Deciding to sell your products on Amazon is a big one – a worthwhile decision if you’re looking to grow your business. However, there are several things to consider when choosing the type of Amazon Account. Should you choose a professional seller account or an individual seller account? What are the pros and cons of each?
Each type of account comes with advantages that make it worthy of your consideration, but at the end of the day, it’s all about what your needs are. By this, I mean, what tools you will need and how many sales you expect to have each month.
A quick look at the differences
Amazon Individual Seller Account
- No Seller Tools: No access to Amazon’s helpful selling tools & reports
- No monthly cost: There is no monthly subscription
- Per item fee: You pay a per item fee ($0.99), in addition to the other seller fees
- Can’t use FBA: You need a professional account to sell your products via Amazon FBA.
Amazon Professional Seller Account
- Seller Tools: You will receive access to Amazon Seller Central which includes tools that allow you to analyze your Amazon sales and more. (Inventory tools, batch upload, feeds & reports, etc.)
- Monthly Fee: With the pro seller account, you pay a monthly subscription fee ($39.99). You need to pay this fee, regardless of whether you sell anything or not.
- No per item fee: As opposed to the individual seller account with the pro account you do not have to pay a per-item fee. All the other normal Amazon marketplace fees are the same.
- Utilize FBA: With a professional account, you can utilize Amazon’s world-class fulfillment center (FBA).
In short, individual seller accounts are best for people on a budget, low volume sellers, those just starting out or those just selling on Amazon as a hobby. A professional seller account is more for people who want to build a business on Amazon whether they are a small, medium or large business.
At a certain point, the deciding factor on whether you will choose a pro seller account or an individual seller account comes down to economics (price). At a certain point if you are selling as an individual seller account and you reach a certain threshold (40 items per month) it becomes more cost effective to choose a pro seller account.
When to choose each seller account (cost analysis)
- Over 40 items a month: It is more cost effective to choose a professional seller account
- Under 40 items a month: It is more cost effective to choose an individual seller account
A detailed look at the differences
When deciding between which seller plan to choose, the price is usually the biggest deciding factor for most people. However, there are several other things to consider when choosing which seller account is right for you. For example, look at Amazon’s selling plan comparison:
Everyone has different needs: Before you make a decision about which kind of Amazon account you want to sign up for, you need to know what it means to be an individual or professional seller on Amazon. First of all, it’s important to note that both are suitable for small and medium businesses.
Choosing one over the other won’t necessarily hurt your business as long as you’re choosing the one that makes the most sense for you. That’s the key point – everyone has different needs.
Do you plan on selling over 40 items per month?: As a general rule, individual accounts are ideal for sellers who plan to sell less than 40 items per month, according to Amazon. There is no monthly subscription fee, which is considered positive for many business owners who are just getting their feet wet or giving Amazon a try for the first time.
However, the second you sell over 40 items a month, the professional seller account subscription pays for itself. So as soon as you sell over 40 items a month, you want to switch over to a professional seller account.
Fee differences when considering your sales volume: However, for each item you sell, you’ll pay an extra fee of $0.99 (on top of the basic variable closing and referral fees) every time you sell an item.
If you plan to sell more than 40 items per month, Amazon itself recommends signing up for the professional seller account. While you do pay a monthly fee of $39.99, you don’t have to pay that extra $0.99 every time you sell an item.
Which Account Offers More Advantages?
Professional seller account:
- Buy box: If you want to have your items featured in the buy box, which would result and much more sales, you will need a professional seller account. If your product is featured in The buy box, all this means is that when customers click add to cart or buy now, it will be your item that they are buying. This results in a higher conversion rate
- Collect Sales Tax: collecting taxes can be very tricky with Amazon FBA (the issue of nexus), you can set up tax collection based on different locations
- Bulk upload: the book upload feature is a very nice feature that you can use to book upload inventory whether you’re selling used items or new items, using Excel.
- Seller Tools: You get access to Amazon seller tools.
- FBA: You can sell your items on Amazon FBA
Individual seller account:
- Pay as you go plan: what the individual seller account you can use their basic listing and Order management tools. These are fine for a listing one item at a time, but if you want to do bulk uploads you will need a pro seller account.
- No sales tax: You cannot set up territories to collect sales tax with an individual seller account.
Unless you plan to sell only a few big-ticket items each month, the professional account does offer more advantages. In addition to dropping the extra fee, you can sell in Amazon’s restricted categories, and you have access to more seller reports. You can upload multiple products at the same time with a spreadsheet, use third party services, and take advantage of Buy Box advertising.
Individual accounts can’t upload items to categories like automotive, clothing and accessories, gourmet and grocery food, jewelry, luggage, shoes, and many more. Amazon also sets the shipping rate for individuals. Experts like to point out that starting out with a professional account may motivate you to sell, sell, sell to reach that $40 threshold and make your monthly subscription fee pay for itself.
Which One Should You Choose?
Cost of each plan:
- Individual seller account: $0.99 per item, no monthly cost
- Pro seller account: $0.00 per item, $39.99 monthly cost
Selling up to 40 items a month (get an individual seller account)
- Individual seller account: 40 items sold per month = $0.99 x 40 = $39.60.
- Pro Seller account: 40 items sold per month = $0.00 x 40 = $0 ($39.99 for monthly subscription)
Selling over items a month (get a pro seller account)
- Individual seller account: 40 items sold per month = $0.99 x 41 = $40.59.
- Pro Seller account: 40 items sold per month = $0.00 x 41 = $0 ($39.99 for monthly subscription)
Just go for it or bootstrap to success?
Just going for it: If you still aren’t sure which one to choose, it may be best to start with the professional seller account. You can always downgrade if you don’t like it, and, of course, if you’ve started as an individual seller and don’t like it, you can upgrade.
The benefit of choosing a professional seller account before you have sold your first product is you will be able to learn all of Amazon’s tools and seller central. Even if you don’t sell over 40 products in your first month, the extra cost can be worth it simply to learn their tools. This experience and initiation to Amazon seller tools will be beneficial down the road when you begin to expand.
Bootstrap it: 40 bucks a month isn’t a lot, but when you are growing your business, you want to be smart about allocating your capital to starting the business. Maybe that $40 per month would be better spent on another aspect of your business.
On the other side of the token, if you just want to get your feet wet and start selling on Amazon, there is nothing wrong with starting slow and starting with a free individual seller account. In fact, this what I did when I started selling on Amazon over 10 years ago. You can always upgrade in the future to a professional seller account, as I did.
Both types of sellers can still take advantage of many of Amazon’s features, like creating new catalog listings and putting listings on hold when you need to take a break and won’t be able to handle the fulfillment of orders. And at the end of the day, no matter which one you choose, you still have to deal with the same tasks associated with selling on Amazon!
Let me know your thoughts! Which account did you end up choosing?