I am probably doing somethings wrong in terms of book keeping and deciding how to price my items but it has been working for me for several years. I am certainly still learning and revising my systems as I go.
I'm not planning to divulge all the private details of my finances here but I would like to be more open on the subject of money. It is one of the things you will find the least amount of information on in regards to selling on EBay. Ironically it is also the most important topic when one is considering whether or not to sell on EBay.
So here are a few real numbers from one EBay seller who has a fair amount of experience and still has a lot to learn.
I estimate that I made about $10.00 an hour last year. I am trying to keep better tabs on the hours that I am working this year so I should have an even more accurate number for 2012. I realize that $10.00 an hour is not a Rolex and BMW kind of salary but I do get to work in my PJ's if I want to and my commute across the hall is great! So I will live with the $10.00 figure as I also try to figure out ways to improve upon it.
There are probably more than two ways to work on increasing income but I have focused on the items below.
1) Sell more items faster
2) Sell items at a higher margin
The fastest way to implement selling more items faster is to sell more than one of the same thing. Of course it can also be more risky to buy 10 of something than 1 of something. I recently purchased some multiple quantities of these two items from an on-line resource. You can click on the images below to check on the current sales status of these items. At the time of this posting the backpacks were a good purchase and the shoes not so much.
If you are interested in more sourcing information there is a post here.
I haven't got a lot of experience selling multiples of the same item so that is an area where I will need to keep experimenting.
So moving on to the topic of margins. How do you figure them? What should they be? How often should you worry about them?
First of all I have no fancy accounting or book keeping system. I keep track of my business on a few different Excel Spreadsheets. Someday I may graduate to using Quickbooks or Outright but for now Excel works for me.
If you are so inclined you can google your way through the endless list of results for "how to figure sales margins." But the basic equations is this: if you what to figure out what your margin will be if you sell an item for a certain amount.
Margin = 1-(all costs/selling price)
If you want to add a specific margin to all your items to figure out your selling price use this equation.
Selling price = all costs / (1-desired Margin %)
Now here is my 2 cents worth of advise on margins. I do keep track of them on my Excel spreadsheet. I have a formula set up that magically figures out my margins for me. But the truth of the matter is that I don't really pay that much attention to them. There is another number that is much more important to me and that is my item profit or loss in real dollars. If the profit per item is where I want it to be then my margins are always good which is why I don't really worry about them. I figure out my selling price based on what I would like to make in profit (actual dollars) not based on a specific mark up percentage. Obviously I also have to consider what I think the item will actually sell for which leads to the fact that for this month my lowest margin was 22% and my highest margin was 77% which is a pretty big swing. So my final thought is that you should know what your margins are but in the world of Ebay particularly if you sell a lot of one of a kind items, margins are not the most important number, and I certainly would not recommend figuring your selling price based on a specific margin if you sell OOAK items.
Thanks for stopping by and