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How Big Your Profit Will Be Selling Information On Ebay

The average CD on the open market today is going to cost about $15.99 retail. So, that's the benchmark you will use for music CDs. For informational CDs with the type of information that cannot be found elsewhere, you can actually sell the information for much more. However, you won't be able to sell it for anywhere less than what it costs you to produce and deliver it to the customer, including covering some operational costs for doing business. Otherwise, you don't make much profits even if you get affiliate sales and sponsored advertising, you will be out the amount of money it cost to manufacture and deliver the product.
Example #1

For the first example, let's assume you want to save a little money on handling by a third party and you opt to buy some private label content and modify it. Say you pay $9.95 for several 100 articles and you take 10 of them and consolidate them into an ebook which you plan to sell for $19.95. Ebooks generally sell for more than music CDs, so this is not unreasonable. You decide to do the work yourself and you estimate that all of your material costs for the CD and labels etc. will add up to $3 a CD. For the sake of simplification, we will assume that whatever it cost to ship your item, you will charge your customers that rate plus a small markup for handling. It will end up paying for the shipping fees and cost of doing business with shipping and will end up being a wash. We are also going to assume that as a new entrepreneur, you don't plan on paying yourself for the time it takes to create the CD.

Cost for insertion of the auction listing will most likely be $0.35 if you are trying to price in the $19.95 or less range. Your final sales fee will be $1.40 if it sells for $19.95. Also, you will have to estimate how long it takes you to run your business for one auction listing. Let's estimate 5 minutes overall for each CD using the tools we've discussed at a rate of $6.00/hr or $0.50 per disk.

So, now we have the following view of this model:

Production costs: $3/disk
Delivery Costs: N/A
Cost of doing business: $0.35 +$1.40 + $0.50 = $2.25
Total Cost: $5.25
Revenue: $19.95
Profit: $19.95-$5.25= $14.70 per disk.

If you were to sell $100 disks per month (to help you qualify as a bronze powerseller) you will make $1470/month and that translates to $17,640 per year in profit. You can take that money and pay yourself a salary or you can plug it back into the business, or both. If you sell 500 units a month (titanium powerseller), you can earn $7350/month or $88, 200 per year. This  is a conservative estimate for physical products because many people are willing to pay upwards of $29.95 for an ebook that comes in a CD-Rom version. If you charged this price, you could make $24.70 per ebook sold and have a total yearly income just shy of $30,000 at the bronze powerseller range. This is the minumum number of sales it takes to make powerseller range and at titanium powerseller level you would make $148,200.

However, you will also be making money off multiple products and income streams, so this is just your base income that you can expect if you are trying to achieve powerseller status. And, remember that powersellers get discounts on the fees too once they achieve the status, thus increasing your profit margin.
Example #2

So, your business will have multiple income streams, not just based on the profit of your physical inventory of CD Roms. Some infoproducts will go for $19.95 and others will be priced higher. A typical ebook can go for as much as $29.95 if good and in the hundreds, if excellent. You can use CD Roms to deliver the ebook to your customer to fulfill the new eBay policies  and all it takes is some extra time uploading it to a dropshipper or burning it on a CD. You will have to estimate costs to produce and deliver, however, you should have various offerings and not just one income stream. You should also be generating advertising dollars in the form of sponsored ads and affiliate marketing offers that other people buy.

Let's assume that you've decided to do do dropshipping with Kunaki.com for our second example. The fee is $1.75 per CD and $3 handling charge. The customer is charged for the shipping based on where they live and the shipping options they choose. You don't even have to see that part of it or include in your metrics to figure out how big your profits are because it's paid directly by the customer to Kunaki. So, let's assume you get each CD printed and delivered for $5 in production costs and $0 delivery charges for you delivering the product, since you don't - Kunaki does it. The cost of doing business then might include the listing fee and the time spent notifying Kunaki to fulfill the order.  

Production costs: $5/disk
Delivery Costs: N/A
Cost of doing business: $0.35 +$1.40 + $0.50 = $2.25
Total Cost: $7.25
Revenue: $15.99
Profit: $15.99-$7.25= $8.74 per disk

This is a conservative estimate that doesn't include any additional fees for added features in your listing or subscriptions to eBay stores. So, you could end up making $8.74 a CD. What's nice about Kunaki is that you don't have to print a batch of them and then try to sell them all. You can sell one at a time and thus keep your production costs from eating up the profits with unsold CDs.

