How I set my Pricing and Shipping and Why

[a1robotrepair]

First is Wholesale Price, example $10.00.

Next is what I need to make on an item to be profitable, ex. $20.

     Doubling you money is a good place to start.

Next, average cost of Shipping, ex 7.10.

     Today's target audience are Millennials, they expect free shipping and returns.

Next, average return rate 4% X $7.10 = $0.28.

     Again, today's targets.

Handling Cost, includes shipping materials., $0.62.

Next is PayPal and eBay costs, (20+7.1+.28+.62)X.13=$3.64.

Adding everything up, 20+7.10+.28+.62.+3.63=31.64.

     Now comes the hook.

Full price is $34.99. This gives me the option to put the item on sale for 10% off, $31.49.

     Know your target audience.

[lewisburggold]

Looks like you have your homework.  Best regards

[a1robotrepair]

And, BTW, using SmartPost or SurePost is Smart way to Surely get negative feedback for shipping time, not that USPS doesn't take too long, my experience, 7% late, 2% lost or damaged.

[getitright1234]

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@a1robotrepair wrote:

First is Wholesale Price, example $10.00.

Next is what I need to make on an item to be profitable, ex. $20.

     Doubling you money is a good place to start.

Next, average cost of Shipping, ex 7.10.

     Today's target audience are Millennials, they expect free shipping and returns.

Next, average return rate 4% X $7.10 = $0.28.

     Again, today's targets.

Handling Cost, includes shipping materials., $0.62.

Next is PayPal and eBay costs, (20+7.1+.28+.62)X.13=$3.64.

Adding everything up, 20+7.10+.28+.62.+3.63=31.64.

     Now comes the hook.

Full price is $34.99. This gives me the option to put the item on sale for 10% off, $31.49.

     Know your target audience.

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Also know your competitior. if your competitior is selling that same item for $19.99, is it worth your time/energy in sourcing the product and then trying to sell it for such a low profit margin.  

[a1robotrepair]

I agree!
That's step #1.

[dcintennessee]

You know, @a1robotrepair, if all sellers & potential sellers took a peek at this, it would be helpful. Thanks for sharing a reasonable business calculation for setting pricing & shipping. Based on some comments I see here, many/most never bother to do that math.

Then add this calculation: the time it takes to photograph and list the item, plus the time it takes to pack & ship. Let's say the seller is really, really good at all that and the item is easy to pack, so it only takes 30 minutes. That means the seller just earned the equivalent of about $20/hour. Sounds pretty good?

But not everything will sell, so some of the $10 purchases will get donated, discarded, whatever. The items we sell don't just magically appear...there also is significant time spent sourcing, ordering supplies, bookkeeping, etc. Using the 4% return calculation, you're banking funds to cover the inevitable free returns, at the 4% level. What if returns are significantly higher? Or what if for some reason several hit during the same month? Are the funds available to cover it? (Those are rhetorical questions, not aimed at you specifically. You're way ahead of the game by setting a benchmark for expected returns.) If any of the items returned are no longer in suitable condition to sell again? There's another loss.

Then the REAL kicker? Sales fluctations or total lack of sales. The person who thinks making "$20/hour" sounds good may get only 5 of those sales a week. Or fewer.  Assuming they're keeping good records (it seems many people don't), they may be in for a shock when looking at about 3 months of profit/loss. Bless their hearts if they don't bother to do the math until tax time, as was evidenced by several posts on here a couple of weeks ago. People suddenly realized they were essentially working for free. Or worse.

Back to your original post: Know your audience. Do the math.

[buyselljack2016]

I try to buy several things at a cost per item under $5. (many times  in lots where they are less than $1 each)

Sell for $15-$50, and skip all the inbetween math

All that thinking would make my head hurt.

[dcintennessee]

@buyselljack2016, that's more my kind of math too! I like the "add a zero" method for inexpensive items. If considering a $2 purchase for resale, I want to know that similar items are selling for at least $15-$20, before shipping. If not, walk away. I deal mostly with vintage items, and enjoy dinnerware the most. They ARE a pain in the backside to handwash (which can reveal flaws not evident on a dry piece of dinnerware), photograph, adequately describe, store, then safely pack and ship. There's more time involved, higher expense for shipping supplies (even though I get lots of freebies from a couple of friends who sell retail only), longer carrying-time, and more space required for inventory. I still do it, because I truly love it, and love working with those buyers.

