So you want to start an Amazon FBA business, but you’re nervous about the upfront investment?

I’ll be honest, many new sellers underestimate the costs involved to start a successful and long-lasting Amazon FBA business. 

But fear not! While you’ll need more than a bare-bones budget, startup costs will be vastly lower than a typical brick-and-mortar business. 

For newcomers, Amazon FBA, or fulfillment by Amazon, is a business model where one sources at-cost goods from overseas and resells them on Amazon for profit. It relies on Amazon’s automated delivery system to fulfill orders, which creates passive income for sellers with successful products. 

Sounds like a piece of cake, right?

I promise, it’s not that bad. But it is an investment. 

Here’s an honest cost breakdown of startup costs for an Amazon FBA when done correctly as a long-term investment.  

Note: All prices are estimated in USD. 

Amazon Seller Central Account: $40 per month (Mandatory)

Amazon gives two choices when setting up an Amazon Seller Central Account; the online portal you’ll need in order to start selling on Amazon. 

You can choose between an individual plan, and pay a 0.99 fee every time an item’s sold, or a $39.99 flat fee professional plan.

Always opt for the professional plan: 

• The plan pays for itself if you sell over 40 items (which you ideally will)
• The professional plan includes advanced analytics and other tools to help push products and grow profits
• Choosing an individual plan, then switching to a professional plan will often trigger an account review that could take days or weeks to resolve, and can be a huge headache to deal with – especially if you’re already selling and relying on the income. 

Total Yearly Costs: $480

Product Research Software $100 Per Month (Mandatory)

Amazon hosts millions upon millions of products across tens of thousands of niches, sub-niches, categories, etc. 

To find a hole in the market, you’re going to need help sifting through them all. 

That’s why you’ll need some type of Amazon product research software. 

You’ll be spoiled with options, but my long-time favorite is Helium 10, as I’ve found it to be the most up-to-date and accurate. 

I have in-depth YouTube tutorials on how to leverage the software to your advantage to find profitable products and niches. 

Any software will do, but if you ultimately decide on Helium 10, check out my discount code here. 

Total Yearly Costs: ~$1200

LLC $250 (Depending on Location) (Highly Recommend) 

LLC stands for limited liability company. 

But why do you need one for Amazon?

Setting up an LLC will protect your personal assets from any legal troubles that might arise when selling on the platform. 

Let’s say for example that a customer slips and falls on a toy they bought from you on Amazon, and decides to sue. 

An LLC will make it impossible for that individual to go after items like your car, or house, for example. 

Yes, you can sell without an LLC, but I highly advise against doing so. As you profit and scale, it will also come in handy for tax purposes. 

I always champion Buffalo Registered Agents, located in Wyoming. They’ve been a favorite of mine despite never being a Wyoming resident. I pay $250 yearly for the service. 

That being said, everyone’s situation will be different. Do your research on this one, as some states like California have different rules for LLCs located outside the state. 

Most often, the simplest and cheapest way is using your state’s government website to form an LLC. You can also use services like LegalZoom, which will complete the paperwork for you. 

For more info, including options for non-U.S. residents, check out my YouTube tutorial here. 

Product Samples $200-$400 (Highly Recommend) 

Here’s what’s going to happen: 

Once you’ve zeroed in on a product, you’ll go back and forth with several different suppliers until you’ve finalized a design and set a price. 

But before you ship the orders into an Amazon warehouse, make sure you order samples first. 

Do this to make certain your product is of 5-star quality, and take the time to address any imperfections or tweaks you’d like to be made. 

Expensive air freight is typically the only option, which is why costs are high. 

Also, don’t forget to factor costs of samples from competitors’ listings on Amazon. You’ll want to do this in order to make sure your product’s quality is on par or exceeds the competition’s. 

First Order $3000-$8000 (Mandatory)

This is the big one! 

The cost of your first order will be market-dependent and can vary greatly depending on your specific product. 

A safe guesstimation is between $3,000 and $8,000. 

For new sellers, I don’t recommend entering higher-priced markets (orders over $8,000), even if your budget allows. Sellers in these tiers are more experienced and often have both the budget and the experience to out-compete. Targeting less expensive items is a good safeguard against this. 

Inspection $200 (Highly Recommend)

Once you’ve finalized a design and placed an order, you’ll want to hire an inspection company to make sure standards are being upheld when your order’s being mass-produced. 

They’ll be able to send you photographs and provide detailed reports of the condition of your order. 

This step is optional, but I highly recommend it to protect your investment. 

