Revenue is the number every marketplace dashboard puts first, and it is the least useful number for deciding whether a flip was worth doing. This guide walks through the costs that sit between a sale and real profit.
What counts as a cost on a flip?
Every cost the unit carried from the store shelf to the buyer’s door counts. For most arbitrage sellers that is:
| Cost | What it covers |
|---|---|
| Item cost | What you paid, plus sales tax |
| Referral fee | The marketplace’s percentage of the sale price |
| Fulfillment fee | Pick, pack and ship, when the marketplace fulfills |
| Inbound shipping | Your share of getting the unit to the warehouse |
| Prep and labeling | Bags, labels, bundling, prep-center charges |
| Storage | Monthly storage while the unit waits to sell |
| Returns | An allowance based on your own return rate |
Fee rates change and differ by marketplace, category and item size, so take current numbers from each marketplace’s own fee pages rather than from a guide.
How do you calculate it, step by step?
- Start from the sale price. Use what the item actually sells for, not the list price you hope for.
- Add the landed cost of the item. Price paid plus sales tax and any cost to get it home.
- Add marketplace fees. The referral fee and, if the marketplace fulfills, the fulfillment fee.
- Add getting it to the warehouse and keeping it there. Inbound shipping, prep and storage, per unit.
- Allow for returns. A per-unit allowance from your own return rate.
- Subtract and compare. Sale price minus total cost is true profit. Profit ÷ sale price is margin; profit ÷ item cost is ROI.
What is the difference between margin and ROI?
Margin tells you how much of each sale you keep. ROI tells you how hard the money you spent on inventory worked. A $40 sale with $9.40 of true profit on an $18 item is a 23.5% margin and a 52.2% ROI. Arbitrage sellers usually set a minimum for both before buying, because a high-ROI item with a thin margin can still lose money if a fee changes or the price drops.
Why does storage time matter so much?
Storage is charged for as long as a unit sits unsold, so slow sellers get more expensive every month. An item that is profitable when it sells in two weeks can lose money if it sits for six months, especially if long-term storage charges apply. Track how long each unit has been in stock, not just how many you have.
How does Market Monster help?
Market Monster is being built to record these costs per unit as you buy, ship and sell, so true profit is calculated for you instead of in a spreadsheet. It is in early access today; see the features page for what works now.