The Revolving Door of Dollars

It’s an old adage, but it still holds true, and that’s “you have to spend money to make money”. The key is finding the balance between the two so when the door swings back in, it carries more cash with it than it took when it swung out.

Promotions are no different. Sure, you have to spend money on whatever promotional marketing you’re creating, but if you’ve hit your market and connected with your buyer, you’ll make that money back and then some. First, and arguably most importantly, you must know the costs to consider when running promotions.



The Cost of Business

Firstly, let’s take a quick look at FBA fees. If you sell FBA, you will always pay FBA fees. It’s just one of those facts of life. On the upside, these are consistent, so it’s not really a fee that you have to “consider”. No matter what promotions you run or what discounts you offer through those promotions, your FBA fees will stay the same price. This cost can be altered depending on how much storage space you need for your given amount of product. In other words, you pay less if you carry less.

Now, if you wanted to, you could avoid FBA fees by fulfilling the orders and storing them yourself (FBM), but that’s an entirely different beast.

FBM, or Fulfillment by Merchant, will end up costing you about the same as Amazon FBA fees with a few exceptions. Fulfilling your orders will incur extra cost when it comes to labeling, packaging, and refilling your printer so you can continue labeling and packaging. The longer you work with an FBM format, the more the cost of supply can add up, and may end up eating into your profits. FBM keeps you more in control of your fulfillment, but for a full-time business owner and depending on your scale, it can be a bit much to handle. Deciding how you want to divide your time will play into how you handle your storage and fulfillment, and at what cost.

“You have to spend money to make money”

Product Price

What is your “cost of goods“? This question is important to consider no matter how you plan to fulfill your orders.

How much does your product cost per unit to get shipped into Amazon?

This question relates directly to your profit margin. Taking the base cost of your goods and factoring in giveaways and other such promotions, you have to make sure that your profit margin exists so you will have enough money to reorder when you run out of stock. The absolute worst thing you can do when running any sort of promotion is run out of inventory after a successful campaign.


Product Price: More Than Just Physical

With “cost of goods“, there’s still some extraneous bills to consider.

What are your paid services? Are you using a keyword service? Are you using a launch service? Are you using any type of inventory management service or analytic software? If you are, it’s important that you take that number and calculate it into your overall product price. That is the true “cost of goods“. With that number in mind, it makes it much easier to balance the money you’ve spent on your product compared to the money coming in from your product sales.

It doesn’t matter how savvy you are, at some point, you will need a paid service to help your business along. Find the ones that work for you and don’t be afraid to invest, but always stay within your budget!

“Sure, you have to spend money on whatever promotional marketing you’re creating, but if you’ve hit your market and connected with your buyer, you’ll make that money back and then some.”

What Does It All Boil Down To?

In the end, all of these things boil down to the ultimate cost, and that’s TIME. All of this takes time. Every action you take with your business takes time, and as you grow and scale, it can become a balancing act between the “front end” and the “back end” of your business.

So, besides the money and the effort, make sure you’re time is invested in the right place. Hire the right people to take care of your periphery duties while you focus on the bigger picture if you can, and if you can’t, work until you can. Invest your time wisely, and don’t be afraid to spend it on the business and the people within it; it’s your greatest asset, and if used properly, will pay back huge dividends before it’s all said and done.