Amazon is a massive platform that reaches literally billions of users. It can be one of the best ways to expand your reach to acquire more customers and more importantly to improve your brand recognition.
Unfortunately, there are costs associated with selling on Amazon, and depending on who you are, what you’re selling, in what volume, and most importantly, how much you’re making on that sale, will determine whether you can afford to sell on Amazon.
Amazon works for both large and small businesses, but the costs associated may be more than the smaller sellers can afford depending on profit margin. Before you decide whether it is worth it to sell on Amazon, we’ll break down how the whole process works and what you can expect to pay so that you have a better idea of what you’re getting into.
We’ll also outline some of the benefits of using Amazon paid ads, besides the massive marketplace. One thing to note is that Amazon offers a number of services beyond just a platform for selling. Most sellers don’t realize at first, that Amazon offers resources for order fulfillment, advertising, affiliate sales linking, and other options. All of these features do increase the overall cost though, so we’ll dive into the benefits of each so that you understand what all you do and don’t need from Amazon before you ever start selling.
The actual setup process for becoming a seller on Amazon is fairly easy. Amazon will actually walk you through the process by making a few decisions and then setting up your seller account.
Before you begin that process though, the key thing is to understand your finances, what you’re looking to do and the scale you’re trying to sell at. Amazon actually offers a marketing agency program to help sellers get to market and offer their goods, but this means additional fees and charges and more work when trying to get ready to sell.
If you’re not going this route and have your own marketing agency, or are doing your marketing yourself, then you would just sign up for a seller account. There are two business models that most sellers use.
Third-Party Seller: This is a person who sells goods that another person makes. This means you rely on the supply you are given by the third party and sell the goods accordingly.
Brand Owner: You make and sell your own goods. This puts you in charge of the supply and sale process. You sell exactly what you are able to produce.
When setting up an account, you should consider whether you want to do one or the other, though some businesses do handle both ends of the process, selling their own goods as well as those provided by third-party suppliers.
Once you know what you want to do in terms of the types of selling you want to handle. Go to seller.amazon.com to register your account. Note that you should already have a standard Amazon account before you begin the process. You’ll also need several pieces of information to complete the actual sign-up process.
We’ll go ahead and bullet point the information you should have for clarity.
All of the information you have to provide is fairly standard for setting up any business type of account, so you shouldn’t have any issues with actually opening your seller account.
When you complete the process, you are given access to a platform called Amazon Seller Central. For informational purposes, we’ll break down Amazon Seller Central into its core components and explain what it does for sellers.
Amazon Seller Central is essentially your eCommerce hub for selling on Amazon. It allows you to manage all aspects of the selling process. They even have tutorials on how to sell on Amazon and a fees calculator to help you see what you’ll be paying for selling your products.
The main benefit of the platform is that you can set up your sales pages, adjust product listings, descriptions, rules, prices, and anything else related to the actual products you sell. It also assists with order processing. From here you can add and edit products as you like, adjust, improve, or remove listings and keep track of all your orders.
Additionally, there are brand services. To access these services, you have to be a registered brand on Amazon. To do this, you must apply to the Amazon Brand Registry, which requires more paperwork.
What you’ll need:
This can be a time-consuming process, even if you have all your paperwork together. Amazon has a brand approval process that can take between 1 and 30 days to complete.
Why is this important? Recognized brands get a number of advantages. They get customized product pages with their brand logos attached, higher brand recognition through the seller platform, and a branded storefront. This level of recognition is invaluable to growing both your sales and your web presence. It guarantees that your brand name and logo will be seen by more people as they browse and buy products on Amazon.
Setting up your Amazon Seller Central can be done manually or you can pay for a service through Amazon to have it done for you.
The last official step before you begin selling is the creation of your actual store on Amazon. This is fairly straightforward and is done through templates. Once you select your brand name and click create store, you’ll be directed to add your brand name and logo and select a pre-built template for your store.
There are a few different options, but select the one that presents your products in the way you want them seen and displays your brand in a way that is visible and identifiable. This comes down to personal taste but is an important part of the store setup process.
From there you move on to the inventory setup process where you can add products to your store. This can be done one at a time or all at once by uploading the products to your store. You can follow the instructions through Amazon’s helpful product upload guide to get the gist of how to do it.
After you have all your product pages set up and you’re happy with everything, the last step before you launch the store so that it goes live is to submit it to Amazon for approval, which takes 72 hours. As you can see, beyond the cost, which we’ll discuss further in a moment, there is a significant type lapse between account creation and beginning the selling process.
