What is a good profit margin for reselling?
Understanding Profit Margin
Profit margin is the percentage of revenue that remains after subtracting all costs, including the cost of goods, fees, shipping, and supplies. For example, if you sell an item for $50 and your total costs are $35, your profit is $15, and your margin is 30%.
In reselling, margins can range widely. Some high-end items might yield 50% or more, while commodity items might be 10-20%. The key is to know your numbers and set a minimum margin you're comfortable with.
- Profit margin = (Revenue - Costs) / Revenue
- Includes all costs: COGS, fees, shipping, supplies
- Varies by product category and platform
- Set a minimum acceptable margin
Typical Margins by Category
Clothing resale often sees margins of 30-50% if you source inexpensively. Electronics can have lower margins (10-20%) due to competition and higher costs. Collectibles and vintage items can have higher margins (50%+) if you find underpriced treasures.
On platforms like Amazon FBA, margins after fees might be 20-30% for many products. On Poshmark or Mercari, you can achieve higher margins by sourcing from thrift stores and selling at a markup.
- Clothing: 30-50%
- Electronics: 10-20%
- Collectibles: 50%+
- Amazon FBA: 20-30% typical
Setting Your Target
A common rule of thumb is to aim for at least a 30% margin to ensure profitability after all expenses. Some resellers aim for a 3x markup on cost (e.g., buy for $10, sell for $30), which roughly translates to a 50% margin after fees.
Consider your time investment. If you're spending hours sourcing and listing, a higher margin may be necessary to make it worthwhile. Track your margins over time and adjust your sourcing and pricing strategies accordingly.
- Aim for at least 30% margin
- 3x markup on cost is a common goal
- Factor in your time and effort
- Track margins to refine your strategy
Common mistakes
- Confusing revenue with profit—high sales don't mean high margins.
- Ignoring fees and shipping when calculating margin.
- Setting margins too low, which can lead to working for little or no profit.