EcommerceBytes-Update, Number 150 - September 04, 2005 - ISSN 1528-6703     3 of 8

eBay Selling Strategy: How Much Is Your Time Worth?

By Michael A. Banks

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Given a choice of two jobs doing the same kind of work, one paying $8 per hour and the other paying $80 per hour, anyone would choose the $80 per hour job. It's a no-brainer. But thousands of eBay sellers are doing the equivalent of choosing the $8 per hour job by electing to sell items on which they make only a dollar or two - justifying the decision by saying they can sell low-priced items in greater numbers, just like discount stores do.

It just doesn't work out that way. As an eBay seller, you don't have the same kind of overhead and price structure that brick-and-mortar stores have.

Consider this example: You find 50 different issues of TV Guide from the 1960s at a flea market, and buy them for $1 each. Then you sell each for $2 on eBay-which nets you $50 on your investment.

But how much time did you spend making that $50? Say an hour to locate and obtain the magazines, and another hour sort through them, for a total of 120 minutes. Another 3 minutes to scan the cover and write a description of each of the 50 magazines puts you at 120 minutes plus 150 minutes = 270 minutes, or 4-1/2 hours.

That puts you at $11 per hour; not quite lawyer money, but maybe enough for you. But don't forget the minute or so you spend posting each magazine. That's 50 minutes plus 270 minutes = 320 minutes, or a bit over 5-1/4 hours.

Whoops - now you're at $9.52 per hour. Okay, that's still more than you make asking "Would you like fries with that?" But wait: you still have to process your orders, and pack and ship each item. Processing includes getting shipping addresses and transferring them to labels (or copying them by hand). Even if you spend only 30 seconds per item (including sending an email to the auction winner), and 30 seconds packing and labeling each of the 50 magazines, that's still another 50 minutes, which brings our running total to just over 6 hours.

Figure another hour getting this stuff to the post office and adding postage, and maybe a half hour dealing with emails from people wanting to know where their magazine is (because they didn't allow for typical delays in postal shipping), and you have 7-1/2 hours in this project. Your hourly earnings come to $6.67. Before you subtract eBay's posting and final-value fees.

"Would you like fries with that?"

Of course, this example assumes that you sell each magazine to a different person, and that you're not using bulk-listing software. The magazines could sell in several lots, which would cut your processing and shipping time. You might also speed things up by using the same description for each magazine, with minor alterations.

But you probably still won't make $10 per hour.

There are several lessons in this. The most important one is that you won't get rich with small per-unit profits on eBay; there is a definite limit to how much you can make, and it's tied to the time you have available to devote to your eBay business. At a dollar per sale, there is not enough time in a week to make decent money. Using the hourly figure from selling old magazines, even if you worked 15 hours per day, seven days a week, you'd bring in less than $700 - before taxes and overhead. And that's assuming you sold everything you posted.

You might try to pad your income with "handling" charges, but you won't get rich that way, either. Try adding a $6 handling charge to an item that sells for $2 and you'll see what I mean.

If you have a spouse, children, or partner willing to work for nothing, you might get ahead of the game. Otherwise, you'll probably want to deal with items that give you a higher per-unit profit. If, instead of the old magazines that bring you a dollar per sale, you sell 50 items and make $10 on each one, you net $500. Which would put your hourly rate at $66.70 - everything else (the time required for posting, packing, etc.) being equal.

There are two ways to achieve that $10 profit level. The most obvious way is to buy something for a dollar and sell it for $11. You're not going to get $11 each for back issues of TV Guide, which means you have to offer something different. With luck, you can make that kind of profit on old comic books or pulp magazines.

The second way is to go to bigger ticket items, meaning, deal in items that you can buy for $90 and sell for $100, or more. Ideally, these items would take no longer to post, handle, and ship than the magazines or comics in the foregoing examples. You might sell collectibles of another kind, or maybe consumer electronics.

Or, you can work the opposite end of the equation by reducing the time you put into each unit. If all the issues of TV Guide in our example were the same date, you could save time by cutting and pasting descriptions, but that's penny-ante stuff. A realistic approach would be to sell the 50 magazines in lots of 10 or 20-or as one lot of 50. That would kick up your hourly rate considerably, with the added benefit of giving you more time to spend finding and posting additional items (which, hopefully, bring in far more than $1 per sale).

The moral: the worth of an item to a seller is measured in how much net profit it brings in, not by how many he sells. Making $50 on one sale is always preferable to making $50 on 50 sales.


About the author:

Michael A. Banks is the author of The eBay Survival Guide: How to Make Money and Avoid Losing Your Shirt (No Starch Press, 2005. ISBN: 1-59327-063-1). He has written 39 books and more than 3,000 magazine articles and short stories. A full-time freelance writer and editor since 1983, Banks has written for most major computer magazines, and has served as a Contributing Editor for such publications as Windows Magazine, Computer Shopper, Connect Magazine, and others. He began writing about computing for Popular Computing in 1981. In addition to writing for the computer press, Banks has contributed to a diverse range of magazines, including Writer's Digest, Science Digest, Analog Science Fiction, Cavalier, Grit, Visual Merchandising, Starlog, Modern People, Good Housekeeping, and many other special- and general-interest publications. His work has been reprinted in Japan and South America, and he has written features and columns for magazines in Japan and England. His latest book is How to Become a Full-Time Freelance Writer, published by The Writer Books. http://michaelabanks.com


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