Why You’re Losing Money on eBay Sales (and How to Stop)
Imagine this scenario: You’re feeling proud of yourself because you found a great item that you feel sure is going to sell quickly and bring in some good money. You sourced it cheaply. You took high quality photographs and put together a strong listing. Now all you have to do is sit back and wait for the right buyer to come along.
And the right buyer does come along and pays your full asking price. Woohoo! You can see dollar signs. You package your item for shipping. You take the measurements of the box, weigh it (it’s pretty heavy), and then use the eBay app to calculate shipping … only to find out that the shipping cost is $64. Wait, what?!? But you only listed it for $45 and charged $12 for shipping. Then there are eBay’s seller fees. So you went through all of that work only to lose $25.
This happened to me early on, and it’s a lesson I’ll never forget. In fact, it fundamentally changed the way I handle pricing and shipping items from that point forward.
Reasons why you might lose money on a sale
Reason #1: You didn’t calculate the shipping costs before listing
When you list an item on eBay, you have to choose how much you want to charge the buyer for shipping. You have three options:
The buyer pays the full shipping cost
The buyer pays a flat fee set by you
You offer free shipping
eBay will automatically estimate the shipping cost at the time of listing. However, if you don’t put in the actual measurements and weight of your package, it will make assumptions that are sometimes wildly off. You may think something is going to ship for $8 and then find out that the cost is actually $18.
It isn’t realistic to measure and weigh every item at the time of listing, but you may want to do that in the beginning, until you get a feel for how much things are likely to cost. It doesn’t have to be exact.
Reason #2: You lose the wrong shipping service.
USPS is the default shipping service on eBay, but you can also select UPS or Fed Ex. I learned that the hard way, but when I did, it was a game changer.
One of my early sales was an infant car seat base that I had sourced for free through NextDoor. I was excited because I knew it would sell quickly. I listed it for $60 and it sold in two days. I spent an inordinate amount of time packing it in a large box with lots of padding to ensure it would arrive undamaged. Then I calculated my eBay shipping cost … $72.48! I wanted to cry. How could that be? And how was anyone making money on eBay if shipping a large or heavy item cost more than you could possibly sell it for?
At some point after that I figured out that while the default shipping service is always USPS, eBay also allows you to select UPS or FedEx, and they are much cheaper for large or heavy items. So that car seat base that cost $72.48 to ship via USPS would have cost around $30 to ship via FedEx.
In my experience, USPS has often worked well for my smaller packages, while UPS or FedEx can sometimes be substantially cheaper for larger or heavier items. I now compare shipping options rather than assuming the default service will be cheapest.
The takeaway? Always check. I took the hit, but now you don’t have to!
Reason #3: You accepted an offer without calculating your profit.
eBay allows buyers to make you an offer that is below your list price, and you can accept it, reject it, or make a counter offer. When you are new to reselling, your excitement can get the better of you, and you may be tempted to accept offers immediately. But I would encourage you to slow down and take your time in figuring out whether that offer is actually going to work for you financially.
Whenever I receive an offer from a buyer, I do this calculation:
[ Sale/offer price − purchase cost − eBay fees − shipping costs − other expenses = estimated profit ]
I’ll often do it in my head using round numbers and an estimate for the eBay fees. If I can’t remember about how much I paid for an item, I refer back to myinventory and sales tracking spreadsheet. Then, if I don’t like the estimated profit that would result from the offer price, I make a counter offer or else decline.
eBay gives you 24 hours to consider offers, and once a buyer has submitted an offer, they cannot walk away from it. So take the time to calculate how much your profit will be if you accept the offer. And don’t be afraid to make a counter offer. This is business and no one’s feelings will get hurt.
Reason #4: You paid too much for the item.
In my post titled “My First 10 Sales” I tell a story about a time I lost money because I paid $20 for a rain coat that only sold for $35. When you factor in fees and shipping, those numbers just don’t work. Before buying anything to add to your inventory, you have to consider how much you can sell it for.
Before you accept an offer, ask:
What did I pay for this item?
What will it realistically sell for?
Approximately how much will eBay take in fees?
How much will it cost to ship?
Am I paying for some or all of the shipping?
What will my actual profit be?
How you handle a losing sale matters.
Losing money on a sale is a total bummer, there’s no spinning it any other way. I lost money on my third sale, and then again several sales later (and quite a few sales after that). When that happened, I really started to doubt myself. I thought that maybe I had made a mistake in trying my hand as a reseller. Maybe there was no money to be made for a regular person like me. Maybe people who were finding success were doing something totally different than I was, or maybe they magically had access to better shipping rates than I did. Seriously, that thought crossed my mind.
But I made the decision not to give up. And like so many things in life, that decision made all the difference. Each time I lost money on a sale, I decided to use it as a learning experience, an opportunity to problem solve. Each time I thought about giving up, I took a look at what I had built, and decided that I wanted to keep building.
Turn Every Losing Sale Into a Better Reselling System.
I talk a lot on this blog about setting up systems. At this point I see losing money on sales as a failure in my systems. I either didn’t source things correctly (my sourcing system), accepted a bad offer (my pricing system), or didn’t select the best shipping option (my shipping system).
I have made plenty of mistakes along the way, and you will, too. But I use every mistake as an opportunity to fix my systems. For example, I keep a spreadsheet where I track all relevant information about each listing and sale, including shipping costs. Because I have been reselling for more than a year-and-a-half, I have some good data on shipping costs. Now when I list an item, I can refer back to my spreadsheet to find shipping costs of similar items that have sold in the past.
Frequently Asked Questions
Why am I losing money on eBay?
The most common reasons include underestimating shipping costs, paying too much for inventory, overlooking seller fees, and accepting offers without calculating your actual profit.
How do I calculate my profit on an eBay sale?
Subtract your purchase cost, eBay fees, shipping expenses you paid, and any other costs from your sale price.
How can I avoid losing money on eBay shipping?
Estimate package size and weight before listing expensive-to-ship items and compare available shipping services before purchasing a label.
Is it normal to lose money when you first start selling on eBay?
Losing money occasionally is common when you're learning, but repeated losses are information. Look at what caused the loss and adjust your sourcing, pricing, or shipping system
Final Thoughts
Losing money on a sale is frustrating, but it doesn’t necessarily mean that reselling isn’t profitable. It usually means there is something in your sourcing, pricing, or shipping system that needs to change. When I lose money now, I look at the numbers and ask why. Did I pay too much? Underestimate shipping? Accept too low an offer? Once I know what went wrong, I can change the way I handle the next sale.
The goal isn't to never make a mistake; it's to avoid making the same expensive mistake twice.
Your reselling journey will be full of lessons, from listing items people actually want to buy to how much you should pay when you’re sourcing. One of the things I enjoy about reselling is that there’s always something new to learn. The most successful resellers are the ones who are able to stay flexible and curious!