International Shipping $1000-$3000 (Mandatory)

Shipping prices have unfortunately risen over the past few years (efficiency hasn’t improved). 

Shipping costs will depend on the size and weight of your product, but will generally fall between $1,000 and $3,000, and sadly take several weeks to arrive via ocean freight. 

There are not a lot of ways around this. 

Photography $300-$1000 (Mandatory)

Customers shop with their eyes. 

Great Amazon listing photos are attention-grabbing, detailed, and informative. 

Theyhelp boost conversions and keep customers returning to your brand. 

So definitely don’t go cheap here. You can DIY, but if you’re using your phone, you’re doing it wrong. 

I suggest hiring a professional and creating powerful photos that convert. 

This will be one of your most important investments in the business. So do it right. 

I’ve had great experiences with Soona.co, but discuss other options in this video. 

Trademark $250-$500 (Highly Recommend)

Getting your product trademarked unlocks Brand Registry, which in turn gives you countless advantages and perks to increase margins and churn profits. 

Trademarks add protection to your brand and can also help increase brand awareness. 

You can apply for a trademark through the USPTO office, or hire a service to complete it on your behalf. 

A+ Content $500 (Highly Recommend)

A+ content is the website-looking feature you see when scrolling to find product reviews on an Amazon listing. 

Although technically optional, it’s a powerful marketing option that can be used to show more photos, details, and information about your product. 

I suggest budgeting around $500 for graphic design and illustrations for A+ content. 

This number’s not in stone and can be greatly reduced if you’re comfortable with graphic design tools such as Canva. 

Video on Listing/Pay-Per-Click (PPC) Video Ad $500 (Highly Recommend)

Consumer trends show demand for video is on the rise, and marketers report seeing a 92% ROI on video marketing. 

Video helps with both brand awareness and brand trust. 

Again, this step is optional, but it’s a wise investment, especially if your competition is already leveraging it for sales. 

Amazon Vine Program $200

The Amazon Vine program is great for new sellers to get much-needed reviews, feedback, and visibility. 

I definitely recommend it to new sellers, as it’s a great way to get your seller central account in good standing. 

Reviews from Friends and Families ~$330 (Highly Recommend)

I’ve said it before, and I’ll say it again. 

Reviews = currency on Amazon.

Without them, it becomes nearly impossible to compete against others in your niche, which can snowball into even bigger problems. 

So I recommend getting creative for your first reviews. One solution I’ve found is giving friends and family free products in return for a few honest reviews, just make sure you factor these into your total costs. 

Note: The ~$330 price assumes 30 reviews at an average cost of goods (COG) of $11. 

Amazon Pay-Per-Click (PPC) – $300-$500 Per Month (Mandatory)

The “sponsored” listings you see on Amazon are actually pay-per-click (PPC) ads. 

The ads allow you to…you guessed it, pay for clicks to drive traffic to your product. 

You’ll need to use these to your advantage to increase both your product’s organic ranking.

PPC ad campaigns are a tried and true way to increase sales and get your listing to the top of the list in organic keyword searches for your product.

I recommend doing your homework on these, as they can be tricky to understand. 

Total for Year: ~$4800

Content Creator/Virtual Assistant $500 Monthly (Optional)

This one’s entirely optional, but if you’re relying on content for external traffic, consider hiring out an assistant to create it. 

Video editing, graphic design, and copywriting can be extremely time-consuming and stressful, even with the recent advances of AI. 

Hiring this portion out will greatly free up time to devote towards other business mechanics. 

If you lack in the creativity department, I highly recommend finding someone (or a team) to help produce content and keep up with social media trends. 

Amazon FBA Costs; Final Breakdown

Drum roll! 

So after everything is accounted for, here’s an honest breakdown of the final costs for your first year of selling on Amazon. 

Of course, there’s always room to cut down on certain costs, but this is my most genuine estimate of what to expect in your first year selling on Amazon. 

But there’s a silver lining!

You should see sales before plowing through $16,000, which means you’ll have cash flow from the business to pay for a portion of these costs (PPC ads, for example). 

After that, it’s just a matter of gradually increasing margins and scaling to new markets and niches. 

Ready to Begin Your Amazon Business?

My Amazon Winners Academy (AWA) mentorship guides you through the entire Amazon FBA process and provides a community of support with others on the exact same journey. 

AWA gives you a much-needed safeguard from costly mistakes, dead ends, and failed product investments. 

So whether it’s solving issues with your Seller Central account, creative approaches to product research, scaling to new markets and niches, validating product ideas, customer service issues, and more, we’ve got you covered. 

Learn more about it here.