How to price items for resale: profit, margin, markup and ROI explained
Resellers use "margin", "markup" and "ROI" as if they meant the same thing. They don't, and mixing them up is one of the easiest ways to underprice stock. This guide explains each one with the same example item, then gives you a formula for the exact price to list at so you hit the profit you want after fees.
Start with real profit
Everything below builds on profit, so it has to include every cost of the sale:
Profit = sale price + shipping charged − platform fees − shipping label − item cost − other costs
"Other costs" is where people under-count: packaging, promoted listings, mileage to the post office, the cleaning or repair before listing. You don't need to be exact on every sale, but a rough per-item allowance (say 50p or 50¢ for a mailer and tape) stops small costs quietly eating your profit.
The example
You buy a jacket at a charity shop or thrift store for 8, and sell it for 30 on a platform that charges 13% + 0.30 per sale. The buyer pays shipping separately, and packaging costs you 0.50. (Use whatever currency you sell in; the maths is the same.)
- Fees: 30 × 13% + 0.30 = 4.20
- Profit: 30 − 4.20 − 8 − 0.50 = 17.30
Profit margin
Margin = profit ÷ sale price
17.30 ÷ 30 = 57.7%. Margin tells you how much of each sale you keep. It can never exceed 100%, and it's the number to watch when comparing platforms: a platform with higher fees shrinks your margin on the same sale price.
Markup
Markup = (sale price − item cost) ÷ item cost
(30 − 8) ÷ 8 = 275%. Markup compares the selling price with what you paid. It ignores fees, which makes it handy for quick sourcing decisions ("I want to sell for at least 3× what I pay") but misleading as a measure of profit.
ROI (return on investment)
ROI = profit ÷ item cost
17.30 ÷ 8 = 216%. ROI tells you how hard your money is working. Two items can make the same profit with very different ROI: 17 profit on an 8 jacket is a far better use of cash than 17 profit on a 60 pair of trainers, because the cash you spent on the trainers could have bought seven jackets.
| Measure | Formula | Example | Best for |
|---|---|---|---|
| Profit | Money in − all costs | 17.30 | Whether a sale was worth it |
| Margin | Profit ÷ sale price | 57.7% | Comparing platforms and fees |
| Markup | (Price − cost) ÷ cost | 275% | Quick sourcing rules of thumb |
| ROI | Profit ÷ item cost | 216% | Where to spend your sourcing budget |
The price you need for a target profit
Most platforms charge a percentage of the sale plus a fixed fee, so you can't simply add your costs and profit together. Work backwards instead:
List price = (item cost + fixed fee + other costs + target profit) ÷ (1 − fee percentage)
To make 15 profit on the 8 jacket on the 13% + 0.30 platform: (8 + 0.30 + 0.50 + 15) ÷ (1 − 0.13) = 23.80 ÷ 0.87 = 27.36. Round up to a sensible price like 28.
If you expect offers, add your usual discount on top. Listing at 32 leaves room to accept 28 and still hit your target.
Pricing mistakes that cost resellers money
- Forgetting fixed fees on cheap items. A 0.30 fixed fee is 1% of a 30 sale but 6% of a 5 sale. On very cheap items, bundling several into one sale is often the only way to make a real profit.
- Counting free shipping as free. If you offer free postage, the label comes out of your profit. Add it into the price.
- Ignoring the fees on shipping. Some platforms take their percentage from the total the buyer pays, including shipping.
- Chasing markup instead of profit. 500% markup on a 1 item is 5. Your time is worth more than that.
- Not tracking. Record cost, sale price, fees and postage for each sale. Apart from showing you what's really profitable, many tax authorities expect sellers to keep these records.
Run your own numbers
The reseller profit calculator works out fees, profit, margin and ROI for eBay, Poshmark, Vinted, Depop and Etsy, and compares the same sale on every platform side by side. It runs in your browser and doesn't store anything.