Do The Math

[namtrag1]

Lets say a seller wants to profit $10,000 per month.

conditions:

sale price of widget = $35

Cost of Widget = $25

_________________________

Gross Profit = $10

eBay fee per widget = $3.25

Paypal fee per widget = $1.32

Shipping Fee per widget = $4.00

__________________________________

Expense per each widget = $8.57

Gross Profit per widget  $10.00

- Expense per widget      $8.57

_____________________________________

Net Profit before taxes = $1.43 for each widget

So to make $10,000 profit per month you must sell 7000 widgets per month

to sell 7000 widgets per month you must stock about 14000 widgets.

14000 widgets x $25 = $350,000 of inventory.

So who has $350,000 to stock the warehouse ?

And who can sell 7000 widgets per month ?

This does not include the 30 day  Free returns that eBay wants us to do.

This does not take into account any employee wages either.

And what happens when eBay cathes a "cold" and does something majorly stupid that costs sellers dearly in lost sales ?

[zamo-zuan]

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@soh.maryl wrote:

I am pretty sure no one here has questioned your credibility.  We are simply attempting here to answer a question from another poster.  

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Sorry if it's not clear in what I said in this topic alone, but the person I am responding to has regularly attacked my credibility on every topic I've been a part of for weeks. I respond to his false claims with correct information, then he goes in another topic and says the same misinformation, blames and shames sellers for things when I have evidence that the sellers have legitimate issues, etc.

It's always the same handful of people, arguing the same misinformation, and blaming sellers for things that are not their responsibilty...

[fuzzface50]

First i will say i only read the opening post but just wondering how many hours the op needs to work a regular job at like a store to make $10,000 a month?

that's what i thought,

now ebay doesn't look quite as bad.

[gopetersen]

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@thatsallfolks wrote:

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@gopetersen wrote:

For years I was saying on the forum that sellers need to mark up at least 10 times and I was raked over the coals for that, but if you do the math AND if you count your time, that's the minimum you need to mark up to actually make money.

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People disagreed with you because they can do it for a lot less than 10x. I spend between 3 and 4 hours per week on my eBay business; last year I banked nearly $10k in pre-tax profit, with an average sale that's only 3x my acquisition cost. Pull out your calculator and check my hourly wage.

...

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I can't respond to your post because I have no idea what you sell, how much time you spend driving around (or surfing the Web) looking for it, how many listings you have and how much time you spend photographing the items, what price range you sell in, or anything else about your business. If your items sell in the $80 to $200 range, then the markup can be less, as I said in my original post... it's not a linear scale.

You could be a drop-shipper for all I know. You could be making it up.

So, while I appreciate you providing your perspective, there's really no way to evaluate whether it is accurate.

No offense to you, you might be telling the truth, but other people have made claims like this and we eventually discovered the picture was quite different from the one they painted. It turned out one of them was simply selling stuff that they inherited (in other words, they didn't pay anything for it), so it wasn't really a business profit, it was cashing in their inheritance. Another person never mentioned that their wife and two children were doing 80% of the work (and he didn't mention all the time THEY were putting into it, which meant, overall, that they were each earning about $2 an hour). So... I understand the need for posting IDs but... they can hide a lot.

[lintbrush*]

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@gopetersen wrote:

For years I was saying on the forum that sellers need to mark up at least 10 times and I was raked over the coals for that, but if you do the math AND if you count your time, that's the minimum you need to mark up to actually make money.

Buy for a dollar, sell for ten, twenty is better, but ten is minimum.

Most eBay sellers don't count their time. There are a lot of people looking for extra pocket money or who are retired, on pensions, and they say out front they don't count their time. There are also many who are selling things they don't use any more and simply trying to recoup a bit of what they originally paid, but if you are trying to earn a living or run at least a minimal business, the markup needs to be 10x or more. It's not quite a linear scale, the markup can be less on higher-priced items, but if it's in the under-$60 category, you really need to go for 10x.

