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?

[thevintagesilvershop]

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@e-lek-tron-ics wrote:

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?

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This is why you look at ALL your sales, because you spread your losses over ALL sales not just one sale at a time. My pricing for ALL items includes a loss factor. 

[southern*sweet*tea]

Depends on what you're selling, how you're shipping, and who you're selling it to.

I've been selling online for 16 years. For every single item I sell, I set back a small amount to cover future loss.  I sell low demand items that I get for pennies. Most of my items are inexpensive to ship. I've had one return in 16 years and one item that got lost and never arrived to the buyer.  These costs were already accounted for and covered. Needless to say I've never lost a penny selling online. 

All of these costs need to be included in your item price - all fees, all profits, acquisition costs, shipping materials, loss coverage, your time...and all of these costs are buyer paid.  If you cannot cover ALL of these costs in your item start price, you are either selling for too low a price or you are paying too much for your inventory. BTW - my acquisition cost for an item I'm selling for $100 would be no more than $5.

So is a $25 net profit enough on Ebay? For me, yes. For others, maybe no.

[mam98031]

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@e-lek-tron-ics wrote:

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?

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A 25% profit is a great profit margin on most things.  It will of course vary, but it is a good place to be.  Many businesses when bidding on some type of job will build in a profit margin of between 12 and 18% depending on the job.  

You are trying to build into one sale the cost of a return if it happens on that sale, which isn't the correct way to look at it.  Unless everything you sell gets returned, which I'm confident is not the case.  As others have told you, you need to look at your return costs as an overall cost.  Over ALL sales.  Not just one sale price.  It's a cost of doing business.  So you may need to increase pricing on everything by a percent or two to accommodate the costs of returns as they come up.

For me.  I'm tracking these costs closely over the last quarter of this year.  In January when it comes time to increase pricing due to the USPS increases, I'm going to then do any price adjusting I need to do on my products at that same time.  So while I track all my costs all the time, I'm just paying a little more attention to it during this final quarter of the year in preparation of price increases come January.

[skipbales]

love your quotes

[myoasisjewels]

it all depends on how much time did you spend sourcing the item, taking pictures and listing the item? did you take these factors into consideration when calculating your profit?

[southern*sweet*tea]

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@skipbales wrote:
love your quotes

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Thank you!

[corvettestainless]

25% net would be after taxes? 

[skipbales]

25% gross profit is terrible, net profit is good. Returns are part of what you have to consider to compute net profit. Of course it is an overall average, not a per sale computation. It doesn't matter is you lose money on a sale once in a while if you make a net profit overall. But if your losses eliminate your total net it is time for a change. I closed one of my eBay stores for that reason. Small items huge shipping advantage for China, etc. China can sell an item for $2 and ship it from China to a home at a profit. My minimum shipping for the item was $2.20. How is that possible? China must have a huge volume agreement with the USPS for containers that get broken down and parceled out.

[mam98031]

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@skipbales wrote:
25% gross profit is terrible, net profit is good. Returns are part of what you have to consider to compute net profit. Of course it is an overall average, not a per sale computation. It doesn't matter is you lose money on a sale once in a while if you make a net profit overall. But if your losses eliminate your total net it is time for a change. I closed one of my eBay stores for that reason. Small items huge shipping advantage for China, etc. China can sell an item for $2 and ship it from China to a home at a profit. My minimum shipping for the item was $2.20. How is that possible? China must have a huge volume agreement with the USPS for containers that get broken down and parceled out.

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Thanks for the observation, but I didn't say anything about "gross" profit.  I am aware there is a difference between gross and net.

[buyselljack2016]

Most items that I sell are well below the $100 selling price.

I, like many others source at a price that will yield a good profit margin. For me, most of those items result in a 300% or greater profit. (some 1000% +) I have some "fillers" (low cost, not so much profit) to keep the total sales #'s up, but they still sell at + $ side.

The last sales that I had in the $100 (including shipping) area came out with profits exceeding $50 which was 5-7 times what I paid for them.

Clearing $25 on $100 sale is OK.  As another stated....       how you are doing on sales is based upon all sales. Some will be better than others.  Any sale that ends up on the + side, even is just a little +, is a good thing.

Like your example, my $6 sourced item sold for $33. Liar buyer filed a false SNAD, and a $15 shipping loss has been incurred. It did come back usable, so may sell again.  At this point I am now $21 in the red on this item, and it will yield little profit, but overall for the inventory sourced on that shopping spree I am still potentially in a 200-300% profit range after all expenses.

[corvettestainless]

Percentage of profit is not a viable way to tell if something is worth doing or not..too many variables

5% of $100,000 sold a month could be good money, but....

Do you have warehouse? 

Do you have employees?

Is this a side gig to FT job, to Retirement, a hobby?

Is this your living? 

Did you choose this to be your living before you found out it's not enough $? 

[pink.fish.rule]

My thoughts? That I'd be expecting a lot more than $25 nett profit on an item which sold for $100.

[grasshopperx]

NO! but it's funny you brought this up? I was just on another forum( not ebay's) and the poster claimed? Xmas sales are up? I clicked the sales.. two sales for 7.10 cents? I scratched my head, knowing the fees are as bad as ebays? I didn't crack the numbers? because I wouldn't waste my time doing so? But what the heck? was the seller getting 2-3 bucks there? I'm just guessing fast. then I hit my head against the wall.(kidding) calculate the time in making the listing, and I assume, maybe 0 money. Because time is money. depends on what reality everyone lives in I guess?

[buyselljack2016]

When I worked retail (independent/privately owned business) the policy for pricing markup was generally a minimum of 2-1/2 times the wholesale cost. Often 3X. Some item due to their nature, or local competitive pricing were only 2X. Imported baskets were often in excess of a 10X markup.  Items sourced at pennies on the $ "closeout" prices were of course sold at the regular retail markup.

There were a couple of "seasonal" sales events that offered a store wide 20% off on nearly all items from books, to pine nuts, to bert's bees balm, to lock nuts, to fishing poles, and a 50% off section, but nothing sold at a loss.

I was not privy to the actual profits realized, but I do know that my weekly paycheck did little to add to the overhead:)