samples from 2-3 factories to compare quality. But if you hit it off with one particular manufacturer and think they are a great fit, you can always start with one sample and see how you find it.
Prices for samples vary considerably based on the type and size of the product along with the location you need it shipped to.
However, an average product the size of a shoe box or smaller air shipped to North America or Europe should usually cost in the region of $50.
When it comes to your actual product cost it gets harder to give firm budgets as there are so many variables in play.
Rather than setting your budget based on unit cost, a better approach is to aim for a unit cost that fits within your budget.
Given most new sellers will want to launch a product in the $15-$50 price range and you’ll want to shoot for a markup of 4-5x your unit cost, the range of unit cost you’ll want to be looking at is approximately $2-$10.
Then the other variable of course is how many units you will order.
We always suggest starting with approximately three months’ worth of stock to maximize your launch efforts whilst also avoiding a long stock out waiting for your second order.
So, be sure to use a tool like XRay by Helium 10 to calculate the average number of sales a product is getting on page one of Amazon search results.
Let’s imagine the average product is generating 200 sales per month.
In that scenario, you’d want to order around 600 units. At $2/unit, that’s upfront costs of $1200 for inventory. At $10/unit that’s $6,000.
Of course, you could spend more than that if the capital was available, but rather than looking at a more expensive product, you may also want to look at products with more demand and sales volume.
For the ultimate optimal budget keep some capital aside (or continue to add to your startup pot over the coming months) for your second inventory order so you can place a follow-up order nice and early if needed.
To ensure maximum product quality you should always carry out a third-party inspection.
An inspection company will travel to your manufacturer’s factory and select a portion of the finished order at random to thoroughly inspect.
They will check things like packaging quality, the finish of any printing on the product, overall product function, and much more.
They will provide a detailed report for you and this whole process should set you back around $150. Don’t skimp on this!
Your shipping cost will vary largely on the mode of transport (ocean or air) and the volume of goods.
Assuming you are shipping from China to the US or Europe, you should be looking to pay shipping fees of around $200 per cubic meter of goods for ocean freight. This works out at around $1-$1.50/unit for a shoebox-sized product.
Of course, these shipping costs can change – they did in 2021 rising drastically, but normalized again in 2022 – but it gives you a rough guide to work on.
Air freight only really makes sense for very small/light products or in a big emergency but should be avoided where possible as it is much more expensive. Expect to pay $6-$10 per kilo.
These numbers are very rough, and before proceeding with a product you should get accurate quotes from a freight forwarder.
In the example previously used of 600 units, let’s assume the minimal budget is for a smaller product the size of a phone case and the optimal budget gives room for larger products up to a shoe box size.
Import Duties & Taxes
Duties and taxes are costs you may incur when importing goods into a specific country.
Most countries have some form of tariff for duties that are applied depending on the type of product you are importing.
For instance, the US has a wide range of tariffs that start at 0% and go as high as 25% (the infamous ‘Trump Tariffs’).
Most products will fall in the low single-digit range and I usually use 5% as a baseline estimate, but you can check with the US import department what your costs will be.
If you are importing to the US you shouldn’t have much by the way of import taxes, but if you import into Europe you will need to pay import VAT (around 20%, depending on the country.)
This is quite the hit, but the good news is you can claim this back in later tax returns.
Like with freight, with duties and taxes, we are making some pretty broad generalizations.
Before committing to a product I’d highly recommend getting accurate estimates on these numbers to ensure they fall within your budget and you don’t fall foul of inflated import costs.
|Duties & Taxes (est. 5% unit cost)||$60||$300|
|Inventory Expenses Summary||Minimal||Optimal|
|Import Duties & Taxes||$60||$300|
Ok. We’ve got your product researched, manufactured, and shipped ready to be sold.
But now you need to sell some products! That’s where a marketing budget is going to need to come in.
The good thing with marketing is that it’s another skill you can learn yourself and in some areas invest more time to save on potential costs.
Amazon Listing Copy
Writing a keyword-optimized and conversion-driving Amazon listing is a foundational building block of Amazon FBA success.
As such, you must invest in the process. Whether that is the time to learn how to write it well yourself or the money to invest in hiring a skilled copywriter.
If you decide you want to do it yourself, you can follow the tutorials we’ve created:
If you decide to hire help, there are a lot of agencies and freelancers that can do this and you’ll usually be looking at around $100-$200.
|Amazon Listing Copy||$0||$200|
The beauty of launching a business on Amazon is that you don’t technically need a website.
Customers buy products through Amazon without ever needing to visit your website.
However, if you’re looking to build a brand of value that consumers trust a website is always a good idea.