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While 10x is good for lower priced items, I don't agree with that statement entirely.

Example:  I bought a Flowers of the Season Lladro at auction for $250 or $275 plus 12% buyers premium.  I sold it for $850.  Net profit was over $400.  No where near 10x, but a nice chunk of change.

I bought $300 of Mottahedeh at auction (total spent) and sold it for $1300.  

Spent $400 on some Sterling flatware - sold for $950.

I could go on.

10 to 1 is a great ration if you're buying $4-$5 items, or a guaranteed fast seller $1 cost item in mass quantity that takes no time to pack.

But when you're looking at bigger number net off of a single item, you may need to make  a heftier investment.

However, in no way, shape or form would I spend $25 to make $1.50 even if I were selling 100 day.   The investment (and subsequent work) is just too high for too little return.  

[thatsallfolks]

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@gopetersen wrote:

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@thatsallfolks wrote:

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@gopetersen wrote:

For years I was saying on the forum that sellers need to mark up at least 10 times and I was raked over the coals for that, but if you do the math AND if you count your time, that's the minimum you need to mark up to actually make money.

---

People disagreed with you because they can do it for a lot less than 10x. I spend between 3 and 4 hours per week on my eBay business; last year I banked nearly $10k in pre-tax profit, with an average sale that's only 3x my acquisition cost. Pull out your calculator and check my hourly wage.

...

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I can't respond to your post because I have no idea what you sell  Doesn't matter

how much time you spend driving around (or surfing the Web) looking for it  Yes, you do. I told you exactly how much time I spend. That's my TOTAL time expenditure.

how many listings you have  Doesn't matter.

and how much time you spend photographing the items  That's included in the time info already given

what price range you sell in, or anything else about your business. If your items sell in the $80 to $200 range, then the markup can be less, as I said in my original post... it's not a linear scale.  My average is $55; so, since it's quite a bit less than $80, according to you, I need 10x. Wrong

You could be a drop-shipper for all I know. You could be making it up.  You could be making up your cost-to-selling price ratio. We have no idea how much you're actually making.

No offense to you, you might be telling the truth, but other people have made claims like this and we eventually discovered the picture was quite different from the one they painted.  You could also be one of those other people. We can't see your books.

It turned out one of them was simply selling stuff that they inherited (in other words, they didn't pay anything for it), so it wasn't really a business profit, it was cashing in their inheritance.  I'm sellling stuff that I buy.

Another person never mentioned that their wife and two children were doing 80% of the work (and he didn't mention all the time THEY were putting into it, which meant, overall, that they were each earning about $2 an hour).  I'm solo. My wife has her own business (not eBay). And I have a full-time job, so I don't have time to fritter away on driving around looking for stuff.

So... I understand the need for posting IDs but... they can hide a lot.  And your selling ID can hide almost as much.

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Believe me or don't. You can't back up your statements any more than I can. But if a seller can acquire things efficiently, they can make a nice hourly wage at 3x (which you'd know if you had done the calculations on the info I already gave you).

[gopetersen]

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@lintbrush* wrote:

---

---

While 10x is good for lower priced items, I don't agree with that statement entirely.

Example:  I bought a Flowers of the Season Lladro at auction for $250 or $275 plus 12% buyers premium.  I sold it for $850.  Net profit was over $400.  No where near 10x, but a nice chunk of change.

I bought $300 of Mottahedeh at auction (total spent) and sold it for $1300.  

Spent $400 on some Sterling flatware - sold for $950.

I could go on.

10 to 1 is a great ration if you're buying $4-$5 items, or a guaranteed fast seller $1 cost item in mass quantity that takes no time to pack.

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Well, that's what I said, isn't it? That it's not a linear scale, the markup can be less for higher-priced items.

[gopetersen]

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@thatsallfolks wrote:

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...

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Believe me or don't. You can't back up your statements any more than I can. But if a seller can acquire things efficiently, they can make a nice hourly wage at 3x (which you'd know if you had done the calculations on the info I already gave you).

