How to Make Sure You’re Always Profitable When Reselling Online
If you’re looking to make money online through drop shipping, retail arbitrage, online arbitrage, or online flipping, then you absolutely MUST know how to calculate your “true” profits on a given item.
In this video, Mark will show you the exact process that he uses to determine the profits on ANY product using a simple google spreadsheet.
Download the FREE Profit Calculator & Sourcing Spreadsheet Mark uses to find profitable products, every single day at: https://merchantonthemark.com/AlwaysProfit
Watch this video on YouTube at:
https://www.youtube.com/watch?v=lA2PirvAqBA
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Transcript:
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Hey, this is Mark with Merchant on the Mark and in this video, I wanted to share my profitability calculator with you. And this is based off of Google Sheet. Because one of the most important things that I found new sellers like to do is actually know their numbers. So, it doesn’t help you to buy something cheap if you’re not going to make any profit on it.
So, there’s many, many opportunities for finding products through retail arbitrage, going into stores, online arbitrage, looking on websites like Walmart, or Target, or Home Depot, or wherever it might be and selling on different platforms.
But if you don’t know what fees that you actually have in processing that order to get it out to the actual customer’s hands, not to mention the marketplace fees, then you’re wasting your time. You’re not really analyzing in the correct way. And so, I wanted to share this spreadsheet with you. It’s very simple and you can adapt it to fit exactly what you want.
Okay. So here you can see that I have a Google Sheet set up with a few automatic calculations. So let’s say for example, that we found a product in, let’s say, Walmart that is clearance priced at $10, okay? Our local Walmart, we walked in, we scanned a bunch of stuff and this is one that we found and they have one of them. So, quantity one.
We then looked on our sourcing app. So I use Scoutify. I’ve used Profit Bandit in the past. There are a lot of really good ones out there. Any of your phone apps are great. And so, I found that I can sell it for about $30 on Amazon, let’s just say. So, this is my total sales price that I would sell it for but do I get $30 when Amazon sells it? No. Amazon obviously they’re in the business to make money.
And so, they will take fees off of that, okay? And so, you have their fees and then you have the fees that you have internally. So let me go through this really quickly. So we sell it for $30. We bought it for $10. We also have to pay sales tax on that. And I’m in Baton Rouge, Louisiana, which is a ridiculous 9.5% sales tax. So yours will vary.
You just need to find what local sales tax rate is and pop that in here. You can see the formula right here, 0.095 for 9.5%. So it costs me $10. Plus 95 cents sales tax. The marketplace fees were going to estimate at 20%. Now this is where you actually bought the product, keep it at your office or your home and then you’re actually shipping it out to the customer.
So there are other systems where you can send your products into a fulfillment warehouse like Amazon (FBA) and the fees will be more because they’re actually receiving the products, they’re removing stickers, they’re putting it in a box, they’re putting the label on it, all that stuff. So let’s just say 20% at a Low-end. And then if you’re shipping it out, let’s just say $8 to ship. Now, obviously this can vary a lot depending on what you’re shipping.
The bigger it is, the heavier it is, the weirder the dimensions, where you’re shipping from and to, all play into this. But if you’re shipping, let’s say for example, a two pound package not too far away and you’re shipping through USPS Priority Mail, that’s a common one, let’s just say it would be $8. Maybe more maybe less. And then packaging and processing.
You have to have bags, you have to have labels, you have to take the time to print out the address labels, you have to have bubble wrap, you have to seal the package closed, you have to then either leave it out for the postal worker to come by and pick up or you have to drive somewhere and drop it off. You have expenses related to packaging and processing any item, okay? You have your labor cost if you want figure that in there.
It’s going to be more than that. So, let’s just say, for example, a dollar product. So, that will give us a total expenses of $25.95. So, we started off thinking that we might make $30 on our sales, where we’re actually not even close to that. After all of our expenses, we make $4 and five cents per item, okay? So that’s 36.99% profit margin or percentage. And so, you need to use that information and compare it against what you’re looking for.
So what are your goals? So, my net profit, lowest dollar amount that I’ll accept is around $10 and most cases I don’t go any lower than that. Most cases I’m looking for much more than that. It just depends on the product.
So, you need to decide what you’re comfortable with and what your time is worth. For me, and this percentage right here, I try to be around 25 to 30% the low-end. So this percentage is good but the actual dollar amount, which is really all that matters, is not going to reach my threshold.
For you it may. So one way that you can look at it is, typically, you’re not just going to find one of an item, you’ll find multiple items. So let’s just say that they had 10 of them. And we looked on Amazon for example, and it looks like it sells 10 times a month.
So, let’s just say that you could get 10 sales a month. So, 10 times $4 and five cents, that would be $40 and 50 cents per month. So if you’re already there, you’re already buying one anyway, you could buy the rest of them and package them all at the same time. And so, they’re ready to go. Or you could send them into Amazon (FBA) or another web fulfillment store and then they could ship it for you.
So, that may change your opinion of this particular deal. And in my case, I know that it would because I could purchase them, send them to a fulfillment warehouse to package, then send in to Amazon and they do all the fulfillment. I don’t mind paying more in fees to have them do that because the worriation, and the stress, and the clutter having it in my office is not there because I absolutely hate preparing products to ship out.
But it’s part of the business. You got to do what you got to do. So anyway, I’m going to share this profit calculator in the description. You can download it, use it, modify it, however you need to do it but it will give you a good tool to use whenever you have questions on exactly how much am I making.
And then you can use the information that you see here to decide whether or not that’s a good product to go with. So with that, this is Mark with merchantonthemark.com. I really appreciate you checking out the channel. If you like the videos that I’m putting out, think about subscribing or hitting the notification bell. And please leaving the comments other videos that you’d like to see.
If this one helped, great. Tell me how it helped or tell me other videos that you’d like to see because I’d love to put these together for you and share what I’ve learned over the past 20 years selling over seven figures a year online 100%.
So again, until next time. I really appreciate you checking that out. This is Mark with Merchant on the Mark and I’ll see you on the next one.
