MARGIN GUIDE
How to calculate resale profit
Write the full cost ledger before you buy. The difference between sale price and purchase price is not profit.
Start with net sale proceeds
Use the amount you realistically expect a buyer to pay, not the highest live asking price. Check closely matched completed sales where the marketplace provides them. If postage is charged separately, include that buyer payment and the actual postage expense rather than assuming they cancel out.
Subtract every acquisition and fulfilment cost
Small costs compound. A replacement charger, collection journey, box, packing material or return postage can remove the apparent margin. Keep tax separate in your records and take advice appropriate to whether you are selling possessions or trading as a business.
Calculate ROI on cash committed
Total cash invested should include the item and the costs required to make it saleable. ROI helps compare two purchases of different sizes, but it says nothing about time. A modest return completed quickly may recycle cash sooner than a larger return tied up for months.
A worked example
Suppose an item costs £80, collection costs £5, testing and cleaning cost £4, and the expected buyer payment is £140. If your current selling charges are £17, outbound postage is £7 and you reserve £5 for uncertainty, estimated profit is £22. Total cash invested before selling charges is £96, so the indicative ROI on that cash is about 22.9%.
The numbers are illustrative, not marketplace rates. Replace every line with the costs that apply to the actual listing and your seller account.
Set a walk-away price
Work backwards from a conservative sale price. Subtract selling and fulfilment costs, your contingency, and the minimum profit you require. What remains is the most you can pay. If the seller will not accept it, the correct result may be no deal.