---

Of course I can back up my statements. I have a record of every transaction I've ever made on eBay, purchases as well as sales. I know down to the penny what I've paid for items, what I've earned, remaining inventory, and what I've handed over to Uncle Sam, including the time I've put into it (since gas and auto expenses are deductible I have records of those and I keep a log of time).

I'm meticulous about keeping track. I can even tell you exactly how each item was packaged right down to the weight (down to 1/10ths of an ounce), size, and color, because I've programmed the computer to add the information for me. If you asked me what I sold on August 14th, 2007 and how I packaged it, it would take me about four minutes to find out.

......................................

One of the things I've learned from talking to sellers is that many of them don't count the cost of unsold items. They claim they earned $2,000 selling 100 items (which sounds good, it's a 20x markup if they paid $10 each) then you find out they had 300 items listed but 200 items didn't sell. If they sourced them for $10 each, that reduces the profit to nothing, but they still had to find, photograph, list, and manage 300 items. There are acres of storage lockers and houses full of unsold eBay inventory. I've seen some of them (jobs are scarce in this town so there are many eBay sellers).

Ask sellers about their sell-through. There are whole threads about it. I used to have 100% sell-through. It's still reasonably good (about 80%) BUT the big difference is it takes much longer. In the early days if I purchased a book for $5 and listed it for $50, it would be sold in a week. Now, if I purchase a book for $5 and list it for $8, it might sit for three months before it sells.

If sell-through is only 50% or 25%, the unsold items (and the time it took to list them) have to be deducted against those that sell. This only applies to businesses, of course. Downsizers and hobbyists usually give away the items that don't sell.

[reallynicestamps]

@dtexley3

egg-zactaly, if you can't at least double the cost you are wasting your time.

And that cost better include your time and all your fees plus overhead.

Doubling your procurement cost can still lose you money if your wages, fees and overhead are as high or higher than what you paid your supplier.

[reallynicestamps]

@southern*sweet*tea

How do you get your cost of a widget to be ZERO?...

People give me boxes of books and booklets because they know I collect them.

I buy my books, but I play with foreign exchange.

I can buy most of my vintage paperbacks vor $1.00, but I'm in Canada and that $1.00 is 75-80cents USD.

Then I sell for $10USD, which is $12-14 CDN.

I have an almost unlimited source of discount mint postage, so I can offer Free Shipping to Canada and the USA.

I also get some interesting ephemera in the estate lots DH is constantly buying. Those are effectively free.

[lja440]

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@thatsallfolks wrote:
Even if I only wanted to make $1,000/month, I wouldn't buy for $25 and sell for $35, and I surely wouldn't give away free shipping.

That's bordering on running a charity.

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Except for media items which have a good S/H discount on multible purchases, all of mine are listed with free shipping. This is of course factored into my starting prices.

[lja440]

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@retrose1 wrote:

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@gopetersen wrote:

For years I was saying on the forum that sellers need to mark up at least 10 times and I was raked over the coals for that, but if you do the math AND if you count your time, that's the minimum you need to mark up to actually make money.

Buy for a dollar, sell for ten, twenty is better, but ten is minimum.

Most eBay sellers don't count their time. There are a lot of people looking for extra pocket money or who are retired, on pensions, and they say out front they don't count their time. There are also many who are selling things they don't use any more and simply trying to recoup a bit of what they originally paid, but if you are trying to earn a living or run at least a minimal business, the markup needs to be 10x or more. It's not quite a linear scale, the markup can be less on higher-priced items, but if it's in the under-$60 category, you really need to go for 10x.

---

The 10x math will never work for the retail sellers who are buying higher dollar merchandise wholesale to sell retail.  Thanks to race to the bottom pricing ebay encourages and the Asian infiltration of manufactured new merchandise, a basic retailer is lucky to get 2 times what they have in it before expenses.  Especially if they are selling items priced over $10.00.

