%ROI - part sold vs bought?

HIDDEN_TREASURE

Hey! To sellers, how do you calculate the %ROI? Does thinking for how much did you buy an average brick and how much you sold it make sense?

Let's assume that we have 200k in inventory, knowing how much I spent on the assortment, I know that on average I managed to buy each brick for 0.06$. Then, knowing how many parts I sold in a month for what amount I can calculate that I sold each brick for 0.09$ on average - does this make sense to you or do you take any other measures apart from the classic money in money out?

thanks for your thoughts:)

Calibrick

I track my ROI tightly using a weighted value method (since I sell mostly used)... it varies year to year dependent upon what buys I have made that year, how much I spent in mileage, did I do holiday thank-you gifts, etc.. The toy industry in general runs 23-27% profit. I've run anywhere from 25% to 40% profit per year which is 10% less than others who operate as I do since we donate 10% of all sales to the CCFA.

For used, some years are simply cheaper than others to restock. ;-)

I am guessing you are selling new parts only, whereas I am selling 95% used parts - so my cost per part (based on a weighted average based on sell price runs anywhere from $0.0001 for a technic pin to up to a $1.00 for a super expensive part for sale (I tend to run anywhere from 300% to 800% sell price per what I paid per part).

Geert Middelman

I track my roi on new parts only via a weighted system of cost of goods sold. My set has a cost price, I calculated the weighted cost per piece based on the listed sell price of each piece. That means that the cost of a pin might end up as 0.02 ct, while the cost of a large expensive windshield could be a dollar or more. Averaging the whole thing just doesn’t work as the cost for a technic pin should never be 10 cents as you’ll never make a profit on that pin, and the costs of that expensive wind should should also not be 10 cents as you’ll be able to list the windshield for way too little to be profitable.

It’s not easy, I had to write some python for it to do the calculations easily, but I was kinda forced to do that anyway as i also file taxes based on the fifo cost of goods sold system. It had to be accurate.

My guideline for purchasing new sets is to have the sell price at least over 2.8 of the purchasing price, preferably 3.0. Exceptions are made to either very good breadth additions to inventory, or proven fast resell time on large or expensive parts or mini figures.

HIDDEN_TREASURE

Geert - Quite a good method, but when I did not complete the price for a brick (my cost) from each set and only after a few weeks I want to make such a calculation (weighted system of cost of goods sold), it misses the point - I do not know how many of these elements that I bought on the beginning is still in my inventory and how many have already been sold.

I think it only remains for me to sum up all the expenses for the bricks (new sets bought) and divide the amount of the current inventory items by the cost of the bricks purchased.

Calibrick

@HIDDEN_TREASURE BO does keep an automated backup for your parts listed, so you could go into your Inventory tab and download one of those auto backups to see your original listings?

Calibrick

BTW, I totally applaud you for trying to do the right thing and calculating your COGS!!!!

Mrs Swoop

I have a very small store just as a hobby and it's mostly new stock. When I first opened my store I used spreadsheets to keep track of sales against the sets that I had bought because I wanted to see if my expected ROIs were correct, but that takes an awful lot of time and I very quickly gave up doing that. The only check I have now is to compare my current stock value against how much I've invested. And I know that that can change dramatically with one click of the Update Lots button but it's good enough for me.

Calibrick

If you are looking to understand how to calculate COGS on used or new LEGO, ONE method is an alternative accounting method I use called weighted value. It is based on the total lot cost paid, allocating my cost to each part based on the sell cost of each item as a weighted percentage of the overall lot cost.

So my math, for better or worse, works like this as an example... and note in the process at the end how I average out my cost, which then actually changes each time I add new lots to a specific part (since I don't do first in/first out or last in/first out):

One-Time Entry:
LOTXCOST = Total cost YOU paid for the full lot of parts you are listing (one-time entry)
QTY = Quantity of the specific part ID (by part and color) input
SELLPRICE = The price you are selling the specific part ID for at the time of entry (by part and color)

Formulas:
LOTXVALUE = Sum of the total sell value of ALL the parts for the lot - this number should increment higher as parts from the lot are input into your store until all are entered (setup as a running sum of a set of your data entry fields, e.g., adds all SELLTOTAL entries)
SELLTOTAL = SELLPRICE x QTY
RELATIVEVALUE = SELLTOTAL / LOTXVALUE
MYTOTALCOST = RELATIVEVALUE x LOTXCOST
MYUNITCOST = MYTOTALCOST / QTY
PROFITPERUNIT = SELLPRICE - MYUNITCOST
%PROFITPERUNIT = PROFITPERUNIT / SELLPRICE

I hope this helps a bit! I'm happy to share my Excel workbook that auto-calcs (based on US and California rules) the above along with all purchases, mileage, and all that good business stuff. It is based on downloading and periodically pasting in several BO reports and for me, a PayPal report. The workbook does all the rest. Just message me with your email address if it would help you! :-)

Calibrick

@Mrs Swoop unfortunately in the US we are not allowed to setup a store as a hobby. :-( Our Federal taxes mandate that EVERYTHING is considered a business save minor carveouts for garage sales and the like (and even then, in my state you have to register those, technically, though you don't have to pay taxes on those).

One is fine with selling one's own LEGOs with our Federal government without reporting it as the sales taxes were already paid on it, but our Federal tax code is super-specific: the second you buy any LEGO with the intent to sell it, you are a business and better make with the reporting. Which is a PITA these days, not how it used to be.

That is part of why we're so terribly slow to restock - inputting into BO is super easy. But for every entry having to track COGS per UNIT is the nightmare for LEGO sales, which requires all that Excel workbook magic. When I ran a Internet-based CCG small business in the earlier WWW days (30-ish years ago), our tax law was a lot simpler: you only had to track new inventory bought, which you wrote off as a single number.

That got super abused (which is easy to do, sadly), so they changed it at some point to you can only write off the actual cost for the items you actually sold... and when selling from lots of used LEGO (or those that splitup new sets into parts), you have to get into the mycost gymnastics discussed here, down to every little technic pin. :-(

I think the above is why I get a wee bit frustrated when I sense folks aren't playing by the rules and putting in the same work I'm forced to... but I also get super stoked when I see good folks like the OP that want to try to do the right thing. It's NEVER too late to start doing it right! :-)

Calibrick

Oops I forgot on my formulas post...

When I add additional lots later, you then have to start averaging out the different MYCOSTS for each part id (specific part and color), unless you are going to deal with separate listings in BO (which can cost you wishlist magic appearances, as you'll have multiple lots of the same item vs. a larger quantity of the item), or have your inventory setup in such a way that you'll know which part sells as tied to which lot for mycost. Which is a PITA!!! So I do the below:

Using all the same formulas discussed earlier... I have each major LOT as a different worksheet in a workbook.

I then have a worksheet that lists (permanently) every single part (by item and by color) that I have ever sold. That is my running MYCOST sheet I use for taxes. Yes, it's like 20,000+ rows at this point, but starting originally is super easy if you already have your parts in BO - download your inventory to start it. ;-)

For each BO ID, I simply average the MYUNITCOST from above from every lot added over the years. Basically I use hidden columns for that. For the CURRENT LOT undergoing entry, you need to link MYUNITCOST to your formula that calcs it - do not actually input the number, as MYUNITCOST will go down as more and more items from that lot are input.

As new lots are input, you add new columns to track those costs and average out what you paid over time for each specific part.