What to sell on Amazon with $500

Five hundred dollars is not much to start with on Amazon, and that is exactly what makes it a good budget to learn on. Enough to get a real product listed, too little to take a risk you cannot afford. The constraint keeps things simple, and simple is what you want on a first product.

We are going to look at what that budget actually buys, with one example costed from end to end. It will not be a fancy product, but it can be a first profitable one, and above all a full first run without losing your shirt.

What a $500 budget really changes

At this level every dollar counts. Start by taking out the launch costs, somewhere around $200 to $250 for photos, barcodes and shipping. That leaves $250 to $300 for the goods, which forces a product that is small, light and cheap to make.

In practice that points to a fairly specific profile: a selling price between $12 and $18, a low minimum order quantity, what people call the MOQ, around 60 to 120 units, and a realistic net margin near 18 percent once ads are paid for. At $500 you are not looking for the perfect product, you are looking for a simple one that moves.

The only math that counts: margin after ads

The classic beginner mistake is to work out the margin without counting advertising. At launch you have to pay to be seen. Take a product sold at $14.99 and look at what is really left once everyone has been paid.

Under three dollars a sale looks thin. But on a product that costs you $2.60 to make, that is a perfectly decent return, as long as you sell volume. You see it when you walk through the order.

A costed example, from the order to the first profit

Stay on that product, a small everyday accessory that sells all year round. Order 115 units and you are at roughly $500 invested: the goods plus the launch costs. The $3 of advertising per unit is not part of that $500, it comes out of your sales as they come in. Each sale leaves you $2.79 net. Sell the 115 units and the stock pays back its own cost plus about $321. The $200 of launch costs comes off that once, at the start, so you end up around $121 ahead on the $500 you put in, a return of roughly 24 percent on a first order. The next order does not pay them again. Give it one to two months to sell through, at a beginner's pace.

Why three rows? Because the same product can launch with more or less stock, depending on what you put in at the start. The first two fit inside your $500. The third one needs about $880: it is there for reference. The logic does not change, the same $2.79 stays on each unit, there are simply more units to sell before you see it.

One piece of advice to start with: at this budget more than any other, order small. Better to check that a product really sells and put your first profits into a bigger order, than to bet everything on the first try.

The mistakes that cost the most when you start at $500

With a budget this tight, the smallest mistake costs you real money. Four of them show up on almost every first launch.

1. Working out the margin before adsA margin that looks good on paper melts once advertising is deducted. The only number that counts is net profit, after everything.
2. Forgetting the launch costsAt $500, if you forget the $200 to $250 of photos, barcodes and shipping, you run out of cash before the first sale. That is the number one trap at this budget.
3. Going for a product that is too heavy or too expensiveA big item gets eaten alive by fulfillment fees. Stay small, stay light, stay under $18 of selling price.
4. Ordering too much to get a cheaper unit priceA high MOQ locks your cash into a product that has not sold a single unit yet. Start small, prove it, then reorder.

The words, in plain English

A few words come up over and over as soon as you talk about product research. Worth knowing them, you will run into them everywhere on Amazon.

MOQminimum quantity

The smallest number of units your supplier agrees to produce. The lower it is, the less cash you tie up at the start.

COGSproduct cost

What one unit costs you delivered to Amazon: manufacturing, freight and duty included.

ROIreturn on investment

What you get back compared to what you put in. A 24 percent ROI is $24 of profit for every $100 you put in.

BSRsales rank

Where a product sits in its category on Amazon. The smaller the number, the more it sells.

Frequently asked questions: what to sell on Amazon with $500

Can you start on Amazon with $500?

Yes, as long as you stay disciplined: a small, light product under $18, in a small quantity. $500 covers a first order and the launch costs, not a fancy product.

Which product should you pick with $500?

Something simple and cheap to make, with a low minimum order quantity (60 to 120 units) and a net margin around 18 percent once advertising is paid for.

How much can you make with $500 on Amazon FBA?

On the example in this guide, about $321 once the stock is sold, and around $121 left after the $200 of launch costs, on $500 put in. Those costs are paid once: the second order keeps the full $321. The numbers depend on the product and on how you run it.

Do you need more than $500 to succeed on Amazon?

No, but a bigger budget opens up higher-quality products and larger quantities. $500 is still a good budget to learn on, with a small amount at stake. Zero risk does not exist, the numbers are there to help you decide, the decision stays yours.