Weekly Update #4 - Sweet Sweet Maths

Seems like I'm starting all of our blog posts with this but yet another quiet week here. Just general cleanup, getting our affairs in order. We've finally got our filing system sorted which contains all the actual paperwork we have ie receipts, proof of postage etc. We've also been making good use of being a business by going to all the cash and carries and buying tons of stuff in bulk (mainly sweets!).

We've also setup a Wave account that'll help us keep track of all of our finances so we know exactly what we've spent, on which items, how much money we've received, how much money we're spending on shipping, on fees, on subscriptions, all kinds of things. First impressions of this software are good, as we realised we were not taking the PayPal fees into account when we setup our eBay prices which Wave highlighted how much we were spending on PayPal fees! Because of this we've adjusted a few of our prices on the items we sell.

We calculate our prices based on a couple of things, I'll attach an image below so you can see what we use to calculate everything. For eBay, because of the insane amount of fees we pay to eBay and PayPal, we have to charge more, we also have to pay for Premium eBay ads, as during our tests, although the item prices were higher for items we advertised, their sales also increased (tested over a process of 1 week with ads and 1 week without), we will go back and test this theory as we have more products, but for now we feel we need the eBay ads to help stand out.

I appreciate the above image may be a bit small on most screens but you can right click the image and "open in a new tab" to view it a bit closer.

So what is this, from left to right.

1. Our item name
2. Its variant ie Our Brine shrimp Hatchery is one item that we then sell in multiple bundles
3. Our costs to buy 1 item
4. Our cost to ship that item
5. How much of a % eBay charge us on the final selling price (+ tax!)
6. How much this actually works out to be
7. How much of a % eBay charge us to be a premium listing
8. How much this actually works out to be
9. How much PayPal will take if we sell the item on eBay
10. How much PayPal will take if we sell it on our own Shopify store
11. The total cost of the item to sell on eBay
12. What the recommended sale price for the item is taking into account the total costs
13. How much profit we make on the item
14. The total cost of the item if we sell it directly from our Shopify store
15. The recommended sale price on our store
16. How much profit we make on the item

So I admit this is a lot to take in all at once but its not as bad as it looks! All of this is calculated with some sweet maths, so all we have to enter is our costs to buy the item, how much it costs to ship the item, and make sure the eBay %s are correct (these vary depending on what category we list the item)

We also have a sheet linked to this (below) which contains all the fees and costs of posting, for example, PayPal take a fee of 3.4% + 20p of whatever we sell the item for so we need to make sure this is all calculated when we're working out the sale prices.

We try to stay as competitive as possible compared to our rivals. For example, one of our competitors is listing a competing DIY Brine shrimp hatchery for £18 on eBay, which looking at their product is the equivalent of the same item we're selling for £9.89. Could we up our prices to be closer to theirs? Probably but we've got a specific formula for calculating our prices, any more than that is just greedy, and we feel exploits our customers. We want to be able to grow our business, and to do that, we need to keep our prices as competitive as possible, but we also need to be smart. What we look for, in all of our items on eBay are 2 things, can we sell cheaper and will be of as good or higher quality, below are 2 items we looked at.

We wanted to look at selling Indian Almond Leaves (Catappa Leaves) but realised to be able to compete with the other sellers on eBay, we'd be making a loss. The current cheapest is 10 leaves for £2.99, (ignoring chinese sellers), we talked to a supplier in india who was willing to sell us 1000 leaves shipped to us for £112, so this worked out at a cost of £1.12 per item, great, lets sell! Well, not quite yet, we also have to add postage cost, which for this would be 0.83 + 0.04 for the ink/paper/bag costs, so now we're on £1.99, then if we sell at £2.89 to undercut our competitors, and take into account all the fees, our total cost is £2.85... Great, we make 4p! Ok, what if we take off the premium ads, we won't get as many sales but maybe the increased profit will be worth it. That brings our total cost for this to £2.68, we make 21p. In the end, for this much upfront cost we didn't think it was worthwhile, sure, we could cut our costs a bit by buying 10000 leaves instead but we currently don't have the sales to justify that kind of big upfront purchase.

However, we did notice that selling Live Baby Brine Shrimp from our DIY Hatcheries could be a viable product to sell as we'd be able to sell cheaper than our competitors, and have a product that's as good if not better than our competitors. While we would still be making less than £1 per sale in profit, the sheer amount of live food sales on eBay will make up for this lack of profit from individual sales.

Aside from our sweet maths, our dwarf puffer guide has also been posted, the day after we posted this we saw our first baby puffies in the tank, we had been thinking they had been acting odd for the last few days so this is good sign for us as we've only had them a couple of months and they're already breeding for us! We will hopefully be posting a guide for cultivating your own vinegar eels, as this is great first puffy food before they get big enough to take things like baby brine shrimp.