💸 How to Calculate Profit Margins

🧮 Step 1: Know What Goes Into the Sale

To calculate real profit, you need to track everything it cost you to sell the item — not just what you paid for it.

Here’s what to include:

✍️ Step 2: Use the Profit Formula

Here’s the simplest Rooted-style formula:

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Profit = Sale Price – (COGS + Fees + Shipping + Supplies)

Then to get your profit margin, use this:

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Profit Margin = (Profit ÷ Sale Price) × 100

📊 Example (Real-World Style):

Let’s say you sold a pair of shoes for $60 on eBay.

Total Costs: $27.70
Profit = $60 – $27.70 = $32.30
Profit Margin = ($32.30 ÷ $60) × 100 = 53.83%

✔️ That’s a solid profit. Rooted in Reselling aims for margins around 50%+ on most items.

📒 Step 3: Track It in a Spreadsheet

Use a simple sheet with these columns:

🧠 Rooted Tip: Track profit per item and average profit across categories. Over time, you’ll learn which types of inventory make the most money — and which to stop buying.

🔄 Bonus: Use Your Margins to Make Better Sourcing Decisions

When you’re out sourcing, mentally run the numbers before buying:

“If I sell this jacket for $40… I’ll pay $6 in fees, $10 in shipping, and I paid $5. That leaves me about $19 profit, or 47.5%. ✅ Worth it.”

If it comes out under 25% margin? Probably not worth your time or storage space.

🧠 Final Thoughts (Rooted-Style)

Profit margins aren’t just for bookkeepers. They’re how resellers stay in business.

• Track it every week.
  
  
• Use it to refine your sourcing.
  
  
• Drop or rotate inventory that consistently brings in weak returns.
  
  

Scaling your store without knowing your margins is like driving blindfolded. RiR doesn’t do that — and neither should you.