Increase Profits by Decreasing Expenses
Profit is the money you keep; it is the money you made minus what it cost to
make it. Most people think that the only way to increase profit is by increasing
the price of the product they sell.
Increasing the price of the product you sell would definitely increase the profit
you make for every product you sell. But while increasing the profit per sale,
raising prices would likely decrease your overall profits because less people
would buy your overpriced products.
The best way to increase your profits is in a way that doesn't affect your
customers. You can accomplish this by minimizing your business expenses.
Let's say you are already an established eBay seller that sells an average of
$10,000 worth of products per month. And out of that $10,000 the money you
get to take home (profit) is roughly $3,000.
The $10,000 in monthly sales is made up of 100 $100 products, each product
making you a clean profit of $30...
100 sales x $100 each = $10,000 (monthly sales)
100 sales x $30 profit/sale = $3,000 (monthly profit)
You are making a total of $3,000 in profit / month. With this money ($3,000)
you are free to do whatever you like. But $3,000 is not enough; you barely have
enough to cover your living expenses and plus you want to buy some new stuff.
What you could do is sell more products. Instead of 100 products, you decide to
sell 150 products for a total of $15,000 in sales per month...
150 sales x $100 each = $15,000 (monthly sales)
Your profit grows by $1,500 to a total of $4,500 per month.
150 sales x $30 profit/sale = $4,500 (monthly profit)
You now have enough money to cover your living expenses and buy the stuff you
wanted to buy. What you don't have anymore is the free time to enjoy the extra
money you are making. Because the extra 50 products you have to sell every
month has added a couple of hours to your workday.
But what if instead of simply making more money you decided to keep more
money by increasing the profit you make for every product you sell...
Let's say you are able to bring down the wholesale price of the products you sell
by $5 per item. You do this by haggling with your supplier and assuring him that
you are here to stay and that you are about to expand your business which
means more money for him/her.
You also realize that you are paying way too much in listing fees to eBay by
using too many of their extra features (highlighted listings, extra photo charges
ext). You decide to stop using some of these extra features and save $0.75 per
auction you list.
You also save $2.25 on shipping supplies by buying your supplies in bulk,
haggling with the supplier and adding $0.25 to the price the customer pays for
In total you are able to decrease your costs by $8 / sale and by doing so,
increase your profit per sale by $8.
Now instead of making a profit of $30 / sale you make a profit of $38 / sale. Lets
see how all of this ads up when it comes to your monthly profits...
100 sales x $38 profit/sale = $3,800
That's great, you now make $800 more than you used to and your total monthly
sales still ad up to $10,000. You were able to do this by keeping more of the
money you make instead of making more money.
I know itâ€™s still less than what you would be making if you decided to sell an extra
50 products per month. But at least you still have free time. And more importantly
your business is much more efficient, you make more money without having to
work any harder than before.
What would happen if you decided to do both, keep more money and make more
money? What if you decided to grow the profit you make / sale and sell and extra
50 products per month? This is how much money you would be making...
150 sales x $38 profit/sale = $5,700
Hmm, isn't that nice? If you were to simply try to make more money you would
have a monthly profit of $4,500. But if you make more money as well as keep
more money you would be able to make $5,700 in profit per month. That is a
$1,200 in extra profits every month, without increasing the number of
products you sell or the price you sell them at. This is what working on your
business is all about.
It's all about increasing PROFITS by decreasing EXPENSES
I am sure you already know this, but there are other ways to keep your money
besides increasing the profit you make for every product you sell. There are
hundreds of other ways to keep more of the money you make.
If your supplier ships your merchandise to you, you can save on shipping. You
can save on image hosting for your listings by hosting the photos on your own
website. And any other expenses you may have, such as phone bills, internet
bills etc. Every single business expense you have can probably be decreased or
in some cases eliminated.
What you should avoid doing at all cost when trying to increase your monthly
profits is raise the shipping prices so you can make a couple of bucks profit on
that. That is what some sellers do, but it's a dirty trick to make some extra
money. The reason you should avoid raising shipping prices is because high
shipping prices are the biggest reason most people refuse to buy stuff from the
In case you were wondering, keeping money is the same as saving money. By
saying "keeping more of the money you make" instead of "saving money" it
makes it easier for me to explain what I am trying to tell you and makes it easier
for you to understand. But whatever you want to call it keeping or saving, do it
and you will have more money to do what you love without working any harder
than you already do.
Investing Back Into Your Business
If you want to grow your business, you will need to invest extra time and effort in
order for that to happen. If you think your eBay business will simply grow by
itself, you are mistaken.
To expand and grow your eBay business will require extra effort, time and
energy. Luckily an eBay business is much easier to grow than a conventional
business. Itâ€™s almost as simple as increasing the number of auctions you list.
When expanding your business you must work on it, improve it, make it more
efficient and make sure you can handle the extra work that will come with the
growth of your business.
