What profit Margin Should I Use to Price my Products on Ebay

by KeithH
11 replies
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Hi guys. I'm new to internet marketing but I just started selling on eBay about a week and half ago. I already started making some sales. I sell new products at fixed price. So going well so far. I started out doing the amazon to ebay thing i learned on here and it worked with one product I researched well and undercut everyone. was selling them back and forth so i had to quit listing them becuase the prices changed so often.

I then searched on this forum and found a good thread on how to find good dropshippers by googling using different search words than I thought to use, and it worked. I found some good suppliers, that are real suppliers. Not like Doba which seemed so over priced. So thank you warrior forum for leading me well so far.

So now that I have a good main supplier and a couple back ups that I am authorized to dropship with, I have my question: What profit margin should I expect when I calculate setting my prices selling on ebay using a dropshiping business model?

I get pretty decent prices from my supplier; although I know and understand they are not as good as if I bought case of the merchandise. I recently set all my listings with a nice template that looks pretty professional, which allowed me to sell the last item for more than everyone else was selling the same thing for. I think that helped, but I know price is also important cause the first product i was selling that I researched very well, amazon to ebay thing, once I sold the first one and started getting pushed up in ebays rank I sold every one that sold on U.S. Ebay but had to switch product line to all products my new real suppliers have so I can have a stable supplier.

So again any and all advice and feedback will be helpful regarding what profit margin I should use when setting prices on ebay using dropshipping business model. Thank you in advance
#ebay #margin #price #products #profit
  • Profile picture of the author SEOexpertSEO
    Hi,

    You need a margin that covers your eBay and Paypal fees, and make at least $10 profit after expenses on each sale.

    You will pay about 65 cents per transaction, plus 13% of the total transaction amount in eBay and Paypal fees.

    eBay charges fees based on what category of product you are selling. Use the eBay fee calculator at: eBay Fee Calculator

    Paypal charges a fee of 2.9% plus $0.30 per transaction, and even more if it is an international sale.
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  • Profile picture of the author Silas Hart
    I believe in high volume low profit, I would rather make 100 transactions with a profit of $1.00 than 1 transaction with a profit of $100.00.

    Unless you are selling an item that nobody else has while at the same time you have a demand from consumers for that item, then you will likely have to compete based on price with your location being the only real variable. So, figure out what it sells for, match them on price or undercut them or you aren't likely to get the sale.
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    • Profile picture of the author timpears
      Originally Posted by Silas Hart View Post

      I believe in high volume low profit, I would rather make 100 transactions with a profit of $1.00 than 1 transaction with a profit of $100.00.

      Unless you are selling an item that nobody else has while at the same time you have a demand from consumers for that item, then you will likely have to compete based on price with your location being the only real variable. So, figure out what it sells for, match them on price or undercut them or you aren't likely to get the sale.
      I used to pull in around $1,000 per day on eBay and my profits were in line with what you suggest, other than one product I sold. It ain't worth it to package up 100 orders per day, and make around $100. Way too much work in just the packaging and then the customer support was a horrendous job in itself.

      But to the OP's question, you need to find products that you can sell for the prices they are being sold for on eBay, and make a profit. Whether that be 10% or 50% or higher, matters not. The products have a price they will sell at, and you can find that by searching eBay for that price. If you can gwt the products delivered to you and be able to make a profit on that cost, then, and only then can you sell them successfully.
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      Tim Pears

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      • Profile picture of the author Importexport
        Originally Posted by timpears View Post

        I used to pull in around $1,000 per day on eBay and my profits were in line with what you suggest, other than one product I sold. It ain't worth it to package up 100 orders per day, and make around $100. Way too much work in just the packaging and then the customer support was a horrendous job in itself.

        But to the OP's question, you need to find products that you can sell for the prices they are being sold for on eBay, and make a profit. Whether that be 10% or 50% or higher, matters not. The products have a price they will sell at, and you can find that by searching eBay for that price. If you can gwt the products delivered to you and be able to make a profit on that cost, then, and only then can you sell them successfully.
        Thanks Tim.

        I also doubt the merit of working so hard for small profit margins.

        Although it was a totally different game, when I sold my first business in which I was exporting the bulk of my products, I checked out other businesses for sale in the same industry and those with similar total profits employed 10 to 15 people. I employed nobody and I made big profits for relatively little work because I only sold products with very high profit margins.

        Profit is the name of the game, that's why I then went into importing direct from the manufacturers.
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  • Profile picture of the author amcg
    Unless you are selling an item that nobody else has while at the same time you have a demand from consumers for that item, then you will likely have to compete based on price with your location being the only real variable. So, figure out what it sells for, match them on price or undercut them or you aren't likely to get the sale.
    This is key to ecommerce; re-selling naturally determines lower prices though not exclusively. For example, companies that are leaders in ecommerce like Zappos don't neccessarily have the lowest prices but usually, they do.

    Secondly as you mentioned, if you're selling something you deem to be unique, you can obviously increase your margin based on the fact that nobody else sells. Though obviously selling something totally unique is difficult in today's marketplace; you'll need to compete on price against similar products.
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  • Okay. Here's the best advice I can give you for this:

    First off, I'm not a big fan of the 'high volume = low profit margin model'

    The reason is, TIME IS MONEY.

    For example, let's just say that I have 200 items that I process, and each of them make 5 dollars in profit.

    And at the end of the month, when I pay the invoice, it take another 5 minutes to itemize those payments.

    Essentially, that is 10 minutes of processing for 5 dollars of profit, or 30 dollars an hour.

    I can do THAT, OR, I can spend 2 hours to source, research, and sell, list, and even go to the post office and ship 3 items for a total of 1000 dollars in profit.

    Or 500 dollars an hour.

    So, if you ask - what is the MINIMUM profit margin percentage to shoot for?

    I don't look at it as a percentage. I look at it as a 'personal minimum'.

    This goes back to my piloting days, really. ‘Personal Minimums’ were sort of a ‘personal gauge of safety’. For example, if I didn't feel comfortable flying in a 20 knot crosswind, (even though the airplane could handle it) then no matter what, I wouldn't fly that day.

    If cloud-cover was at or below a certain elevation, even though it would be legal to fly in it, if it was ‘below a personal minimum’, I wouldn't fly that day.

    Utilizing this idea of a ‘personal minimum’ I have translated this into my decision making in product acquisition. Granted, certain situations call for different ‘minimums’ and you can set your own.

    For example: If I am going to source an item, I wouldn't pursue the item unless the estimated total profit is AT LEAST 40 dollars. That is my personal minimum. Now, I can see if I can’t negotiate a cost to acquire to achieve that, but if the person isn't willing to do so, then I won’t bother.

    If it is outside of 100 miles, then I won’t consider it unless I can make at least 300 dollars on the item.

    If it’s a dropshipped item, then I won’t consider it unless it’s at least 10 dollars PER 100 DOLLAR BLOCK AFTER ALL DEDUCTIONS. (Which is pretty much all of the margin you’ll get on them anyway- this is the negotiated margin I always aim for). This isn't a 10% margin, it’s merely ‘per 100 dollars an item sells for, there needs to be at least 10 dollars in profit) for example – if an item sells for 50 dollars, I need to make at least 10 dollars. If it sells for 510, I need to make at least 60.

    So, as you can see – you can find your OWN personal minimums – but keep in mind that if you restrict your personal minimums too much, you could end up spending more on opportunity cost than actual sales.
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    • Profile picture of the author Importexport
      Exactly right ADE, time is money.

      When teaching my franchisees when they were starting with me in my importing business I taught something similar to your "personal minimum" idea.

      It took approximately the same amount of time to process an order that would make $50 profit as one that would make $1,000 profit. I found that when starting off they were thirsty for business and this made them hunt for easy orders at low prices and low profits.

      As a result I wrote into the Operations Manual, instructions not to chase any orders that would not give them at least $150 per hour. The result was that the average income generated by each franchisee after they were established was 4 times the national average wage in 3 of the 4 countries where my importing business operated. It was just over 3 times the national average wage in the other one.

      The point is that big margins with big total income on smaller turnover can be handled by a single operator with much less work. Almost every franchisee worked from home and only a couple employed staff.
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  • Profile picture of the author timpears
    Hey Importexport, how much is your coaching? Even after reading your reports, and others, I have found it way too hard to find a product I can import with decent profits that sells well. I would love to sell on Amazon, but had one hell of a time finding something that would sell and be profitable. I do have limited cash, so maybe I am howling at the moon and should forget it.
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    Tim Pears

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    • Profile picture of the author Importexport
      Originally Posted by timpears View Post

      Hey Importexport, how much is your coaching? Even after reading your reports, and others, I have found it way too hard to find a product I can import with decent profits that sells well. I would love to sell on Amazon, but had one hell of a time finding something that would sell and be profitable. I do have limited cash, so maybe I am howling at the moon and should forget it.
      Hi Tim,

      My coaching for 3 months is included in the price of the book. Although it is well over three months since you got your copy, I would love to help. I don't want any of my book readers to not succeed.

      Just send me an email via the contact form on my website, and I will be happy to answer any questions and see if we can't get a really profitable importing business up and running. I am very confident that we can with your persistence and my experience.

      By the way, you don't need a lot of cash for direct importing.
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      • Profile picture of the author bloomingrose
        The OP is using drop-shipping - so isn't it okay if he has less profits per sale?
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        • Profile picture of the author Importexport
          Originally Posted by bloomingrose View Post

          The OP is using drop-shipping - so isn't it okay if he has less profits per sale?
          I think you have missed the point of the posts by Auctiondebteliminator and myself. Maybe you should do what very few people do --- read right through the thread.

          Time is money, and profit is the name of the game, so surely if you can make more dollars per hour of your time by selling with big profit margins why would you bother making tiny profits per sale?

          By buying direct from genuine manufacturers you can make huge margins and work less for more money in the bank.
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