Reseller Profit Margins Explained: The Complete Guide to Understanding Your True Costs (2026)

Most resellers don’t actually know how much money they’re making. They know their revenue. They know what they paid for inventory. But the gap between “I sold it for $45” and “I profited $22” is filled with fees, shipping costs, supplies, gas, returns, and a dozen other expenses that silently erode margins.

Here’s the uncomfortable truth: a reseller who tracks revenue of $50,000/year might only be profiting $15,000-$20,000 after all costs. That’s a 30-40% net margin—far from the 60-70% gross margins they think they’re earning. And some resellers, especially those who don’t track expenses carefully, are making even less than they realize.

This guide breaks down every cost that affects your bottom line, shows you how to calculate real profit margins on every flip, compares how platform fees impact your margins, and gives you benchmarks for what “good” margins actually look like by category. If you’ve been tracking revenue and calling it profit, this is the guide that changes how you think about your business.

If you’re new to reselling start with our beginner’s guide, then come back here once you’re selling and ready to understand your actual numbers.

Gross Margin vs. Net Margin: The Critical Distinction

Before anything else, you need to understand two terms that most resellers use interchangeably—even though they mean very different things.

Gross Margin

Gross margin is the simplest profitability measure: sale price minus the cost of the item, divided by the sale price.

$\text{Gross Margin} = \frac{\text{Sale Price} - \text{Cost of Goods (COGS)}}{\text{Sale Price}} \times 100$

Example: You buy a jacket for $8 at Goodwill and sell it for $45.

$\text{Gross Margin} = \frac{45 - 8}{45} \times 100 = 82.2%$

That looks incredible. 82% margin. But it doesn’t include platform fees, shipping costs, packing materials, gas to the thrift store, or anything else. Gross margin tells you almost nothing about your actual profit.

Net Margin

Net margin includes ALL costs associated with a sale: platform fees, payment processing, shipping postage, shipping supplies, a portion of your gas/mileage, a portion of your time, storage costs, and an allowance for returns and dead inventory.

$\text{Net Margin} = \frac{\text{Sale Price} - \text{ALL Costs}}{\text{Sale Price}} \times 100$

Same example with real costs:

$\text{Net Margin} = \frac{45 - 24.91}{45} \times 100 = 44.6%$

Your “82% margin” just became 44.6%. That’s still a good flip—$20.09 profit—but understanding the gap between gross and net is the first step to running a profitable reselling business.

💡 Pro Tip: Track both gross and net margins. Gross margin tells you whether your sourcing is good (buying low enough). Net margin tells you whether your business operations are efficient. If gross margins are high but net margins are low, your operational costs are the problem. Use our flip profit calculator to calculate true profit on every deal.

The Complete Cost Stack: Every Dollar You’re Spending

Here’s every cost that should factor into your profit calculations. Most resellers track the first two and ignore the rest.

1. Purchase Price (COGS — Cost of Goods Sold)

What you paid for the item. This is the most obvious cost and the easiest to track.

Common COGS by sourcing channel:

For a detailed breakdown of sourcing channels, see our complete sourcing guide.

2. Platform Fees

Every selling platform takes a cut. This is typically your second-largest expense after COGS. And they vary significantly.

Use our platform fee comparison tool for exact calculations at any price point. Sometimes shifting an item from Poshmark (20%) to eBay (13.25%) adds $5-$10 in profit with no extra effort.

💡 Pro Tip: The platform you list on can swing your net margin by 5-12 percentage points. A $50 item on Poshmark costs you $10 in fees. The same item on Facebook Marketplace shipped costs $4. That $6 difference goes straight to your bottom line. Use our ebay-mercari-poshmark fee calculator before listing every high-value item.

3. Payment Processing Fees

On some platforms, payment processing is separate from the selling fee:

• eBay: Included in the 13.25%
• Poshmark: Included in the 20%
• Mercari: 2.9% + $0.50 per transaction (on top of the 10% selling fee)
• Etsy: 3% + $0.25 per transaction (on top of the 6.5% transaction fee)
• Your own website: Stripe/PayPal charges 2.9% + $0.30

4. Shipping Costs

Shipping is often the largest variable cost for resellers, and it’s the one most commonly miscalculated.

Shipping postage by method (2026 rates):

Use our first class vs. priority calculator to determine the cheapest shipping option for each item, and our shipping box size calculator to optimize your packaging.

Shipping supplies:

Estimated supply cost per shipment: $0.30-$0.75 for soft goods, $0.75-$2.00 for fragile/heavy items.

5. Gas and Mileage

If you’re sourcing in person (thrift stores, estate sales, garage sales), transportation is a real cost.

IRS standard mileage rate (2026): $0.70/mile

If you drive 15 miles round-trip to a thrift store and buy 8 items, your mileage allocation is:

$\frac{15 \times 0.70}{8} = $1.31 \text{ per item}$

If you hit 3 stores in a sourcing trip covering 40 miles and pick up 15 items:

$\frac{40 \times 0.70}{15} = $1.87 \text{ per item}$

This doesn’t seem like much, but over 500 items/year, it adds up to $650-$935 in gas costs alone (which is also a tax deduction).

6. Storage Costs

Whether you’re using a spare bedroom, garage, or rented storage unit, space has a cost.

