Make Money Online with eBay

If you want to make money online with eBay, understanding your profit margins is crucial.

It's important to know roughly how much your items will sell for so you can work out how much you can afford to spend on buying stock and listing items -- and still make a profit!

Luckily, figuring this out boils down to a simple formula:

(Item Final Selling Price + Shipping and Handling Fee) - (Item Purchase Cost + eBay Listing Fees + eBay Final Value Fees + PayPal or Credit Card Fees + Shipping Costs) = Profit

Let's say you list a picture frame you bought for $2 at a garage sale with a starting price of $0.99 and a gallery picture (listing fees: $0.65). You then sell it for $10 plus $5 for shipping, incurring an eBay final value fee of $0.53 and PayPal Premier Account fees of $0.75. Let’s say it cost $3.80 to actually mail it in a bubble wrap envelope that cost you $0.20.

So your profit margin is: ($10 + $5) - ($2 + $0.65 + $0.53 + $0.75 + $4) = $7.07.

As you can see, there are a lot of factors involved in working out your final profit on a sale.

Now that you know how to figure out the profit margins of a particular item, it's time to decide on a pricing strategy. Will you sell high volumes of items with slim profit margins or fewer high-profit items?

Here are some tips on how to make money online with eBay using both pricing strategies:

• Sell high volumes of items with a low profit margin. It is possible to make money online with eBay using this strategy -- provided you sell enough items!
  
  The key to your success will be having good, reliable suppliers and a method for staying on top of all the extra work involved in listing lots of auctions and shipping lots of items.
  
  
• Sell fewer items with a high profit margin. Selling high-priced items generally means you need to sell fewer of them to make money.

  But selling high-priced items on eBay can be more difficult than selling items of lower value. For one thing, there's often a smaller market for high-priced items. And, you need to work harder to establish your credibility as a seller since very few people will pay a high price for an item from an untrustworthy source.

Once you figure out your profit margins and pricing strategies, you'll be able to source products with confidence and enjoy fatter profit margins as you make money online with eBay!

For more tips on how to make money online with eBay, from novice to advanced, check out our newsletter archives at www.auctiontips.com.