How to calculate resale profit
Resale profit is the money that remains after you subtract everything it cost to acquire and sell an item from the money you received for it. The formula is short. Most errors come from using the wrong inputs, such as the listed price instead of the amount you actually received, or a cost that appeared after the sale and was never recorded.
The formula
Realized profit equals money received from completed sales, minus item cost, minus selling costs, minus refunds and returns, plus rewards and credits received.
FlipKeep uses the term realized profit for this result. It counts completed sales and money that has actually changed hands. Pending refunds, expected cashback, and stock you have not sold stay out of the number until the money arrives or the item sells.
The inputs
- Money received from completed sales. This is the amount that reaches you. For a gross sale, it is the price the buyer paid. For a net payout, it is the amount the marketplace paid you after its own fees.
- Item cost. The part of the purchase price that belongs to the item you sold. For a single item, that is what you paid. For a bulk purchase, it is your share of the lot, calculated as described in how to split bulk purchase costs.
- Selling costs. Marketplace fees, payment fees, seller shipping, packaging, seller taxes, and other costs you paid to complete the sale.
- Refunds and returns. Money you gave back to a buyer, plus the costs of handling a return, such as return shipping and restocking. If a return recovers a fee, the recovered amount counts toward the result too.
- Rewards and credits. Cashback and store credit that count toward the result. Count them once they have been received, not when they are promised.
A worked example
The numbers below are an example, not a real sale. You bought a camera as part of a lot, and your share of the lot cost is 60.00. You sold the camera for 150.00. The marketplace charged 15.00 in fees, you paid 12.00 to ship it, and packaging cost 2.00.
| Step | Amount |
|---|---|
| Money received from the sale | 150.00 |
| Subtract item cost | 60.00 |
| Subtract marketplace fee | 15.00 |
| Subtract seller shipping | 12.00 |
| Subtract packaging | 2.00 |
| Realized profit | 61.00 |
Two ratios are often used with this number:
- Profit margin is realized profit divided by money received. Here, 61.00 divided by 150.00 is about 40.7%.
- Return on investment (ROI) is realized profit divided by item cost. Here, 61.00 divided by 60.00 is about 101.7%.
Suppose the buyer later receives a partial refund of 20.00. Realized profit falls to 41.00 once that refund has been paid out, and it stays at 61.00 until then.
Common mistakes
- Treating the sale price as profit. The sale price is revenue. Profit is what remains after costs.
- Leaving out packaging or shipping you paid on a listing that offered free shipping.
- Counting a refund before the money has been returned.
- Counting cashback or store credit before it arrives.
- Placing the full cost of a bulk purchase on the first item you sell. That item can look like a loss, and every later item appears more profitable than it was.
Gross profit and realized profit
Gross profit usually means revenue minus item cost. It is a useful first check, but it leaves out the costs of selling and any money given back to the buyer. Realized profit adds those costs, subtracts refunds and returns, and includes the rewards and credits you have received. Use gross profit as a quick signal, and realized profit for the result you actually keep.
How to calculate profit for each sale
- Record the purchase with its full cost, including shipping and other purchase costs.
- Confirm the share of that cost assigned to each item.
- Record the sale with the amount you received, or record the price the buyer paid and each cost separately.
- Add each selling cost once.
- Record refunds and returns when the money moves, and keep the original sale in the history.
- Add rewards and credits when you receive them.
- Review the realized profit for the period you want to check.
Common questions
What is realized profit?
Realized profit counts completed sales and money that has changed hands. Pending refunds, expected rewards, and stock you have not sold do not change it.
Is the sale price the same as profit?
No. The sale price is revenue. Profit is what remains after you subtract item cost, selling costs, refunds, and returns, and then add the rewards and credits you have received.
How do I record shipping that the buyer paid?
If the buyer paid you for shipping, that amount is part of the money you received for the sale. If you paid the postage yourself, it is a selling cost. Record each amount once.
Does the formula change for a net payout?
No. A net payout is already the amount left after the marketplace's fees, so record that amount as the money received. Do not subtract the marketplace fees again. Add only the costs the payout did not already include, such as shipping or packaging you paid.
What if a sale makes a loss?
Record it the same way. A negative realized profit shows that the sale did not cover its costs, which helps you decide what to change next time.
Track your next flip in FlipKeep
Try the full app for 30 days. If it fits your workflow, unlock it once. There is no subscription.