Selling on Amazon is not nearly as simple as it may seem at first glance. To sum up the entire process, you need to think about the type of seller you want to be, gather all the important documents, create your seller account, get your brand name approved (if applicable), set up your store, and get it approved.
Now that we’ve broken down the process of selling on Amazon, we’ll do a deep dive into the actual cost of selling on Amazon. This can get fairly complicated so we’ll try to break the fees down in a way that lets you figure out what you have to pay, what you may want to pay for, and what you have no use for.
Beyond just the storefront, there is a whole plethora of options and services that Amazon provides to sellers. The trouble is that each of these services has additional fees associated with them. These costs can really add up, especially if you go in for more than what you need.
Before we begin, one quick thing to note is that the costs we are quoting are at the time of publishing and are subject to change. Use these costs as a guideline for what you can expect to pay.
There are two seller subscription plans and each has its own costs and features.
The individual plan is free to set up and the fee is a flat $.99 per item, at the point the item sells. You can create new product pages with an individual account, but you won’t have access to many of the customized reporting options and inventory management features.
The shipping fees are standardized and set by Amazon instead of the seller. You will also not have access to gift cards and promotional sales options. The individual account is also a single account that belongs only to the account holder, permissions to alter the product pages and other services cannot be given to other users.
We can’t say whether this type of account will be right for you, but for individuals that do limited numbers of sales and just want a marketplace to host their products, this is a good option to start with. If sales volume increases or you need access to other features, you can upgrade. Amazon also offers temporary suspension of sales for any reason to either plan holder. This is useful if you run out of stock or suffer a sudden emergency.
The professional plan comes with a flat fee of $39.99 per month. There is no per-product fee directly associated with the plan (though other fees may apply depending on services). You are also given access to all of the product management and reporting features that are offered through a seller account, unlike with an individual account.
One major difference is that with a professional plan, the seller is able to set the shipping rates instead of Amazon. Sellers are also given access to promotional offers, gift cards, and featured listings on products. You are also able to calculate U.S. sales and use taxes on your products through an available feature. Lastly, professional plan owners have the ability to grant access and use rights to other owners/users.
The professional plan is ideally suited for larger sellers that want more control over their products and reports and who do such a sales volume that the per-item fee would be an unnecessary expense. Starting sellers may choose to go with this plan straight away or may choose to wait and upgrade to it.
These are fees assessed to the seller at the point of sale. For individual plan owners, the fee ranges from $.45 to $1.35 per sale, on top of the standard $.99 fee. This means sellers can expect to pay between $1.44 and $2.34 per item sold. These fees are non-negotiable and are applied by Amazon.
Professional plan fees are percentage-based and can vary greatly. There are two types of fees assessed, closing fees, and referral fees which are paid on a percentage of sale basis and range between 6% and 25%, though the average is 13%. Professional plan holders can track fees with a fee calculator to determine the cost of fees associated with the sale of products.
Depending on the place of origin, taxes can vary wildly so we can’t give you an accurate estimate of what taxes, if any, are applicable. Amazon does provide professional plan members a tax calculator for U.S.-based sales. For multinational sales, the taxes can be quite high, so it is best to do some research into these costs to determine what your product is going to cost you so that you can set your shipping costs accurately.
This is what marketers refer to as the “landed cost” of an item, you take the base price of making the item and include the cost to get it to the customer to determine how much it will cost you in total. If you’re planning on selling on Amazon, it’s important to understand the role taxes play in the sale of products.
The cost of a GTIN may vary depending on the size and scope of your product sales. A standard GTIN for just a few products is a one-time fee of $30. For large companies with many products and expectations to add more, there is an annual fee associated with your GTIN and multiple GTINs may be necessary.
You can get an exemption to this, but to be a legitimate brand you must have a GTIN on every product. This is mandatory and facilitates shipping around the world. You should figure out the monthly cost of your GTINs and factor that into the cost of products just like taxes.
The first thing we’ll talk about, and this is one that big business may want to invest in to protect their property, is a registered trademark. You should already have this if you are a branded company, but we’ll assume you’re just starting and need to know the cost. Depending on the level of protection you want, the cost ranges from $225 to $400. This is not mandatory but should be considered essential if you’re using Amazon to build your brand.
Second, and this is one that has to do with getting your products sold, is Amazon PPC Ads. Advertising is an important part of getting your products sold and investing in advertising through Amazon’s PPC ads can help you drive sales to your store. There are a number of ad types, some are directed at new customers and some are directed at marketing towards existing customers through remarketing ads.
Lastly, there are additional marketing costs for influencer marketing and marketing agency representation. These are associated with the marketing methods you choose and whether or not you employ help from Amazon or an outside marketing agency
The last thing we’ll talk about in regards to fees and Amazon are the fees you pay as part of building your brand and marketing your products on Amazon. There are a number of things you can do from using Amazon’s marketing services to maximizing the SEO on your product pages to improve Google rank or running ads through the Google Ads program on outside sites or through SERP.
Using Google Ads and Ad Extensions can help you develop customer data, but these costs are based on each individual situation, like the optional fees above, these services aren’t necessary, but they may benefit your brand.
Marketing and SEO can get expensive but is one of the main ways to drive your sales up. If you’re looking to build brand exposure and sell more products quickly, then these are important steps to take.
These are the basics of many of the different fees associated with being a seller on Amazon. The exact amounts and total costs will vary, but as we’ve discussed, the total cost versus profit on Amazon is calculated by adding in all of the associated fees, the cost of the product, and subtracting that from the sale price.
By knowing this, you can determine whether Amazon is the right platform for you. You may decide the benefits are worth the increased costs or you may decide that you don’t have the right procedures in place to make it worthwhile. The last tip we will give is to get help from a marketing agency or advertising firm to help you set up and run your online shop so that you can maximize the potential for profits.
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If you’re running an e-commerce or retail business, you already know that visibility is everything. The best product in the world won’t sell if no one sees it. That’s where paid ads for ecommerce comes in.
Done right, they drive traffic, conversions, and repeat customers.
Done wrong, they drain your budget and leave you wondering what went wrong.
Whether you’re spending $500 a month or $50,000, your goal is the same: profitability. Not just clicks, and certainly not just impressions. You want to turn ad dollars into real, predictable revenue.
So how do top-performing e-commerce and retail brands make their paid ads work?
What are they doing that you’re not?
This guide breaks it down step-by-step, so you can start running profitable ads with confidence.
Before you launch a single campaign, you need clarity on your audience and goals. Are you trying to boost first-time sales? Increase average order value? Each objective requires a different strategy and metrics for success.
Don’t fall into the trap of launching ads just to “see what happens.” Paid media works best when it’s part of a bigger strategy. So before you log in to Google Ads or Meta Ads Manager, get specific about what success looks like.
If you want to run profitable paid ads, knowing your numbers is the foundation of your entire strategy. Without a clear understanding of your margins, break-even points, and how much you can afford to spend to acquire a customer, you’re essentially gambling with your ad budget.
And in e-commerce, that can get expensive fast.
Let’s start with the most critical numbers you need to know:
Your break-even ROAS tells you the minimum return you need on your ad spend to not lose money. It’s calculated by dividing 1 by your gross profit margin.
So if your margin is 50 percent, your break-even ROAS is 2.0. That means for every $1 you spend on ads, you need to make $2 in sales just to break even.
For example, let’s say you’re running Facebook Ads and spending $1,000 on a campaign. If your break-even ROAS is 2.0, you need to generate at least $2,000 in revenue to avoid losing money. Anything above that is profit. Anything below that eats into your cash.
Once you know your numbers, you can reverse-engineer your ad strategy instead of throwing money into the void and hoping for results. For instance, if your AOV is low (say $25), you might struggle to profit from ads unless you have a very low COGS or high conversion rates. In that case, you might want to:
On the other hand, if your AOV is $150 and your margins are strong, you have more room to compete in ad auctions, bid more aggressively, and test multiple audiences and creatives without instantly wiping out your profit.
A lot of beginner advertisers focus entirely on immediate return from ads. That’s understandable – but short-sighted. If you’re breaking even or slightly losing on the first sale, that might still be a smart move if you’re building long-term customer relationships.
That’s where Customer Lifetime Value (LTV) comes in. If you know that your average customer places three orders a year, each worth $60, then their LTV is $180. If you spend $40 to acquire that customer with your first ad, but earn $140 more over the next 12 months, that ad was extremely profitable in the long run.
Top e-commerce brands build their paid strategies around LTV-to-CAC ratio – how much they earn over time compared to what they paid to acquire the customer.
A healthy ratio is usually 3:1 or higher. So if you’re spending $50 to acquire a customer, you want to earn at least $150 from that customer over time.
