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It’s probably safe to say that for most things you sell on eBay, you can make a profit… or is it? Sure, you might be able to identify a real niche. You might be able to locate a source for your product that allows you to gross 30% over what you paid. Doesn’t sound too bad unless we are talking about a $25 gross sale on each auction. With a 30% profit you’ll only be pocketing a little less than $6 per sale. Take out mileage to ship the product at today’s gas prices and you may be coming close to breaking even.
As a part of your research, you need to know what your expected net profit will be. If you expect to sustain life (yours) with this as a business, using the above example, you would have to complete 1000 auctions a month to have a gross profit of about $72,000 a year ($6,000 a month gross profit). Then Uncle Sam comes along and wants his share. You can see where this is going.
Let’s not kid ourselves here. We’re either serious about making your business succeed, or we’re just playing around. You have to choose. Pick your number and do the math. Even if you only wanted to make an extra $24,000 a year profit (gross) using the above example that’s still over 300 successful auctions a month (and some percentage of that in trips to the Post Office & expenses). That’s over 70 successful auctions a week!
It’s no good to be in business without the mindset of success and the profit that accompanies it. So let’s set some reasonable guidelines. First determine the Gross Profit you want to make a year. Let’s say for this example that we want to make $120,000 in Gross Profit a year. That’s $10,000 per month gross profit, or about $2,300 per week average. Take a look at the tables below to get an idea about what this success level definition means to you and your business from a day-to-day, practicality, get-it-done view point:
$30K per
Year Example
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$60K per
Year Example
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$120K per
Year Example
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It’s very easy to see why e-Books have become so popular. If you are selling your own e-Book at $49.95 per copy and want to make $120K profit per year, you need only sell 46 copies a week. If, on the other hand, you are selling someone else’s $75 cost product and want to make the same yearly profit with only 46 auctions per week, your products would have to sell consistently for $2,700 each. While not impossible, it is not a very likely scenario.
There are a number of other things that should be considered as you think about what your product will really cost you. If it is an e-Book, this is fairly easily identified. If not, consider the following in determining the base cost of doing business for each product you plan to sell: