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Is this profitable?
I thought I would share this, and seek opinions?
Having completed my first year's REAL tax return, I have found that I am "making" a lot less than I thought - which in one way is good - less taxes - and more LEGO!
My real profit from gross receipts is approximately 12% does that sound reasonable?
PayPal fees and commission combined is approximately 6% so for every dollar in profit I am parting with ¢33
Not being the least expensive store here, I just wonder how those with rock bottom prices make anything?!?
Working it out per hour is fairly OK as I put in (again approx) 15-20 hours per week so it is strictly part-time.
Thoughts or opinions anyone?
Having completed my first year's REAL tax return, I have found that I am "making" a lot less than I thought - which in one way is good - less taxes - and more LEGO!
My real profit from gross receipts is approximately 12% does that sound reasonable?
PayPal fees and commission combined is approximately 6% so for every dollar in profit I am parting with ¢33
Not being the least expensive store here, I just wonder how those with rock bottom prices make anything?!?
Working it out per hour is fairly OK as I put in (again approx) 15-20 hours per week so it is strictly part-time.
Thoughts or opinions anyone?
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Never did a sale here as I keep my prices on average and all the hard work I put in to be paid off.
If all you want to deal with is new pieces I expect you need to get sets wholesale to get the best prices. A good relationship with a local non-chain toy store might be all you need, agreeing to buy their over-stock no questions asked for a suitable discount at the end of every season, etc.
12% could be a great margin if you're doing enough volume. Large businesses work on much lower margins.
Edit to add: I don't think price is necessarily the thing that most buyers concentrate on. Sure, some will and it's always a consideration, but the quantity and variety of parts available will be just as important for most - being able to buy all you need from 1-2 stores as opposed to twice that many can offer significant savings on postage costs. Long story short, I personally don't worry about not being the cheapest on every piece.
As for entire stores that are on sale, could be to generate quick income for a huge lot they are looking to buy to make money on, could be to create awareness on their store, boost feedback for the store due to being new, etc. Could be a few things but this is of course not sustainable in the long run.
My thoughts,
Chris
2. Many sellers believe that they don't have to pay tax because they're just a 'hobby store'.
3. Few sellers account for the elephant in the room - their time.
Many sellers therefore, have never properly calculated net profit, so sell at unsustainable prices, simply because others are doing so, or because a price guide suggests a particular price.
It's only when you 'do the math' as they say across the pond, that the penny drops and you have to decide whether to be more profitable or more popular.
Naturally, we all strive in vain to be both
Now we run as a business here and as brickcounter so elegantly stated points 1 and 3 are the key issue. Time equals money and because of the costs that need to be calculated correctly the profit is less than expected. As a business we don't do crazy sales, we rather dig the investment hole a little deeper to create more sales. This way at least the stock value of your shop doesn't drop.
For me "it started as a hobby" then gradually became a cheap way to get LEGO - then to be honest the building/hobby side is starting to wane - but I thought this could be a good way to fill the gap after I lost my **real job**.
In reality the hourly return (pay) is pretty good, guess I just thought I was making a lot more!
… ain't that always the way!
Fortunately the other half has decent job for now…
ultimate goal is a self sustaining life style = little or no taxes on your labor
I think it's a hobby for many of us, so it's no big deal if it pays much less than most regular professional jobs. Frankly, I find it relaxing to stop thinking for a few hours every day...
It looks like we'll have to register as a business in 2015 though, as we'll exceed the Canadian maximum of on-the-side personal income. For a business, the paperwork required to keep track of every transaction looks dreadful.
I have a side job as a teacher which I'm going to quit, it pays less per hour than my store.. On the other hand, you have to do all the savings for holidays, retirement etc yourself.
G
Having had to sort this mess out, after many grueling hours staring at spreadsheets, I have found where the profit is/went - in the stock room (unsold parts and figs).
Next thing is to figure out how to moneytize it all…
This past year has been my first "real" year, so this has been quite educational.
The profit is sort of there only it's ABS and not $$ :-O
Whilst my part count has remained fairly consistent - the value of the inventory has increased dramatically. So definately I feel better about the future...
I would guess you pro-sellers would have a clue as to why/what/how
Not a pro-seller, but I do keep some excell sheets to give myself an idea on what I'm doing, I've only done so since 2010 and I even skipped a year and half of data since then.
If you're selling as a sidejob, with not a large inventory, then you need to take in consideration that the build up takes many years and yes, your 'remaining' value is in your store (it's actually your profit *if* so far you managed to balance your purchases against your sales).
Thing is, without continously listing new stuff, the chances these 'remains' actually sell become slim, as the less you have, the less interesting your store will be... So basicly you build up year after year and your inventory grows, your 'returns' get re-invested (so you can't really 'cash in') and as long as you balance purchases and sales, your profit is the remaining ABS...
But that's like money on the bank, it's there, but it doesn't render all that much, the difference is, that in the long run, if you keep the flow going, the return is better and one day, you can cash in... The whole point is to find out what kind of store you wanna be, I've learned years ago I cannot compete with those larger stores who purchase at really low prices and 'dump' (if I may say so) their LEGO to get faster returns, so I work towards a more specialised store, but it's a process that has been taken already many years and it will still take many years to reach the point I wanna reach, but I know my goals and know how to get there, and that is the start of all 'knowledge' on how one wants to run his/her store ;-)
Have fun, Eric
I have a LOT of inventory and a substantial amount of storage infrastructure.
My wife understands my "investment", but she also sees a return in my sanity and ability to "stay busy". She has asked, gently, "What will happen to all of this when/if you 'go'?"
I tell her that it will be my Legocy. ;0)
Legocy , will have to add that to the http://www.newelementary.com/p/glossary.html#l
Having started from nothing in July13, not having a sale till Nov and braking the £100 in sales in Feb 14.
I've invested 1K twice using 0% on a credit card, not the best way I know! Which I've paid back 1 and now working on the other! (I say invested, I got carried away buying bargains!!)
Finally got around to adding up all my receipts and I'm making money, not much but I'm reinvesting in stock and better storage.
My plan was to reach the stage where if I had a slow 2-3 months with work I could use the store to pay my everyday bills and keep the store stock level the same.
My hourly rate is probably less that the Minimum UK wage, but I'm at stay at home dad of 2.
If I went out to work I'd need a 15-20K job just to pay their childcare.
Luckily my self employed work does pay better than the minimum.
I will be adding "LEGOcy" to my vocabulary
(I also am a stay home dad - Wife has a good job - no way I could match her Salary in the "real"
job market!)
It would seem that there are break points, and that I am at the first one - last summer I attempted to break the 200k part count - in vain - I had at least 20k parts in sets waiting to part out - so I went at it adding between 2 and 4k parts per day. As I closed in on 190k - orders started mushrooming - many multi lot. I was working up to 6 hours pick, pack and post - and another 4 parting and sorting.
Then I started making mistakes - not good - so I slowed it down.
I believe I have to decide IF I want to make this a "proper job" - which will involve employing someone, and a lot more costs.
It has turned out very worth while analyzing the data - basically pulled downloads of BrickOwl back ups as .csv, also PayPal history and bank data.
It was much easier than I imagined.
I have also found that having a reasonable MOV has little effect on gross sales - I currently have no MOV or ALV. Altho having no MOV results in some ridiculous orders - I think the single 10¢ part about tops it.
The bottom line is "hobby" or "business" - I think it is difficult to be both, plus I have too many hobbies at the moment. Guns, cars and LEGO - an odd mix but there ya go (not to mention (co)raising 3 pre-teens 2 of which are home un-schoolers
G