Profit is not sale price minus what you paid. That number — sometimes called gross spread — hides four or five costs that decide whether your shop makes money.
The full formula
Net profit = Sale price + Shipping charged − Item cost − Marketplace fee − Payment processing fee − Actual postage − Packaging materials − Any refunds or discounts.
Margin = Net profit ÷ (Sale price + Shipping charged). ROI = Net profit ÷ Item cost. Both matter: margin tells you whether the sale was worth doing, ROI tells you whether the purchase was worth making.
The costs people forget
- Payment processing, typically around 3% plus a fixed fee per transaction
- Promoted listings or ad fees, which stack on top of the base commission
- Packaging: boxes, bubble wrap, tape, labels, and thank-you cards add up per order
- Postage underestimation — dimensional weight catches out palette sellers
- Returns and partial refunds, best modelled as a percentage of revenue
- Unsellable inventory from pallet buys
A worked example
- Sale price: $48.00, shipping charged: $6.00 — total collected $54.00
- Item cost: $18.00
- Marketplace fee at 13%: $7.02
- Payment processing at 3% + $0.30: $1.92
- Actual postage: $7.40
- Packaging: $1.10
- Net profit: $18.56 — a 34% margin and a 103% ROI
Margin targets worth aiming for
- Below 15%: the listing is probably not worth your handling time
- 20–30%: healthy for higher-priced prestige items
- 35–50%: typical for well-sourced discontinued or bundled items
- Above 50%: usually sourcing luck; do not build forecasts on it
Pricing backwards from target margin
Instead of guessing a price and checking the margin, work backwards: decide your target margin, then divide your total costs by (1 − margin − fee rate). A pricing calculator does this instantly and stops you from listing at a loss during a busy sourcing week.
Bundling changes the maths
Bundles raise average order value and spread one set of fixed costs — postage, packaging, the fixed part of processing — across several items. A $12 item that is unprofitable alone can be strongly profitable as part of a $45 bundle.