As your eBay business grows you must grow with it, you must realize that in
order to grow your business to its maximum potential you must work on your
business. Not just sell more products.
The majority of the time and effort you invest in to growing your business should
be invested in working on your business. This is very important because before
you decide to list 1,000 auctions per day, you must make sure your business and
you can handle it.
Before you start increasing the number of product you sell, you need to have a
system that will enable you to handle the extra sales. Some PowerSellers have a
team of employees working for them because they know they couldn't possibly
handle all of that work by themselves.
You might need to do the same. You might need to hire help in order to grow
your business. You might need to hire an accountant, a secretary, a customer
service representative. This all depends on how big you want to grow your eBay
business. The sellers that have a whole team of employees working for them are
usually the ones making hundreds of thousands of dollars per month.
But besides time and effort, it will also take money to grow your business.
Remember how many steps it takes to double $1,000 into $1,000,000? It takes
only 10 steps. The only catch is you must invest all of the money you make into
your next step.
You can double $1,000 into $2,000, $2,000 into $4,000 etc.
If you double $1,000 into $2,000 but take the extra money you have just made
and spend it, you will be back at $1,000.
The more money you invest back into your business the faster it will grow and
the more money you will be able to make. Instead of spending all of your money
right from the start, use it to buy more merchandise and make more money.
Keep repeating the process until you are making the kind of money you have
always dreamed of.
Here is an example of how quickly your can business can grow if you simply
invest the profits you make...
Let's say you are selling a $100 product that makes you $30 in profit / sale. It is
your first month selling on eBay and you have bought a total of 20 products from
a supplier in order to resell them on eBay. Each item costs you $70 which adds
up to $1,400 for 20 products ($70 x 20 = $1,400)
You list the products up for auction and in your first month you end up selling all
20. Each product sells for $100, making you a total profit of $600 in one month.
That's great! Let's have a party and spend the money, right? Not so fast! Instead
of spending the money, you decide to invest it back into your business and buy
more products with it.
Now you have a total of $2,000 ($1,400 plus $600 profit). You head over to your
supplier with that $2,000 and this time instead of spending $1,400 and buying
20 products for $70 each. You spend $2,000 and buy 28 products.
You list all of the 28 products you have bought and once again sell all of them.
Every product once again sells for $100 giving you a $30 profit on each sale.
This time you make $800 in profits instead of $600 like last time.
You take your $2,800, head over to your supplier and once again spend all of
your money on merchandise. This time you are able to buy a total of 40 products
to sell on eBay.
You list the 40 products you just bought, and they all sell for $100 giving you a
profit of $30 dollars / sale. This time you make $1,200 in profits and sell a total of
$4,000 worth of products.
Guess what? You are now making $1,200 a month, which is twice more than you
were making when you first started. And it is all because you resisted the
temptation to spend the money you made and decided to invest it back into your
Now that you are making $1,200 in monthly profits you can afford to spend a
little, but what if you decide not to? What if you decide to invest all of your money
back into your business once again? What if you invest all of your profits 10 more
times? Here is how much money you would be making if you decided to invest all
of your monthly profits 10 more times...
You would be selling roughly $142,000 worth of products per month! Over
$42,000 of that money would be profit! That's right, you would be making
$42,000 a month in clean profits all because you decided to keep investing your
money back into your business 10 more times. Now would be a good time to
have a party, a BIG party!
Note: this is just an example and it is meant to make you understand the
importance of investing back into your business.
As you can see, the more money you invest back into your business the more
money you will end up making. So please try and restrain yourself from simply
spending all of the money you make; invest it instead. The more you invest the
more you will get in return.
Now there are obviously different ways of investing your money into your
business and the above example was just that, an example. What you should do
once you start making more and more money is switch to selling a more
expensive product that makes you a bigger profit. That way, while your business
is growing, the time it takes to operate it will stay the same.
As weâ€™ve covered, there are different ways you can invest money into your eBay
business. One thing you should remember is the time your business needs your
time, effort, attention and money most is when it is just starting out.
The beginning is the most important part, this is when the business is still in its
infancy and much like a new born infant, this is the time it needs to be taken care
of most. The more you take care of your business in the beginning, the
more it will take care of you in the future.
Before You Get Started
You have just read a lot of information about becoming a successful eBay
PowerSeller. The information you have read is more than enough to get you rich
and is worth every penny of the money you spent on it and more. Unfortunately,
for most of the people that have just read this valuable information, it is
worthless. Let me explain...
Unless you apply all of the things you have just learned nothing is going to
change, your financial situation won't get any better and you will simply move on
to a new and "better" idea.
What good is it to read something, learn it, and know exactly how to apply it but
never get around to doing anything? You have just read what is probably the best
eBay book ever written. You have just been given a goldmine of money making,
dream achieving, ground shaking information...why would you waste it? Why
would you waste this great potential to make money?
You have so much potential. You are so close to making the kind of money you