If you are using eBay to create a long-lasting internet business, you will naturally be concerned about your financials. This section provides some tips on creating a template for thinking about your business.
Revenue
Your Revenue on eBay in a particular month is the sum of the Item prices that you sold in that month as well as the shipping, handling and insurance costs that you charged the buyer. These revenues need to cover all your costs as well as leave with a profit that is in line with what you require.
Costs
Your costs may include all of the following:
- Cost of the item that you are selling
- Cost of shipping the item to the buyer (this may include insurance)
- Cost of Packaging your items
- eBay Fees
- PayPal Fees
While shipping, insurance and packaging costs can be recovered directly from the buyer, the item price needs to cover the remaining costs as well as provide a profit.
eBay Fees
The fees that you pay to eBay can be divided into 3 categories:
- Insertion Fees – This is a fee for making your items available for sale and is levied regardless of whether your item sells or not. Insertion fees vary depending on the starting price of your item (and in some cases the category in which they are listed).
- Feature Fees – These are optional fees which are levied for listing upgrades. You may choose to use these listing upgrades to market your items to buyers on the eBay platform. If you choose to take features, these fees are levied regardless of whether your item gets sold or not.
- Final Value Fees – This fee is levied if your item gets sold successfully.
The fee structure is different for different eBay sites. Click here to see the detailed fee structure for www.ebay.com.
PayPal Fees
PayPal also levies fees for using its services. These charges are explained in detail on the PayPal site.
Here is a link to a 3rd party site which can help you calculate your PayPal fees.
Conversion Rate
Conversion Rate on eBay is defined as the ratio of your Successful Listings to the Total Listings ended in a particular period.
Cost of Sales
Cost of Sales on eBay is defined as the ratio of the fees paid to eBay to the total sales on eBay. The higher your Conversion Rate on eBay, the lower will be your cost of sales, since you will be paying insertion fee & feature fee on fewer listings which did not sell.
