eBay Selling Tips: 5 Ways to Calculate Your Profitability

As a reseller, your primary goal is to make money. With that in mind, it’s important to understand that a variety of factors can impact your profitability—from customer demand and competitor pricing, to shipping costs or general economic ebbs and flows. You can protect yourself and your business by finding eBay selling tips to help you plan ahead for anything that may impact sales and revenue, and adjust your expenses and costs accordingly. Understanding the factors of profitability and diligently tracking your sales performance will help ensure that your business is worth the time and energy you put into it.

Below are five eBay selling tips to consider when calculating your profitability:

Determine Upfront Expenses and Operating Costs
Running a successful business requires both upfront and ongoing investment. And, when it comes to tracking where all of your money is being spent, organization is key. Make a list of all your costs—from a monthly seller subscription package, to product acquisition costs, to advertising and shipping expenses. Budget what you’re willing to pay for each, and consistently review your outgoing expenses to make sure you stay on track. It’s also important to reevaluate your budget frequently to make sure your overall spending balances with your incoming revenue. Generally, the price at which you sell an item should cover three things: the base amount a customer is willing to pay for that item, a portion of your operational expenses, and your profit. Make sure your expenses and your listing price are set to operate in harmony to bring you a profit at the end of the day.

Analyze Sales Trends
Keep track of your sales and analyze trends. Do certain items in your store rise in popularity during particular seasons (shovels, beach towels, etc)? Is a certain technology you sell soon to be replaced by an updated model next month? Use tools like CheckAFlip or Mark Sight, which give you a big picture view of how certain items are being priced and what percentage of those items are selling. Anticipating ebbs and flows in demand can help you determine how much revenue you’ll pull in at any given time and help you balance your costs accordingly.

Evaluate the Competitive Landscape
Another way to anticipate demand is to evaluate the competitive landscape to determine how many other sellers are offering similar products. Research other resellers within your purview by typing specific items into the eBay search bar, and take a look at their inventory to see what they have, what condition those items are compared to yours, and how quickly items are being sold. Keep track of their pricing methodology and make sure that your prices are on par—if not competitive. Analyzing availability and pricing from other resellers can help you determine estimated demand for your items.

Pay Attention to Market Changes
Certain economic trends can also affect your profitability. Keep track of consumer spending reports that estimate how much money shoppers are spending each quarter. A decline in overall spending could mean a decrease in discretionary income and signal changes in your sales estimates. You should also keep track of price increases for third party services that you rely on — like shipping costs. Market changes may be beyond your control, but staying on top of the latest trends can help you anticipate changes and alter your business practices to follow suit.

Figure Out How Much Your Time is Worth
Is reselling your full time gig, or is the time you spend pricing and listing items taking away from other, more profitable income sources? Diligently record how much time you spend contributing to your reselling business, and compare with total profits. If the time you spend isn’t worth the payoff, you may want to consider outsourcing to services like eBay Valet. eBay Valet can save you valuable time, and still earn you 80 percent of the price of each item sold.

Running a successful reseller business takes time and energy. Before you open up shop, do your research for eBay selling tips. Make sure that you chose your inventory wisely—balancing popular products with items that you’re able to source at reasonable prices. Once you’re up and running, diligently track products sold and their prices, product costs, promotions, and shipping to determine the overall ongoing health and profitability of your business.

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