Is a $25 net profit enough on eBay? I don't think so.

[e-lek-tron-ics]

On a $100 item, you would think a $25 net profit (after all costs) would be a great margin, but it may not be. If you offer free returns and if a buyer returns the item (in this case, buyers remorse) and let's say you are shipping this 12lb item across the country for $12.00. That means on the free return, your $25 net is now $13 net. (There's no keeping "up to 50%" for buyer's remorse. ) Now that same item has to be relisted again. It sells again to another buyer across the country. PAYPAL keeps $3 (again), free shipping is $12, you've just lost $2.00... Sure I could raise the price, but the market dictates the value of any item, free shipping or no free shipping. What are your thoughts?

[equid0x]

Read the thread...

When I sold here I spread losses, shipping materials, self insurance, and a few other costs across all sales. This way, prices were lower for the average customer and I still made my money back. 

25% on a $100 item? Not too great... better than nothing.

I would aim for 50% or higher to cover contingencies and reasonable profit. 

There are some on here who would shout down any such earnings but in the end... making anything is probably better than making nothing. 

I've known business owners who refused to sell XYZ over perceived value... went to the grave and never sold. At the end of the day, the item makes $0 if you never sell it, regardless of what its "value" is. 

Just something to keep in mind. 

[mvls1]

Your  profit is determined by your cost to obtain the item for sale. $25.00 is far too little margin on that item you are describing. Once in a while you will get an item that your margin will be lower like that. Either you paid too much initially or the value changed since you obtained it or you may have had it too long and just want to turn it. That should be the exception and not your normal business model, unless by chance you are selling large quantities of that item.

[mam98031]

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@luckythewinner wrote:

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@mam98031 wrote:

So you think sellers should mark up each listing price to accommodate the costs of a return in case it happens?

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No - because if you are accounting for return risk after you have already committed to your inventory, you are doing it too late. 

I think that before a seller even acquires an item, he should have already considered the likelihood and cost of a return as part of his decision about whether the item is worth selling.

In the OP's hypothetical example, the seller had already calculated his expected profit of $25 before he took the possibility of a return into account. IMHO that should have been part of his calculation before the item was even acquired. 

If the seller encountered an item with a high return risk, he might choose to buy it only if it had a higher expected profit to hedge against the risk. 

And if the seller found an item with a low return risk, he might accept a lower expected profit in accordance with his risk asessment. 

I was simply saying that returns and shrinkage need to be considered alongside other direct costs like acquisition, fees, and shipping. 

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Good, your previous post that I responded to had me concerned.  I was sure it was a misunderstanding.

[luckythewinner]

Good, your previous post that I responded to had me concerned. 

Don't get me wrong - if a seller were to commit to inventory without properly anticipating the return risk, then increasing his price to absorb the loss would be a perfectly logical and sensible strategy.

I was sure it was a misunderstanding.

It was not a "misinderstanding".

You mischaracterized my comments by asking whether I had said something that my post clearly shows that I did not say. 

[inhawaii]

I've known business owners who refused to sell XYZ over perceived value... went to the grave and never sold. At the end of the day, the item makes $0 if you never sell it, regardless of what its "value" is. 

Well said.

[inhawaii]

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@lintbrush* wrote:

I'm not going to invest $75 to make $25 on eBay.    And I wouldn't risk a $400 investment for a $500 sale.

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 I didn't say MAYBE sell it.  I said EASILY sell it.   I wouldn't risk $400 either.  But if  i KNEW i could get $500 for it (0 risk), i'd be all over it.  

People have their own way of doing things.

As far as your 10X/20X mark up.  Good for you! I need to sell stuff like that!

[inhawaii]

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@luckythewinner wrote:

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I was simply saying that returns and shrinkage need to be considered alongside other direct costs like acquisition, fees, and shipping. 

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... and food expiring (for those of you who sell edible items like me).

[chapeau-noir]

Sorry - no post, just fumble fingers.

[luckythewinner]

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@inhawaii wrote:

I've known business owners who refused to sell XYZ over perceived value... went to the grave and never sold. At the end of the day, the item makes $0 if you never sell it

Well said.

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But the item it can also provide immense pleasure if it is something you enjoy owning.

And sometimes that enjoyment is better than the money you would have gotten for it ... the money that you also can't take with you.  

[1tuna]

I sell many items for a $20 profit,25 is even better

next year I will sell over 2200 items,if I can make 30 a piece that is 66,000  profit

there is a big difference between listing and selling

I do not offer free shipping

i prefer to let my buyers set their own prices,that is how a no reserve auction works