If you are a powerselling at 100 units a month, then you can expect your profits to be about $874 per month. That's $10,488 per year on the sale of physical items. This doesn't seem like much, but again, you will be using your physical product sales as one income stream and have plenty of time left over using this model to generate other income streams from affiliate advertising and sponsored ads. There are established eBay infoproduct sellers who make $2,000 a week on eBay. That's $104,000 per year.
Comparison Of Different Models

The first model may seem more profitable at first glance, but we did not include the startup costs of getting the necessary equipment to do everything yourself. You will need a quality printer and mailing materials. There are printers that can print directly onto a CD without the need for a label, but they are more expensive. You will have to spend time burning CDs, packaging CDs, and shipping them. You may even have to spend time testing CDs to make sure they are burned correctly. There is also a learning curve on how much time it takes to learn how to do all these procedures. Of course, once you have that in place the income does become significantly higher after you recoup these expenses. The question is: Do you want to spend significant amounts of time being a publisher of infoproducts or do you want to be a marketer of infoproducts?

If fiddling with electronic equipment gives you the heebie jeebies then you might want to go with the second example, even if it is less profitable. The reason for this is that what you pay in outsourcing the production and delivery pays you back in additional free time to develop other income streams. If your goal is to make money quickly without having to spend too much time learning new software applications and mail programs, then this might appeal to you despite fewer profits. If you can work your way up to selling 500 units on the second model, you can still earn over $50,000 a year and have much more free time.

Don't Forget To Milk Your Other Money-Making Opportunities

The reason some people think that making money through ebooks or other infoproducts is hard is because they only think about selling one product at a time and never cross-sell or understand the marketing strategy to generate BIG MONEY. You have to stop thinking like a brick-and-mortar small business owner and take up the power of the Internet to get you big returns.

That means that you will want to begin creating a product line of high quality and with many different formats that you can use to promote your business. Some will make a lot of money for you and some you might decide to practically give away in the Classified Ad section to generate some sales leads. You should have accounts at various online third party sites to make your business work for you even when you are not there to mind it. Paypal can be used to automate order taking and delivery of digital products without too much trouble.

You will want to devote your time to market your products to others and, by all means, if you see another product that complements your own offerings, consider adding it as an affiliate offer to your own site. You don't have to create every single ebook or video yourself, you just have to offer it to your paying customers.

Pretty soon you will set yourself up as an expert in your niche and can offer membership to special classes, mentoring, or online seminars. The sky really is the limit when you are your own boss as to how much you can make, as long as you continue to think outside the box and take advantage of ALL your money-making opportunities, not just the conventional ones that are easy to spot.
The Benefits Of Being Your Own Boss

One last consideration to take into account when you are deciding whether to start your own online business are the benefits of being your own boss. If you work for someone else and you commute to and from their place of business to do your job, you don't get to claim that expense as a deduction on your taxes. The same is not true if you are using your car for errands that help support the running of your business. Be sure to check the IRS guidelines at IRS.gov to find out how to properly claim not only expenses from driving to and from the post office of mail box, or for trips to buy materials, but also for depreciation on your car too. The same is true of any equipment that you buy specifically for your business. The cost of buying the initial equipment can be depreciated on your taxes and help you to reduce your tax burden at the end of the year.

If you devote a portion of your home to doing an eBay business you also may qualify for the home office deduction on your income tax. This would allow you to deduct expenses that you normally would pay like utilities, rent or mortgage, from the profit that you declare at the end of the year to the IRS. This can reduce your taxes and help you to keep more of the money that you make.

Finally, there is nothing better than having your own business and knowing that you can make ends meet regardless of whether your company is having layoffs or suffering economically. It gives you the confidence to create the financial security you dream about with practically no upper limit on your income. You don't have to go to the boss for a raise and you don't have to wonder whether you'll be laid off. As you become more familiar with efficient and profitable ways to make money on the Internet your business can continue to grow and success is just a matter of time and persistence.

All the skills that you learn while setting up your own online business are transferable to any other type of product line you want to start as an online business and working with eBay makes it all that much simpler. You have access to a company with strong customer loyalty and a huge following. With the new policies in place, competition will be down for a while as eBay vendors try to convert their virtual online products into physical products and you can be a part of the bottom floor on all that!

Visit my Selling Info on ebay Blog for step by step information

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