Lesson 2 of 10

Startup Expenses

What it costs to start: equipment, software subscriptions and the stock budget, listed for both the US and the UK.

Arbitrage has a lower entry cost than most ways of selling online, but it is not free. This lesson lists what you actually have to pay for before the first unit ships, so you can decide on a budget rather than discovering the costs one at a time.

The four things you are paying for

The seller account. A Professional selling plan is a monthly subscription. At the time of writing it is $39.99 a month in the United States and £25 a month plus VAT in the United Kingdom; the current rates are on Amazon's selling pages (US, UK). The next lesson but one covers why Professional rather than Individual.
Stock. This is the real number, and it is the one you control.
Prep equipment. Printer, labels, tape, scales, and packaging materials.
Shipping to Amazon. Boxes, and the carrier cost of getting them to the fulfilment centre.

How much stock money to start with

You can technically start with around 100 in your currency. The lesson recommends closer to 500, and the reason is worth understanding, because it is not about buying more for its own sake.

With a very small budget every purchase has to be right, which means you turn down deals that are good but not perfect, and you wait. With a larger budget you can take several ordinary deals at once. That matters because arbitrage works on volume of small margins, not on finding one exceptional item. A wider spread also protects you: if one product sells slowly, the others are still moving, and you learn from four outcomes instead of one.

The other reason is cash flow. Amazon pays out on a schedule, not on each sale. Money spent on stock is unavailable until that stock sells and the payout lands, so a budget that is entirely committed leaves you unable to act on anything for weeks.

Prep equipment: use what you have

This is where people overspend before selling anything. Almost none of it needs to be new or specialised at the start.

Printer. Any printer that produces a clean, scannable barcode will do. Test the one you own before buying: print a label sheet, scan it with your phone, and check the ink does not smudge. A mono laser is the right tool and is cheaper to run once you print labels regularly, so treat it as an early upgrade rather than a purchase you make before the first shipment.
Labels. These you do have to buy. Amazon expects a specific label per unit, in one of a few standard sheet formats, and a hand-cut sticker will not scan reliably.
Poly bags and bubble wrap. Optional at first, needed eventually. Some categories have packaging requirements, and some items simply will not survive the journey unprotected. Poly bags used for FBA need a suffocation warning on them once the opening reaches 5 inches.
Tape and scales. Tape for sealing boxes. Scales because you have to declare box weights, and guessing causes problems at the other end.

Boxes are the cost you do not have to pay

Shipping boxes are a recurring expense that is easy to avoid at the start. Larger shops receive stock daily and throw the boxes away. Ask at the customer service desk of a supermarket or a large retailer whether you can take some. Most are glad to hand them over, because it saves them disposing of them.

Two conditions: the box has to be strong enough to survive a courier network, and any old shipping labels or barcodes on it must be removed or covered completely, or the wrong label gets scanned in the warehouse.

A worked starting budget

Putting it together, a realistic first month looks roughly like this, in either dollars or pounds:

Seller account for the first month: about 40.
Labels, tape, poly bags: a small one-off, under 50 if you already own a printer.
Stock: 100 at the absolute minimum, 500 if you want room to work.
Shipping to Amazon: varies by weight and distance, and is often included free or heavily discounted through Amazon's partnered carrier rates.

The equipment costs are one-off. The account fee is monthly. The stock budget is the only one that scales with the business, and it is the only one worth thinking hard about.

What to do before the next lesson

Decide on a stock budget and write it down. It should be money you can leave tied up in inventory for a couple of months without difficulty. Then check what you already own from the equipment list, so you only buy what is genuinely missing. The links under the video point at the specific items used in the course, in both the US and the UK.