Is a 10% profit margin on a £89.99 item worth it?
I sell an item for £89.99, I make a 10% profit on it. I don’t get very many returns. Is it worth it? The only issue I have is I have to buy a minimum of 100 items, that’s £5000 including postage, not to mention the duty I have to pay (which I do claim back). They don’t sell quickly either, it’s taken 7 months to the day to sell 79 units. For £8,999 in sales, I only make £899. It just seems meager.
What do you think? Am I just being silly and greedy?
In your opinion what percentage should I be aiming for to make the profit margin reasonable/worthwhile?
Is a 10% profit margin on a £89.99 item worth it?
I sell an item for £89.99, I make a 10% profit on it. I don’t get very many returns. Is it worth it? The only issue I have is I have to buy a minimum of 100 items, that’s £5000 including postage, not to mention the duty I have to pay (which I do claim back). They don’t sell quickly either, it’s taken 7 months to the day to sell 79 units. For £8,999 in sales, I only make £899. It just seems meager.
What do you think? Am I just being silly and greedy?
In your opinion what percentage should I be aiming for to make the profit margin reasonable/worthwhile?
Seller_esvgLzKXw2YAl
This is Amazon, you will be doing ok to get a margin of 10%.
The calculation that you need to make, is “Can I use that money on something else and make more from it?” Or are you happy to have your money tied up in that particular item?
Personally, I wouldn’t want to tie up my money for an item that will take 7 months to sell. That’s a long time to have cash tied up. Now if you can sell something with a margin of 10%, over 4 weeks, your looking at a much healthier profit.
But the actual margin to aim for, is just what makes sense to you.
A lot depends on what your selling, how quickly your selling it etc.
33 replies
Seller_esvgLzKXw2YAl
This is Amazon, you will be doing ok to get a margin of 10%.
The calculation that you need to make, is “Can I use that money on something else and make more from it?” Or are you happy to have your money tied up in that particular item?
Personally, I wouldn’t want to tie up my money for an item that will take 7 months to sell. That’s a long time to have cash tied up. Now if you can sell something with a margin of 10%, over 4 weeks, your looking at a much healthier profit.
But the actual margin to aim for, is just what makes sense to you.
A lot depends on what your selling, how quickly your selling it etc.
Seller_7VbclcPFFRTnc
And just to check, when you say profit, do you mean net or gross ?
Are you including any overheads, bills, wages etc ?
Is this your only product ?
Seller_77IcbQKVGdZo0
10% margin itself is not that bad and if you are comfortable making that profit then all is good.
On some of my items I might make less than 10% margin on others I can make over 100%. On the lines where profit margin is lower I might be selling a vast quantity which makes it worthwhile, there can be something to said for a small profit if the items are selling quickly.
If it was my business I would be asking myself if it was worth having £5000 in stock on one SKU for up to 7 months. If the item was only selling slowly I might say it is not worth it if I have to buy a minimum of 100 units. I would personally want to invest in some faster selling items where I make my money back more quickly.
I think you can answer you own question though. If you are asking is it worth it then you must have doubts and if that is the case I would walk away and find a different product.
Seller_DTufFoxJuMU0M
If its worth it really depends on you.
I make about 10% of the sale price of some of my items, some as little as about 50p, but it literally takes less than a minute or less to print out a shipping label, lift and item off the shelf, put it in and envelope and put the label. I have other items that are personalised and take time to make, or mugs where I have to bubble wrap etc them that I wouldn’t be happy making 50p on.
Also my items are all cheap and not really in a cutthroat marketplace, I am sure the profit margin on more expensive items is less and I would also assume that expensive items sell less than cheaper items…
On saying that, I have to agree with Smiley, I am not sure I would like £5k tied up on stock that I’ll be lucky to sell in 7 months. But again this depends on your cash flow and if £5k is a problem.
It really boils down to can you afford it, or would your money be better spent on cheaper or faster moving items that will turn over your profit quicker or items with a lower MOQ that won’t hold as much money hostage. Presumably if you are Vat registered then it is not your only SKU, and your other ones are better sellers?
Seller_tc3VxVXAlHXbN
I think if you find almost any product in the world you will make more than 10%.
At the moment a really bad product for me is 40% after labour, packaging, vat, fees, postage.
If you have more money than you can spend or can’t find any products go for it:
a 10% margin isn’t much in a hyper competitive market like Amazon you might have to lower your price by 10%.
Tescos used to operate on 4-6% profit. But they sell billions.
I honestly don’t think you could find any profit to sell on Amazon with less than 10% profit margin so maybe shop around…but if you have more money and time than you can use go for it.
Trouble is with Amazon from selling it to getting paid is around 3 weeks…for just 10%,
But 10% is more than what it will get in a shoebox.
Also if you are not vat registered yet which sounds like you are not selling such a high value product you will quickly have to VAT register then you can kiss most of that margin goodbye.
Seller_M00gWu6PyeJf5
What a refreshing change to see someone asking a sensible question and receiving qualified advice on the forum from the usual seasoned sellers. We all have different business models and of course it depends on the market or niche that you sell into. Ourselves, we sell in a consumable market but try, and I repeat TRY to work on a 15-20% profit margin. However, we produce our own products which is obviously labour intensive but from memory, I believe our highest priced product is about £13.99. We have 5 or 6 products that we have established over the years and aim for between 100-200 sales per month for each of those. We are semi retired now and that suits our needs. However and rewinding to our early days, my advice is to never ‘fall in love’ with one particular product. If you’ve got any doubts, £5k is a lot of money to spend, particularly for a product with the amount of sales that you receive, especially at the retail price that you quoted.
One or two INR’s with a refund granted is a big chunk out of your profits. As others have mentioned, 10-15% I would suggest is a comparable expectation but why not consider using part of that 5K to try other avenues to grow your business? At the end of the day, as the Americans would say, ‘throw enough mud at the wall and some of it will stick’. Any business is about taking a risk sometimes and I wish you well my friend.
Seller_DnL3AXoQFgZKI
I dont know how you are calculating your margin and what other costs you are adding in, but in its bare form with a buy price of £50.00 and a sell price of £89.99 the margin will be 23.99% and the profit should be around £21.59 so where is the other £12.60 gone? (£21.59 minus £8.99)?