[jason_incognito]

but what if the item sells for $149?  Would you still sell so low?

What if it sells for $20? Would you bother to list at a high price. 

See what price the market sets, then subtract your costs and if the money left is enough for you, list away. Otherwise why bother?

[ed8108]

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@buyselljack2016 wrote:

I try to buy several things at a cost per item under $5. (many times  in lots where they are less than $1 each)

Sell for $15-$50, and skip all the inbetween math

All that thinking would make my head hurt.

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Agreed, your way is the right way for most sellers.

[buyselljack2016]

Much of what I sell is multiples, and repeat multiples which allows me to usually know up front where my profit is going to fall.  

That works until some "clown" rolls in to kill the market for an item.  Sometimes things are selling well. (1200% profit) Then along comes someone that only lists at a 300-500% profit thinking they are doing great, and the bottom falls out.

Some of my early eBay selling was a vintage set of Noritake "Pheasant" dinnerware.  Pieced the set out for many buyers to fill in the missing/damaged items in their sets.  Lots of photos, and lots of double boxing.

[buyselljack2016]

Not for everyone, but a simple way for me to do it. I have a idea of what sells at a profit before I buy.

Made a purchase this month. $35 with my gas figured in.

Sales to date profit, $269.50. Expect about $200 more from the lot.

My time is not figured in.  Doing it keeps me occupied/amused/mentally active.

Another lot, not as good at $160, but with $400 cleared to date, and a projected $350 more, it will work out OK.

[emerald40]

Setting up your sweet spot in pricing is all fine and good.

But the question is what is your competition charging and will buyers pay your price.

[percgrabbe-0]

First is Wholesale Price, example $10.00.

Next is what I need to make on an item to be profitable, ex. $20.

     Doubling you money is a good place to start.

Next, average cost of Shipping, ex 7.10.              ---(NJ to California can be as high as $15 if its Parcel Post and over 1lb). 

     Today's target audience are Millennials, they expect free shipping and returns.

Next, average return rate 4% X $7.10 = $0.28.    --------- Everyone likes free returns

     Again, today's targets.

Handling Cost, includes shipping materials., $0.62.     -------you cant charge handling if you offer free shipping and many customers wont buy unless you offer free shipping

Next is PayPal and eBay costs, (20+7.1+.28+.62)X.13=$3.64.  -------its way easier to figure its 10% EBAY fee and 5% PAYPAL fee so you lose 15% and tack on another 5% if you are being charged EBAY fee for postage (another reason to offer free shipping)

Adding everything up, 20+7.10+.28+.62.+3.63=31.64. ---------- is your competition selling the item for $20 and free shipping (better make sure)

     Now comes the hook.   -----------------?????????????????????

Full price is $34.99. This gives me the option to put the item on sale for 10% off, $31.49.

     Know your target audience-----------------------------------  again if another EBAY competitor is selling it for $15 or $20 free shipping you are wasting your time many buyers can be super cheap

The better approach is :

1. Look up the item sort by LOWEST PRICE find what the lowest price is for the item on ebay from other sellers

2.  If their lowest price is below your wholesale price then sell it at a loss maybe a dollar or two less than lowest and get rid of it ---its not profitable to sell it

3.  If the price is higher than your wholesale --- mark it a few dollars less than your competition and hope you make a profit and can cover fees

You see the whole flaw in your idea is that items are only worth X--- some collectibles and other items can sell for 10x or 20x what you paid for them if you know what you are selling and dont have a lot of competition for a rare item!

[ymeagainlord]

I especially like your #2. Something I try to do but sometimes it's hard to realise a purchase was an oops and "let it go".

When purchasing I usually aim for a x5 - x 10 range but am sometimes pleasantly surprised when something sells for far more.

As far as people who try to "figure in their time spent" I figure if the tax man doesn't allow the cost of labor (which would be hourly value of time spent) paid to yourself under COGS then I'm not going to either = )