Home › Forums › Buying and Selling › Scavenging for Inventory › Do you have a “profit margin” measure when you buy?
- This topic has 9 replies, 8 voices, and was last updated 6 years, 2 months ago by simplicio.
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02/13/2018 at 1:10 pm #32899
When I buy, I usually (unless I’m getting stuff virtually free) to be pretty confident I can sell something for 10x what I buy it for before I spend the $ on it.
Hubby (who is starting to dabble in eBay with me…after years of me begging) thinks I’m nuts. He thinks if I can make any profit at all, I should buy it.
I feel like at a certain point it’s not really worth the time and storage space…
What is your measuring stick with regards to profit? Or do you have one at all?Incidentally, he is also always saying I should take all offers, while I am more likely to hold out for full price or a stronger offer. Lol!
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02/13/2018 at 1:43 pm #32905
For me, it isn’t a pure calculation.
If I can easily and quickly make $10 on a $1 item, and it is very easy to ship/list, I’ll buy it.
If I can make $100 on an item that costs me $100, and it won’t sell for months, and is a pain to ship/list, I’ll pass on it – as I can probably get the same profit quicker on 10 x $1 items without the cash tied up.
It is an item by item judgment for me.
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02/13/2018 at 2:45 pm #32912
There are soooo many variables that go into a decision for me. Just through sheer experience I make pretty good buying decisions.
A handful of decision making criteria I consider:
-Price: I think holding to simply a “10x” profit margin is very short sighted. You have a trinket that weighs 2 ounces and fits in your pocket you buy for $1 and can sell for $10. You have a speaker you can buy for $3 and sell for $30 but it takes up 2 cubic feet of space. Are those the same in your book? For me the cost is irrelevant. What is the total profit compared to its size and estimated time to sale? If you consider those three at once, you’ll keep yourself from buying a bunch of stuff you’ll regret.-Size: I constantly consider my “profit per cubic foot”. This also ties directly into Shipping complexity most of the time. In the past I bought a lot of large items that may net me $50 at most. Many of these mostly electronics items also require special testing. Nowadays, any large items have to net me $100+ for me to even consider it. Breaking down to a smaller level, I store everything in totes. I often look at my storage and consider the inventory value in each tote. I can store 20+ shirts/pants in a tote. I can store 12-15 pair of shoes in a tote. So, I can afford to sell shirts/pants at a lower profit margin and still have a higher profit/storage space ratio.
-Shipping complexity: There is a big difference between shipping a tshirt and a record player or a strangely shaped large toy. Some items will require a special size box, may require the box to be resized, a lot of packing dunnage, etc. These kind of items better be netting me significantly more profit. A Tshirt on the other hand I can ship in 1 minute. Fold, put in polymailer, label, and done. A complicated shipping job can take 15 minutes or more.
-Is there a market: The old slow dime fast nickel argument. If I know I can flip an item quickly, I’m more inclined to accept a smaller profit margin.
-Personal interest: FACT – I’m more inclined to list items I’m interested in. I’ve passed up $30-50 items many times because I simply don’t want to fool with them. Don’t feel obligated to buy every single thing you can make a buck on. You just might find you have surrounded yourself by miserable death piles you wish you hadn’t bought.
Hopefully these random musings help you develop your own sense of buy/skip logic while you are out scavenging. Good luck!
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02/15/2018 at 3:56 pm #33101
I deal mostly in antiques and collectibles, which typically have tighter profit margins. I usually try to double my money on most items. Once my mistakes (any items I lose money on) and miscellaneous expenses are taken into account, I usually bring home around 35% after taxes. I only do this part time and I don’t think margins that thin would be enough to support someone doing it full time.
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02/15/2018 at 4:59 pm #33104
Retro Treasures, you saved me a bunch of time , because your reply sums up my view pretty much exactly. I’m getting better at passing on things….that’s partly because of my enormous death piles, and partly because I see no scarcity around here of stuff to buy and sell….
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02/15/2018 at 6:23 pm #33124
I basically agree with what’s been said above, and just want to underscore that buying anything and everything simply because it will sell for some kind of profit is, generally speaking, a shortcut to overwhelm and burnout in your own sweatshop.
It sounds like he might have more of a churn and burn mindset while you’ve got more of a long-tail approach. It would be interesting for him to open his own shop and for your two to compare notes.
I could never be a churner and burner. My mindset is closer to what Retro Treasures describes, but with ADHD thrown in (so less organized, mindful, and intentional.) But the general mindset, with the right items being a matter of a ratio of a whole bunch of different elements, is the same.
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02/18/2018 at 1:02 am #33270
The buy/no buy equation is actually pretty complex, I think. Retro Treasures WV did a good job bringing out some of the factors involved.
It’s hard to say exactly how to balance them, but I find while I’m packing is when I do a little post mortem. “Was this item worth the time, space, and hassle?” And that guides future choices.
It’s really very seller dependent too. How much space you have, how much your time is worth, etc.
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02/18/2018 at 1:15 am #33271
Really, if you want a key concept that kind of unites all these factors, it’s opportunity cost. Could I put the expected time needed for this item (cradle to grave) to better use? What about the space it’ll take up? Is it worth tying up the money?
One split I notice a lot is the capital-limited reseller versus the time-limited reseller. The capital-limited reseller’s extreme version is a dumpster diver. They’re basically trading a lot of their time for a little bit of money, but they don’t have to shell out. The time-limited reseller is trying to basically maximize their hourly “wage” and they don’t mind making large outlays of money to do it.
Point being, these two types will have very different cutoffs for buy/no buy in percent terms and in dollar terms.
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02/18/2018 at 8:43 am #33277
These are such great points. We’re definitely in the more time than money camp. But I know some sellers who have little time for selling online so go the wholesale route, willing to make a tiny sliver of profit on each item…but taking little time to list.
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02/18/2018 at 8:54 pm #33300
Yep. There are some differences with risk tolerance too. The dumpster diver is really risking nothing but time, the wholesale flipper is going all in on some widget and if it doesn’t pan out they’ll be out quite a bit of money.
I am splitting the difference myself as although I’m willing to shell out quite a bit, I don’t think I’ve ever spent more than $1000 on a single SKU, and my inventory is quite diversified.
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