Once you understand your numbers, you can plan your ad spend with precision. You’ll know exactly:
Let’s say you want to make $5,000 in profit this month, and your product has a 50 percent gross margin. That means you need $10,000 in sales. If your target ROAS is 2.5, you can spend up to $4,000 in ad spend to hit that goal. With those numbers in hand, you now have a roadmap for campaign budgeting, not just a shot in the dark.
Every ad platform has strengths. But if you try to use them all at once, you’ll burn through your budget without learning much. Instead, pick one or two that align best with your business model and customer behavior.
If you’re selling visually appealing products like apparel, skincare, or home goods, platforms like Instagram and TikTok can deliver strong returns – especially with the right creative. If you’re focused on high-intent buyers, Google Search and Shopping Ads are goldmines. And if you’re targeting professionals or B2B retail buyers, LinkedIn may offer surprising results.
Test channels strategically. Start with the one that matches where your customers spend their time and scale from there. The best platform for you is the one where your ideal customers are already shopping, scrolling, or searching.
One of the biggest mistakes retailers make is casting too wide a net. You don’t want everyone to see your ad – you want the right people to see it.
On Google, this means targeting high-intent keywords that signal buying behavior. Focus on terms like “buy,” “best,” “free shipping,” or product-specific searches. On Facebook, Instagram, or TikTok, you’ll want to dial in your custom audiences using demographic data, lookalikes, interests, and behavior.
Don’t forget retargeting. Most people won’t buy the first time they visit your site, but retargeting brings them back when they’re ready. Set up ads that follow people who viewed a product, added to cart, or engaged with your brand but didn’t check out.
The more relevant your targeting, the more efficient your spend and the higher your return.
Creative is the make-or-break factor in most e-commerce ad campaigns. You can have perfect targeting and the right product, but if your ad doesn’t grab attention in the first two seconds, it won’t convert.
Your creative needs to do three things quickly:
Use high-quality product photos or videos. Show your product in action. Highlight a clear benefit or solve a specific problem. Incorporate customer reviews or user-generated content to build trust.
For paid social, test multiple creatives at once – video vs. image, UGC vs. branded, short-form vs. long-form – and let performance data guide your iterations. On search platforms like Google, focus on copy that’s compelling and packed with relevant keywords. Test different headlines and descriptions to see what gets the best click-through rate.
Sending paid traffic to your homepage is a rookie mistake. You want every click to land on a page that’s designed to convert. That means fast load times, mobile optimization, and a clear call-to-action.
If you’re promoting a specific product, send users to that product page and not your full catalog. If you’re offering a bundle or a seasonal deal, create a dedicated landing page with copy, visuals, and layout tailored to that offer.
Remove distractions. Reduce friction. Make it stupid-easy for people to buy. The less effort it takes, the more sales you’ll see. And don’t forget to A/B test. Sometimes a simple tweak to your headline or CTA can double your conversion rate overnight.
Once your ads are live, your job isn’t done. In fact, this is where it really begins. You need to monitor performance regularly, looking at more than just the surface-level metrics.
Click-through rate (CTR) tells you how well your ad is capturing attention. Conversion rate shows how well your landing page is sealing the deal. ROAS tells you how profitable your campaign is. And CPA helps you compare efficiency across different products or audiences.
Watch for early indicators of success – or failure.
Treat your campaigns like living systems. Tweak, test, and improve them continuously.
Once you find a winning combination – an ad, offer, and audience that works – it’s time to scale. Increase your budget gradually while keeping an eye on performance. Scaling too fast can tank your results, so go step by step.
Duplicate high-performing campaigns to test new audiences or creatives. Experiment with upsells, bundles, or time-limited offers to increase AOV. Layer in email or SMS marketing to retarget paid traffic and drive repeat sales.
And just as importantly, don’t be afraid to kill underperforming ads. If something isn’t working after a reasonable test period, cut it. Your budget should be flowing to what works – not what you hope will work.
One of the biggest mistakes in paid advertising is chasing one-off sales without thinking about the bigger picture. Winning e-commerce brands think in terms of customer lifetime value.
If your first sale breaks even, that’s fine. (As long as you have a plan to turn that customer into a repeat buyer. ) You can use post-purchase emails, loyalty programs, and retargeting ads to bring people back.
At the end of the day, when you view paid ads as the beginning of a customer relationship – not the end – you unlock real long-term profitability. And at PPC.co, that’s where we want to help you! We offer industry-leading PPC management services for ecommerce and retail brands who want to stop wasting ad spend and start generating real ROI.
Contact us today to learn more!