This doesn’t have to be anything fancy – the best option for most beginners is a simple (and free) Shopify theme that you can customize yourself.
You will need to pay a monthly subscription for this but it won’t be needed until your products go on sale. We’ll include 3 months of Shopify’s base $39 plan in our optimal budget just to be safe.
The most effective way of launching new products on Amazon is by leveraging the power of PPC advertising.
Amazon PPC spend will usually turn into immediate sales which means these costs would be covered by the sales revenue they are generating and wouldn’t need to be part of a startup budget.
However, most sellers find it useful to set aside an amount of capital as an initial investment into PPC marketing so they can hit the ground running and give the Amazon algorithm some fuel without agonizing over every cent being spent.
Like Amazon PPC fees, your selling fees such as the Amazon referral fees and FBA fees are deducted from any sales you make so these aren’t considered – or included here – as ‘startup costs’.
Additional Launch Strategies
If you’re looking to launch a product with a lot of potential for sales volume or in a competitive niche, you will want to look at some launch strategies beyond just Amazon PPC.
There are a lot of options available to you, but some recommended strategies include:
- The Vine reviews program – use this program to generate your first 30 reviews.
- Promotional giveaways – run a campaign on social media to build up an initial audience for your brand. Offer your product as a giveaway so you know anyone who missed out may still be interested in buying your product on launch day.
- Google ads – Amazon loves when sellers drive external traffic to their listing. Google ads, like Amazon PPC, give you the control of targeting specific keywords so you’re driving high-intent traffic to your listing.
- Influencer marketing – gift your product to influencers in your niche and ask them to create content about your product with a link to your Amazon listing.
How much will this all cost? It’s like asking how long is a piece of string.
The more you can spend, the more eyeballs you’ll get on your Amazon listing. But for most new sellers, allocating an extra $1,000 to some initial promotion can really help make a big splash with your launch.
|Additional Launch Strategies||$0||$1,000|
|Marketing Expenses Summary||Minimal||Optimal|
|Amazon Listing Copy||$0||$200|
|Additional Launch Strategies||$0||$1,000|
The final category you may want to consider if you’re starting an Amazon FBA business for the first time is training.
This should be considered as an investment more than an expense, as good training will save you from making costly mistakes and help grow your business faster.
People who want to get in shape will often seek out a personal trainer.
Those who want to pass an exam will often find a tutor.
However, when it comes to selling on Amazon there are so many people who would rather fly blind without any support.
If you want to take this business seriously and build it into something that can create real financial strength for you and your family, I’d highly encourage you to consider some kind of training and/or mentoring.
Of course, I am biased given we have what I believe to be world-class training and mentoring inside Brand Builder University.
But whether you choose us, another Amazon FBA course, or a 1:1 coaching setup I’d highly recommend getting some level of support from those who are at least a few steps ahead of you.
How to reduce Amazon business startup costs
Finally, here are some quick tips to help you save money when starting your Amazon business.
1. Invest time instead of money
If you’re low on cash but have time to invest, learn how to do as much of the startup work as possible yourself.
Learn how to create a website, write an Amazon listing, and create infographics on Canva.
Not only will you save a huge amount of money, but you’ll also learn some very useful skills.
2. Only pay for what you need
Make the most of free tools and be ruthless about cutting expenses that you don’t need – particularly subscriptions that can easily recharge to your credit card without you giving them too much attention.
3. Keep it small and light
The smaller and lighter your product, the less the unit cost should be and also other associated costs like shipping, Amazon fees, and storage fees.
4. Launch a single SKU
Don’t get lured into launching multiple colors or sizes just because everyone else is.
Keep it simple and launch with one variation of a product. When you’ve got momentum and profitability, then expand into more products.
Of course, like any budget in life, there’s only so much you can save. There comes a point where the solution isn’t saving more but making more.
So, to help you get started in building an online asset, you could run some side hustles like retail arbitrage to help earn some extra cash on the side, sacrifice on some luxuries for a short period, or clear out some of the lesser-used items that are lying around at home.
Remember – you’re doing this to build a better future for you and your family. So make the sacrifices now, and reap the rewards later.
Amazon FBA Startup Costs: The Bottom Line
Starting an eCommerce business on Amazon – or any other platform – comes with its expenses like any new business.
Thankfully though there are a lot of expenses you don’t have to incur such as warehousing, staff, and office space.
Plus, by following the breakdown in this article you can decide between a more streamlined, minimal budget in some categories, and an optimal budget in others.
Find a budget that works for you and your goals, but always remember:
Create a vision for your future and don’t let any circumstance stand in your way.
You got this!
And of course, if you need our help at any stage of your Amazon FBA seller journey please do reach out.
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