posted on March 17, 2001 10:28:17 AM
Here is my calculation for the scenario presented. (And no, I'm not saying it's a decent hourly rate or that one could survive on this money).
Opening bid.................$9.99
Cost of item ................. $ 5.00
Listing fee................... .30
FVF at eBay................... .50
Billpoint fee on $15.......... .43
Cost of tape and packing...... .50
Gross profit (excluding any wages,
ISP fees, or other overhead).. $3.26
Not quite as dismal now.
I don't pay for services I feel I don't need, which makes a big difference to the bottom line. (I know the gross profit isn't really the bottom line. The cost of gas does come into play. But with a $3.26 gross profit, I think it's safe to say it's covered.)
posted on March 17, 2001 10:51:22 AM
Now, place those SAME items on DUTCH auction:
Say, 10 items at a time. Assuming they are big sellers and all sell at your opening bid, you hvae:
Opening bid.................$9.99 per item, ten items
Cost of items................. $ 50.00
Listing fee................... 2.20
FVF at eBay...................$3.12
Billpoint fee on $15.......... 4.30 (assuming it is 10 different bidders)
Cost of tape and packing...... 5.00
Gross profit (excluding any wages,
ISP fees, or other overhead).. $35.28, or $3.53 per item.
Dutch auctions are GREAT. You sell multiple items at a time, increasing your bottom line. It might not SEEM like much, but they are the way to go for low end popular items. They are not that much more work, either. Just a few more letters.
posted on March 17, 2001 11:21:58 AM
I think BJ's scenario is more realistic. Although, I'd go a little further. I'd eliminate the 'Tape and Packaging' cost as I include that in my S&H charge which the customer pays. Also, I overestimate the shipping weight by an ounce just in case my scale is off. So, I usually end up making 10-20c profit on S&H.
Also, you can eliminate the Billpoint fee. I offer it,but it isn't used too often.
So, my profit in that scenario is over $4.
Also, my PO is 1.5 miles away. So I make the 3-mile round trip on foot or bicycle. So, there are no gas expenses and I get a health benefit from it.
posted on March 17, 2001 11:22:21 AM
I agree that the math in the opening post is not realistic and far from sensible. Sorry barkrock. If you're going to sell $5 and $10 items mostly (and there is nothing wrong with that if you do it right), it only makes sense to minimize your expenses. No silly frills that only cut into already small (per item) profits.
Heck, even if you sell many very expensive items it still doesn't make sense to throw away extra money to ebay, AW, Billpoint, Paypal, and on and on, except for maybe ebay's reserve fee, if you feel you must protect the item.
posted on March 17, 2001 11:26:25 PM
brighid, there are a lot more elements that need to be considered when comparing a $10 item and a $1000 item. Generally higher priced items have lower profit margins. The lower the margin means more risk. If you buy something for $800 and sell it for $1000, ok that is nice, except when demand falls 20% and your margin evaporates.
Another risk element is that there is a smaller market for higher priced items, and fewer repeat buying. How many $1000 antique tables can one buy in a month? How many can you sell in one month? How many can you find to resell? Seems like a limited market to me.
I can't speak for everyone, but I have many items that when sold, I just hit relist. It only takes a minute to relist. My initial outlay in time is steep, but over many relists it becomes a cash machine. Figure about 60 relists in an hour x $10=$600 hr, not too bad.
Still, another risk element for a high priced item is competition in costs. Maybe someone will just say forget about that $1000 table in mint condition, lets buy the same one elsewhere in average condition for $500. Maybe they will be totally priced out of the market and stop collecting tables and revert to my $10 items. I sell collectible items in which the people buying the item sometimes don't intend to use it as a collectible. I had one lady buy my item to use as a prop in a play. I had another person buy my collectible item for a gag gift (I'm not sure how though). This equates into an extended market for my items.
I understand you can do less work selling higher priced items, that is great in theory. If you get one deadbeat though, there goes your mortgage payment, so to speak.
If you are paying $800 for an item that you'll part with for $1000, you're being foolish!
There are greater fluctuations in price when the items are higher end. What goes for $825 today might easily go for $970 tomorrow. What goes for $1100 today, might go for $890 tomorrow.
If you are paying 80% of the amount you expect to get for an item---just to acquire the item, you need to rethink your Ebay career.
In brick and mortar situations you may be able to pay 80%, but there's less risk involved. Paying that much of the potential sell price just to acquire an item is especially risky on Ebay.
posted on March 18, 2001 09:52:44 AM
I wasn't thinking of $1000 dollar items....My items that I'm selling mostly now a days are specialty art-to-wear pieces that go for about $100.00 each. I made up a large number of them several years ago for possible wholesale distribution so I don't have current labor charges added in and the original labor costs were minimal (I did them on the clock at a graveyard shift job I used to have). If I sell two a week, I have a nice additional income of $200 per week and I wrap 2 items and take them to the post office on the same day if possible. I have sold 4 or 5 a week at time making the $450 mark you mentioned, but usually I don't try to do that since photographing them is a fuss and I prefer to do only a couple at a time.
I used to sell books---still do occasionally---and my cost was about a dollar apiece (average) and my selling price averaged 10 bucks with a high of 20 and a low of 4 dollars. Even at 2000% profit (20 dollars for a book I paid 1 dollar for) I felt like I was working for peanuts, and would have rather sold fewer things for more money, although I do like selling books.
I guess everyone has their own opinion on what works for them. You challenged the "logic" of my statement, though, and that's what I was trying to show.
There are certainly exceptions, but there's no logic to me in working harder for the same amount than you have to.
posted on March 18, 2001 10:27:45 AM
brighid, you said- "How many hours did it take you to make that 450 dollars selling 100 items? How many hours would it take me to make the same amount selling 10 items? Our hourly wages would be VERY different.
Then later you said- "I made up a large number of them several years ago for possible wholesale distribution."
So you put a lot of time, energy and materials in creating the items you are selling.
You do have a good business going by making your own items. It gives you a bigger margin. But for most people who don't have those skills to make their own items it is not an option.