Secondary market sellers can pick up some items out of free boxes or get goodies for less than a buck that they can flip for 10 - 100 times what they have into it, but that is not consistant money as that merchandise can not be found consistantly.  I am really happy I picked up something out of a free box that I flipped in 5 days for $30, but I know that the odds of my finding that again are so low, they wouldn't pass under a snake belly.

I specialize in 40+ year old vintage clothing, which is appearing less and less in the garage sale/estate/rummage sale supply routes.  So I have to either face shrinking inventory aqusition in the next few years and with that less sales OR expand my knowledge base and find different things in different categories to resell.  The second is working out well for me.

One of the things I have been living off of is the fact that most resellers in my vintage category will often beat me to the good stuff and will pick the high dollar stuff/quick flip items out of a closet and leave the rest because they don't want to waste their time on stuff they can't sell for $50 or less.  So they bought 5 items and paid $100 for them and will price them all at least $50 each and will wait months until a collector is willing to pay that for one of them.  And they leave 400 items that I can pick up for the same $100 (because no one else is interested in doing the work) and sell at least half of them to people looking for clothing to wear or craft or costume for $10- 20 each and make my money back in a week with the rest being pure profit.

When you do the math - it looks like the high dollar flipper is better off with less work and storage and fees - but the last of my competitors who used that plan is getting a full time job and is getting out of online selling because they don't make any money, and I am still happily packing up my $5, 10, 20 and up items every day for a profit margin my competitors only dreamed of.

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I do some vintage clothing. But yeah the market is waining. Oh, not the demand but the available items. I kinda blame manufacturers for this. Take vintage T's, Seriously I have a drawer full that a I still wear. Last week one of my vintage Kiss T's finally gave out, that puppy was 30 years old if a day I will still keep it and use the graphic in an art piece. I wouldn't doubt that it had been washed at least a few hundred times. Today's T's I am lucky to get a years wear out of and if I don't buy them at a concert or quality venue they will twist after washing. I have a picture of me riding in a Endurance Race in that Kiss T back in the 80's covered in mud and grime (it rained), number pinned on it and everything, a modern T would have probably been shredded and ruined, I just tossed it in the wash and it was fine.

[lja440]

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@fuzzface50 wrote:

First i will say i only read the opening post but just wondering how many hours the op needs to work a regular job at like a store to make $10,000 a month?

that's what i thought,

now ebay doesn't look quite as bad.

---

Yeah, I bring in roughly $800 per month clear at my B&M's (as close as I get to a real store). 

On average I spend a couple hours a week at each but unless I am doing a total inventory swap only about 15 minutes is actual work, the rest is BSing with the owners and other vendors.

Inventory is usually a half hour to an hour while watching TV in the evening if I have new stuff to price. I actually have a couple thousand records priced and ready to go so this is not critical.

I check auctionzip.com for auctions in my area for new inventory and may go to one a couple times a month depending on what is offered. 

Over the past 6 months I have set up 2 new shops from the ground up and that was time consuming especially since drive time they are 30 minutes and 50 minutes from my home. Most of the time spent was in constructing displays for the inventory (something you don't have to do on eBay). Heck the second one is in an old Bowling Alley and we had to fill in gutters on the lanes and rip out ball returns.  We are still mulling over what to do with the snack shop portion of the venue. We know we don't want the fryers(too messy) and are leaning toward a sweet shop. All we do know is we definitely want an area where shoppers that have husbands or others that are not that interested can chill out have a seat and a cup of coffee so they are not rushing the buyers out. Our old shop had no where to sit except on the walkway outside and was stuffed to the gills, this place is 3 times as big.

[retrose1]

I do some vintage clothing. But yeah the market is waining. Oh, not the demand but the available items. I kinda blame manufacturers for this.

I blame the must buy new attitude that the people adopted in the past 30 years because they have allowed marketing to control them and not common sense.

