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Out of curiosity, I wanted to figure out what level of Ebay sales were needed to match an equivalent $1000/week of PreTax (regular job) income. $1000/week is considered an average American’s family income ($52K/year). I was a bit shocked at the results.
Using a spreadsheet, I took my monthly sales and costs data from the Ebay seller hub Performance pages to sum up a year of sales and costs. The costs here are made up of all the Ebay fees, the Paypal fees, and the shipping costs. I then included the costs I directly paid for the goods themselves over this period, plus any other costs such as for supplies and the car. The Ebay/Paypal/Shipping averaged 35%, and the COGS/Supplies/car another 19%, for a total of 54% of sales. This therefore says 46% is “profit;” your PreTax income.
At 46%, one therefore has to sell $2174/week [$1000/.46] to match a PreTax pay of $1000/week. If it takes 2 people to sell that much per week, then each are working for $26K/year equivalent.
Taking this one step further, here is how many items you have to sell per week:
@ $20/sale; 108 [108 x $20 =~ $2160/w in sales]
@ $25/sale; 86
@ $30/sale; 72
@ $35/sale; 62
@ $40/sale; 54
@ $45/sale; 48
@ $50/sale; 43 [43 x $50 =~ $2159/w in sales]This illustrates the challenge. Sourcing, cleaning, photographing, researching, listing, storing, and shipping at even this level of $1000/w income is pretty tough, and this assumes all of it will sell (eventually), which we know is unlikely.
Anyhow, I thought the analysis was interesting.
Any thoughts on this?
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I do think a large part in making this work is integrating things with your life, so that scavenging isn’t an ‘extra’ expense so to speak…. like hitting a thrift store when you go to a doctor’s appointment.
I do also think that working at home is less expensive (no travel to and from work, no workday lunches or coffees) and that through your scavenging your cost of living will go down a lot also, we find heaps of things we would normally have paid full price for that we need while we’re scavenging, so I don’t think it’s all that fair to compare the numbers like for like.
But if you want to earn that exact money.. yes it’d be a larger task, but still very doable over time with enough work and consistency I feel. Especially with multiple stores over different platforms.
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Ah, the magic of statistics.
This may be the classic case of comparing apples to oranges.
I have a few concerns..
You group your fees and shipping together. The number seems a bit high. Do you offer free shipping? If that is the case, it would be more appropriate to add the shipping expense to your COGS. This of course would increase your COGS.
Where is your car expense derived from. It is real costs, or just the computation from the IRS mileage chart. Would you take a car expense write off if you had a normal job? Are you actually putting more miles on your car now vs a regular commute. My guess is no, except now you have the benefit of a tax write off and probably no higher actual car expense.
Speaking of write offs, there are others that benefit us, Cell phone, internet and office supplies to name a few. These are for items we probably already spend money on.
Regardless of statistics and spread sheets, the number that really matters is the amount that gets deposited to your bank every month. At the end of the day, I believe the $1000 a week in your example benefits the Ebayer more that the traditional worker.
Please let men know if I’m missing something.
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I’ve thought of this enough over the last two years to feel comfortable pencil whipping my own calculation.
$30 average sale price
$5 average COGS.
14% ebay/paypal fees.
Shipping is never included. Shipping discount offsets a portion of fees. No deduction here.
Supplies are free. USPS boxes, Ebay coupon for other supplies. Free used boxes. At most I spend $100 a year on supplies.
Don’t include the car – you don’t include the car for a 9-5 job. It’s a household expense that you actually get to deduct on your taxes because it is used for work.So to even further pencil whip, I’ll round down to $20 profit per item. So 50 sales a week to equal $1000 in profit income.
So yes the key is to build up your average sale price so that you work less for more money.
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Not apples and oranges at all. It doesn’t matter if the cost of shipping is in the item price or identified separately; You collect it one way or the other from the buyer and it’s paid to the shipper. The numbers I used came right off the actuals on my Seller Hub over the last 12 months. The sourcing costs are by receipts I keep, as are the cost of shipping supplies. The car costs are just the direct cost of fuel used to go sourcing. The analysis is all PreTax.
No statistics were used.
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The apples and oranges referred to comparing $1000 of pretax work income to $1000 of Ebay income. I apologize if I was unclear.
I agree with you on the shipping expense, however, the way in which you are presenting it distorts your COGS. If we all offered free shipping, it wouldn’t matter, but since many of us do not it creates some confusion.
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Seller hub: https://www.ebay.com/sh/prf/sellingcosts
What Percent do you see for Cost as a percent of Total Sales?
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I’m with So Cal Joe–
the number that really matters is the amount that gets deposited to your bank every month
I have a degree in finance as well as an advanced degree and in the beginning I tried to quanitfy everything. It was a waste of time. I still track several things but the metrics of what I need to keep going have been tossed in favor of just worrying about what ends up in bank.
What I think this discussion is really missing is the intangible. Freedom.
I work more than I did as a professional for a little less money. We adjusted our standard of living to allow us to do what we want when we want. We have excelled in where we are at financially, but more importantly, I own every single second of every single day. That is not in your calculations but for me it is the most valuable part.
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I only do eBay, shows, flea markets, private sales (no amazon) and As a rule of thumb, you net AFTER tax roughly 50% – give or take 5%. Schedule SE is always a 2×4 to the tickly bits.
And don’t forget to contribute to your retirement fund every month, what ever form it takes.
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Ok so I went and looked at my numbers from last year.
My ebay/paypal/shipping fees were 29.4% of my total sales (sales, shipping, tax collected)
Just ebay was 10.1% – the store subscription is why that is over 10%
Paypal was 3.4%My average sales price was $40
My average shipping income was $7.61So Based on my actual numbers:
Profit = 47.61*.706 = $33.61 per item.Sales to make $1k profit a week: 30 items a week.
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D’oh, I left that off. My average COGS is $5, so
$33.61 – 5 = $28.611000/$28.61 = 35 sales a week.
Really these numbers don’t mean all that much. Every year we’ll have a complete different inventory. Everything will vary and cost prices will rise across the board while ebay sales prices will stay pretty much the same.
Over the last 2 years thrift store prices have more than doubled. It’s only getting worse. -
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This is a great conversation.
As others have said, we ignore the “shipping income” in our calculations because it’s ultimately a wash. That money doesn’t really touch our hands since its money in and money out. The weekly numbers we post on each podcast is purely sales profit.
Unless you’re selling commodities in quantity, it’s difficult to say you need to sell 40 items at $30 each on eBay. We dont have such consistent inventory. We really push ourselves to find the treasures that sell for $100-$500 which can happen more often than you think. We just sold a table last night for $340 (local pick up).
This is where the eBay mentality is much different than Amazon mentality. Amazon really does seem to be about quantity and small slices of profit that can be easily predicted on a spreadsheet. eBay allows for a lot more creativity and “art of scavenging”. By spending time looking for the weird, wacky, cool stuff, we can find items for cheap that sell for $300 and might have only cost us $5. Numbers like that will throw any predictive spreadsheet out the window.
This is why I think we have a lot more in common with the junkers who sell in the flea markets out of the back of their cars than a retail merchant. We’re more flying by the seat of our pants.
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Yes, I think most of us sell a variety of goods, and aim for the big score, selling a $300 item we got for $5 for instance. That said, I scored a lot of 500 NOS Vacuum tubes for $50 at an auction last fall that took a full weekend to list but has really been a big money maker even though most sell from $10 to $20. I only have about 100 left, so it’s been great.
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