Frankly speaking, there are two main components to running any online trading business. They are demand for your product and your profit margin. Profit margin calculator can help you assess the economics of the potential business. After careful analyzing the demand for a specific product or service, you are in a better position to conclude whether or not the opportunity is worth the time and investment. Once that part is clearly understood, you can more accurately estimate the profits you may earn. However, it all begins with whatever you decide to sell. So before getting into the finer details, let’s quickly look at the steps on how to properly understanding margin and gauging the demand.
So here’s a question. Are there really people out there searching for, or even more importantly, purchasing what you have to sell? Whether you are a seller on Amazon, eBay (Etsy, Shopify, etc) or all – the demand structure is easy to understand. Before making use of our Profit Margin Calculator, you should find out how many people are actually looking for what you have to sell. To do that, use the Google Keyword Planner Tool. However the tool will give you a vague traffic estimate at times,
so there is always the option of checking how many sellers are offering the same you are via eBay or Amazon. The logic surrounding this is quite simple – if there are many people selling it, then there is usually a great demand for it. But with that said, you will still having have the task of separating yourself from the others to get noticed!
How much is really selling?
Even though many people may be selling a particular item, that doesn’t always mean it will always sell well. In order to see what really going on in that instance, you can use any of these two ways. Go on eBay and enter your keywords in the “advanced search” box. You must make sure to select both sold and completed listings. By doing this you can see how many are just listing compared with how many are actually selling.
It’s a bit trickier on Amazon, but it can still be done. You check the amount of reviews or the Amazon Sales Rank. However, you should be aware that the reviews don’t provide the best estimates as it relates to volume, given that the Amazon Kindle only has about 10,000 reviews but millions have been sold. That’s less than 1% but still…. 10,000 reviews? If you can source any product that can with that much volume of feedback or anything close, buy as much of it as you can!! Reviews in general are an overall indication of how the wider audience engage with a particular product. Normally, people don’t give reviews unless they were really impressed by the product and felt they had to tell someone about it. So if you are able to source a product that can provide this type of engagement, try to get as much of it as you can!
Naturally, the highest selling products usually have the highest reviews. It is due to the the fact that more engagement leads to more sales and overall product demand, with even more competition. Again, make use of a profit margin calculator to gain even deeper insights into profitability.
Healthy margins and the use of Profit Margin Calculator
Despite what many people may think, profit margins aren’t just important for retail. They have the power to make or break just about any business. Just recently, I completed a project that had very low margins. I concluded that it wasn’t worth the time and effort anymore, after careful thinking using a profit margin calculator. This was due to the contrast between margin and demand.
Good profit margins have no set benchmark and like I mentioned earlier, it depends on the volume. In some cases you might have a low margin, but you can still meet your monthly minimum quota if there’s enough demand for your product. On the other hand, you may have a product with high margins and very low demand. So if you even happen to squeeze every possible sale from the pool of demand it would not be enough. Expensive items can do very well with a little margin; even if the demand is very limited.
Are you selling on Amazon? Click here to calculate your Amazon and eBay profit margins.