Increased difficulty to sell on eBay as profit margins continue to decline

ebay profit margin calculator

Those who think that selling on eBay simply involves logging into your account and listing an item are mistaken. At least, if one wants make sales while achieving healthy eBay profit margins. Let’s break down eBay’s typical costs of sale to get to our profit margin.

Below are some of the typical cost items that need to be accounted for:

  1. eBay seller fees – average 10%
  2. PayPal fees – $0.30 flat fee plus an average 2.9%
  3. USPS insurance goes for about $2 for $1 to cover $50.
  4. Some new sellers may forget that there are also packaging costs! If you sell one item a month the packaging doesn’t sound like a costly exercise. Yet, once you start moving items on a regular basis, trust me, the costs start claiming up. Some of the typical packaging costs involve boxing, taping, packaging material itself, labeling, printing, and so forth. All in all, it’s about $0.50 per item. Let’s also not forget that to buy the packaging material you still need drive to a local store or order them online, where shipping costs are often hidden in the price.

How does it all translate into your profitability? Well, here comes our eBay profit margin calculator. Let’s assume you are selling an item at $40 and your shipping is $4.99

  1. eBay fees: $4.50
  2. Paypal fees: $1.46 (that is, $0.30 flat plus $1.16 (i.e. 2.9%)
  3. USPA insurance: $2
  4. Packaging: $0.50
  5. Total: $8.46

Bottom line

So when selling an item at $40 (plus $4.99 shipping), roughly 20% of that disappears as a cost of sale. Although, this doesn’t sound that bad, it becomes a concern when an unexperienced seller buys an item at $30 in order to resell it on eBay at $40. The eBay seller would effectively make only $6.53. That makes it a bit more difficult to make a good living while selling on eBay, hence the importance of keeping your profit margin high!

Make use of our eBay profit margin calculator and stay profitable at all times!