How much does it cost to launch a private label product on Amazon?

Linda Heidi

Do you want to sell your own products on Amazon under your own label? You fear financial ruin because of it. You know what? It could end up costing less than you expected. You may launch your own product on Amazon for about $2,000.

Now, while it is the bare minimum, if you desire instant and massive success, you may want to invest more than that. With an opening investment of $2,000 and $5,000, I will show you how to get started successfully on Amazon. In this way, you won’t have to worry about any hiccups in your business plans because you’ll be ready for them.

Yes, I see what you’re thinking. “Private labeling on Amazon must be a gold mine!” You’re not wrong, either. In their first year alone, some people make over $1 million! But let’s face it: as more individuals join the race, the competition will only increase. That’s why it’s important to put in the time and effort necessary to prepare and spend wisely. Stay with me, and I’ll explain everything to you.

Estimated cost to launch a private label product on Amazon

For my latest two products, I put in $30,000 each. It seems like a lot, right? But it totally changed the dynamic for me. The greater price of a product that is of higher quality usually means larger profits, even if the item doesn’t sell in large quantities. FBA start-up costs might vary widely but typically sit at around $2,000. Let’s start breaking down the cost.

Essential cost in Private Label product Launch

1-Product Cost

First things first: whether you’re starting from scratch or improving upon an existing product, the cost to produce it will be the single largest expense you face. The price will vary based on the product type, the materials required to make it, how complicated it is, and the quantity you’re ordering.

Let me explain it to you with an example

Let’s suppose you select the product “Wall Clock.”. There would be a difference in the cost between a “stainless steel clock” and a “simple plastic clock,” as shown in the figure below.

Saving tips

A good way to save money on a private label product launch is to buy inventory in bulk, but don’t make the costly mistake of stocking up on a product that has no market. Make sure there is a need for your products before investing too much.

2-Shipping Cost

The shipping of products is not cheap. Shipping costs can change depending on the dimensions and weight of your package, types of products, demand and season, customs and duties, as well as its final destination. For this reason, I always recommend starting with a product that weighs less than 2 kg. If the price goes up too high, it will be impossible to afford.

Impact of Importing Products on Inventory

Think about the costs of air and sea freight when acquiring products globally. Sea freight may be less expensive and is typically charged per container (20 or 40 containers are standard). This freight takes $0.5-$2. But it takes longer, which can make it harder to plan your inventory.

On the other hand, air freight costs are calculated based on volumetric weight. So, no one can imagine paying $5 per unit. So, cross over to the air freight. So, if you are using sea freight, you have to take a lot of care about the time period, as getting stock to the Amazon warehouse can take up to three months. That’s why you should make sure that importing products in bulk will not affect your Amazon inventory.

Watch out for any unexpected charges

In the first private label product launch, make sure that you are not getting sad about the hidden fees. When importing products into the country from outside, keep customs fees in mind. These costs can add up quickly and be a nasty surprise for new sellers, driving up the price of their stock.

3-Amazon Monthly Fee

The monthly charge for Amazon’s Professional Selling plan is $39.99. With this plan, sellers can list and sell an infinite amount of items. Although you can use the individual plan with less fees.

Tools for managing larger stockpiles, such as bulk product listing and order processing, are also included in this plan’s perks.

4-Barcode Purchase

Every product that you want to sell on Amazon needs a unique number, which is usually a UPC.

Why use GS1?

For authenticity reasons and to avoid listing problems in the future, it’s best to buy barcodes straight from GS1.

In the United States, the cost of a GS1 Company Prefix, which grants the right to create multiple barcodes. This cost ranges from about $250 for a modest number of barcodes to several thousand dollars for a prefix that grants the right to create barcodes for a large number of distinct products. Additionally, there is a yearly renewal fee that begins at roughly $50 and goes up depending on the length of the prefix.

Prices for a single GTIN (barcode number) from GS1 UK begin at roughly £119, and there are no yearly fees. Prices for multiple barcodes start at around £129 for 10, with yearly membership fees starting at around £119.

This price is quite minor, but we must consider it when calculating the cost to launch a private label product on Amazon.

5-Amazon advertising Cost

Advertising on Amazon can range from very low to very high. In some ways, it’s similar to asking, “How much does a car cost?” – It all depends on the brand, the model, the purpose, and the usage. However, successful sellers view advertising during launch as a must to compete with established businesses.

In the short term, your profit margins will be cut, but in the long run, your product will sell itself without the need for extra advertising. PPC advertising has a daily budget that isn’t always used to its full potential. A $10 budget might therefore be established for a period of one week or two months, depending on how long it takes for your product to rise in the rankings.

Variables like the following have an impact on Amazon advertising costs:

Type of Ad: Several forms of ad, including sponsored products, sponsored brands, and sponsored displays, are available on Amazon. The price changes based on the type of ad.
Keywords and bidding: Choose appropriate search terms for your products and enter a maximum bid price. Highly competitive keywords tend to be more expensive.
Competition: If you want potential customers to see your ads in a market that is extremely competitive, you might need to raise your bids.
Campaign budget: Ad spending can be limited on a daily or permanent basis with the help of campaign budgets.
Product Category: The price of ad varies widely amongst demographics. There are more competitors in certain categories than others.
Seasonality: The price of ad may change during the year. For example, holiday seasons frequently witness more competition and expenditures.
Ad Performance: The more effective the ads are, the less money you will have to spend on advertising.

Costs for Amazon advertising can vary widely from business to business, but a ballpark figure of $300 to $10,000 per month is not out of the question for small and medium-sized businesses. However, this is a vast range, and real expenses can fall outside these estimates.

Because it is a dynamic and auction-based system, there is no “usual cost” for advertising on Amazon. It’s important to test several approaches, monitor their effectiveness, and adapt your methods so that they work best for your products and objectives. So, if you calculate the cost to launch a private label product on Amazon, you must consider the ad cost beforehand.

6-Product Research Tool

You can’t find quality products without product research. You’re revved up and ready to make a sale, but there are millions of products to choose from. These tools proudly step in at that point. You can find out what’s popular, keep tabs on competitors, and plan for future profits with the help of these tools. Without them, you’re just taking blind shots and crossing your fingers.

In terms of your Amazon business, the price of these handy tools may vary. The best tools are JungleScout and Helium 10. The monthly cost might range from $40 to $100. Although it may seem like a financial hardship, consider it an investment in a crystal ball that might hold the key to your next major success. So, we must add the expense of such tools before calculating the cost to launch a private-label product on Amazon.

7-Photography

If you have a keen eye for photography and a limited budget, taking your own product photos can save you money. If you already own a high-quality camera, then your only real expenses would be for a robust tripod, some lights, and perhaps a white background. You don’t want to take any chances with your product photos because they are the first thing your buyers will see.

If you want high-quality images for your online store, you should engage a photography agency that specializes in doing so. More than $500 may be spent on this if each photograph costs $50. The extra cost usually comes with added features, such as professional lighting, set design, high-resolution photographs, and retouching

8-Inspection

Inspect the first inventory personally or have a third-party inspection service do it. It’s not easy to manage production and import products from another country. You and a manufacturer’s relationship develops over time. Both sides need at least one order to gain insight into issues like defect rates, material quality, recommended packaging methods, etc.

Performing your own inspection of the products is free, although it might be time-consuming. As an added cost, you’ll need to pay to have the products shipped to you for inspection before sending them on to Amazon. Loading inspections from firms like V-Trust and Asian Inspection, which operate on a global scale, cost between $100 and $400. Trade assurance can also be used to hire an independent inspector that is listed on Alibaba.

Optional cost in private label product launch

When preparing to launch a private-label product on Amazon, it is crucial to think through every facet of the FBA process. This might add to some unexpected expenses.

1-Order Sampling

It’s not necessary to obtain samples before launching a private-label product on Amazon or another marketplace. However, there are a number of strong reasons for continuing with the initial launch:

Make sure the product’s quality satisfies your expectations and standards.
Use this approach to ensure the reliability of the supplier.
Make sure the branding and packaging reflect your objectives by giving them a once-over.

Even if order sampling is expensive, it will prevent significant losses. For testing purposes, we have to order sample sizes of various products, and doing so costs us close to $300. Believe me, it’s not expensive.

2-Seller Central Management Service

Seller Central is pretty tough on its own. It’s the nerve core of your Amazon business, where you handle everything from listing and order processing to inventory monitoring and customer service. For someone just starting, it can be overwhelming. There are a ton of knobs and buttons to push, and striking the wrong one might bring trouble. A seller central management consultant can help you improve your listings, keep track of your stock, and provide excellent support to your customers.

When it comes to a first launch, every aspect matters. Everything from the product listing to the initial response to a client inquiry is crucial. A Seller Central management service has been in business for some time and has a good idea of what strategies work and what don’t. They may give advice on how to improve your methods, steer you clear of hazards, and raise your profile and revenue. Plus, they can take care of the mundane stuff, so you can focus on strategic things like, say, the launch of your next major product.

That’s why I suggest you not go all alone during the first launch of a private label product but rather hire an account management service.

3-Product logo and label

Your products will stand out from the competition with a distinctive logo and label. Your product’s label determines the design of the box or package it comes in.

Costs can vary widely depending on where you make your purchase. Established advertising agencies can supply high-quality designs at a higher cost, but online marketplaces like Fiverr offer cheaper possibilities. We spend around $300-$400 on labels for each of our products. The price tag for the logo was around $100.

Last but not the least…

You can now proceed with the launch of your product. These are all the total costs to launch a private-label product on Amazon. You should pick what expenses you want to minimize and what you want to splurge on based on your financial plan.

Many sellers successfully land on a product’s price by first calculating all of the associated costs. This ensures that no other parts of the launch will be compromised. All of these expenditures should be made to guarantee a successful launch. However, attention must be paid to the above-mentioned necessary expenses.