Since the 80s, parents are having their kids throw away everything that they haven't used in a year, mostly because they aren't going to  have more kids to pass those items down to, and those kids grew up and carry that old is bad new is good attitude to their kids.  Since everyone is buying all new all the time, manufacturers realized that merchandise only needs to have a short shelf life so they make it cheaper so people can by more.  And so the cycle of poor quality and less heirlooms was created.

[thatsallfolks]

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@gopetersen wrote:

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@thatsallfolks wrote:

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...

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Believe me or don't. You can't back up your statements any more than I can. But if a seller can acquire things efficiently, they can make a nice hourly wage at 3x (which you'd know if you had done the calculations on the info I already gave you).

---

Of course I can back up my statements. I have a record of every transaction I've ever made on eBay, purchases as well as sales. I know down to the penny what I've paid for items, what I've earned, remaining inventory, and what I've handed over to Uncle Sam, including the time I've put into it (since gas and auto expenses are deductible I have records of those and I keep a log of time).

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Great. That's commendable. But unless you're willing to share your Schedule C with the world, you can't prove any of that here. And even then, anyone can mock up a tax form to look any way they want.

You can prove everything to an auditor, but you can't prove any of it on a message board. So again, the statements of a posting ID are just as provable as yours are.

[lja440]

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@gopetersen wrote:

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@thatsallfolks wrote:

---

...

---

Believe me or don't. You can't back up your statements any more than I can. But if a seller can acquire things efficiently, they can make a nice hourly wage at 3x (which you'd know if you had done the calculations on the info I already gave you).

---

Of course I can back up my statements. I have a record of every transaction I've ever made on eBay, purchases as well as sales. I know down to the penny what I've paid for items, what I've earned, remaining inventory, and what I've handed over to Uncle Sam, including the time I've put into it (since gas and auto expenses are deductible I have records of those and I keep a log of time).

I'm meticulous about keeping track. I can even tell you exactly how each item was packaged right down to the weight (down to 1/10ths of an ounce), size, and color, because I've programmed the computer to add the information for me. If you asked me what I sold on August 14th, 2007 and how I packaged it, it would take me about four minutes to find out.

......................................

One of the things I've learned from talking to sellers is that many of them don't count the cost of unsold items. They claim they earned $2,000 selling 100 items (which sounds good, it's a 20x markup if they paid $10 each) then you find out they had 300 items listed but 200 items didn't sell. If they sourced them for $10 each, that reduces the profit to nothing, but they still had to find, photograph, list, and manage 300 items. There are acres of storage lockers and houses full of unsold eBay inventory. I've seen some of them (jobs are scarce in this town so there are many eBay sellers).

Ask sellers about their sell-through. There are whole threads about it. I used to have 100% sell-through. It's still reasonably good (about 80%) BUT the big difference is it takes much longer. In the early days if I purchased a book for $5 and listed it for $50, it would be sold in a week. Now, if I purchase a book for $5 and list it for $8, it might sit for three months before it sells.

If sell-through is only 50% or 25%, the unsold items (and the time it took to list them) have to be deducted against those that sell. This only applies to businesses, of course. Downsizers and hobbyists usually give away the items that don't sell.

---

I sell mainly records, books, glass, occasionally clothing, vintage tools and housewares. Sell through on average on eBay and other on-line stores is around 80%

In the B&M it is vastly under that, but then this is also where I have more obscure items.

Example is I have a gentleman who each and every week comes in and buys one, just one, classical album. These do not sell on eBay and rarely on Discogs. Yes it will take years for him to buy my whole classical inventory but he isn't the only classical buyer that I have at the B&M. 

I guess you could say I fall into the hobbyist category as I do give away a lot of albums. We do art on some but I get a lot of unsalable albums and I have a girl that comes in and she makes cosplay outfits. We found that they are good for making armor pieces (yes I tought her how to work with it and not breath in the fumes when cutting tham with a hot knife). Albums in good condition that will not sell, Christmas, and over prodused artist like Barry Mannalow get donated to the Habitat or Hospice stores.