• Spare room in your home: Allocate a portion of rent/mortgage. If you dedicate 150 sq ft of a 1,500 sq ft home and pay $1,800/month rent, your storage cost is $180/month.
• Rented storage unit: $50-$200/month depending on location and size
• Cost per item: If you store 200 items at a cost of $150/month and average 30-day turnover, each item incurs ~$0.75 in storage cost

Storage costs are easy to ignore because they’re fixed monthly expenses rather than per-item costs, but they absolutely impact your margins.

7. The Hidden Costs Nobody Talks About

These are the margin killers that don’t show up on any receipt:

Dead inventory: Not everything sells. Industry estimates suggest 5-15% of reseller inventory never sells at a profitable price and eventually gets donated, recycled, or sold at a loss. If you spend $1,000 on sourcing, $50-$150 of that is effectively wasted.

Returns and refunds: Across platforms, return rates for resellers average 3-8%. On a $50 item, a return costs you the original shipping ($5-$10), potentially return shipping ($5-$10), platform fee refund timing, and the item may come back damaged or unsellable. Budget 5% of revenue for returns.

Time value: The most controversial “cost” but arguably the most important. If you spend 20 hours per week reselling and earn $500/week in profit, you’re making $25/hour. Is that good? Depends on your alternatives. But if you’re spending 30 hours to earn $300, that’s $10/hour—and you need to restructure.

Unsold relisting fees: On Etsy, every 4-month listing renewal costs $0.20. If an item takes 3 renewals to sell, you’ve spent $0.60 beyond the original listing fee.

Photos and listing time: Your time to photograph, write descriptions, research comps, and manage listings has value. A systematic approach saves time—see our guide to writing listings that sell.

Full Worked Example: The $5 Thrift Store Find

Let’s trace a single item through every cost to show what “profit” actually means.

The Item: Vintage Levi’s 501 Jeans

• Sourced at: Goodwill
• Purchase price: $5.99
• Sold on: eBay
• Sale price: $62.00
• Shipping charged to buyer: $0 (free shipping offered)

Gross Margin Calculation:

$\text{Gross Margin} = \frac{62.00 - 5.99}{62.00} \times 100 = 90.3%$

Looks amazing. But here’s reality:

Complete Cost Breakdown

True Net Profit

$\text{Net Profit} = $62.00 - $35.33 = $26.67$

$\text{Net Margin} = \frac{26.67}{62.00} \times 100 = 43.0%$

That Levi’s flip is still profitable—$26.67 for roughly 30 minutes of total work (sourcing, photographing, listing, packaging, shipping) is solid. But it’s a long way from the $56 “profit” you might have assumed at 90.3% gross margin.

Use our vintage Levi’s date decoder to identify valuable vintage denim that commands premium prices, and check our ROI calculator to model scenarios before you buy.

💡 Pro Tip: Run this calculation on your last 10 sales. The results will surprise you—and immediately change how you source and price. Knowing your true margins turns “I think this is a good deal” into “I know this will profit me $X.”

How Platform Fees Crush (or Boost) Your Margins

Platform selection can make or break your margins. Here’s the same $50 item across five platforms:

Same Item, Different Platforms

Item: Nike vintage windbreaker, purchased for $6 at Goodwill, sold for $50

Note: All examples include allocated costs for gas ($1.50), dead inventory ($2), and storage ($0.50) beyond the listed fees.

Key takeaways:

• Poshmark’s 20% fee sounds brutal, but the buyer pays shipping—which can actually make Poshmark MORE profitable for clothing than eBay
• Facebook Marketplace local pickup eliminates shipping entirely, giving the highest margin
• eBay is middle-of-the-pack for clothing but excels with its massive audience
• Platform-specific strengths matter more than fee percentages alone

For every item, run the numbers through our platform fee comparison tool before choosing where to list. For more on choosing the right platform for each item type, see our platform comparison guide.

The “Hidden” Costs Nobody Talks About

Beyond the calculable per-item costs, several expenses silently eat into your annual profits.

Dead Inventory

This is the inventory black hole. Items that sit for months, eventually get donated, sold at a loss, or thrown away. Every reseller has a “death pile.”

The math on dead inventory:

If you source 500 items per year at an average cost of $7 each, and 10% never sell:

• Lost COGS: 50 items × $7 = $350/year
• Lost storage space: 50 items × $0.75/month × 6 months average = $225/year
• Total dead inventory cost: $575/year

That’s $575 straight off your bottom line. Reducing your dead inventory rate from 10% to 5% saves you ~$290/year in pure profit. Learn how to avoid accumulating unsellable inventory in our guide to avoiding the death pile.

Returns and Disputes

Returns cost far more than the refund amount. When a buyer returns a $50 item:

A single return on a $50 item can effectively erase the profit from 2-3 other successful sales. Read our returns and refunds guide to minimize return rates through better listings and honest descriptions.

Subscription Services

Reseller tools add up:

Annual tool costs for a part-time reseller: $300-$800 Annual tool costs for a full-time reseller: $800-$2,000+

These costs need to be recovered through either higher volume or higher margins. For a breakdown of essential tools and whether they’re worth the investment, see our reselling apps and tools guide.

Vehicle Expenses

If you source in person, your car is a business tool:

• Gas/mileage for sourcing trips
• Additional wear and tear
• Car insurance increase (if you declare business use)
• Parking fees at estate sales/thrift stores in urban areas

Realistic annual vehicle cost allocation for a part-time reseller who sources 3x per week: $1,200-$2,400/year

Track every mile with an app like MileIQ or Everlance. These costs are tax deductible.

Minimum Margin Thresholds: When Is a Flip NOT Worth Your Time?

Not every deal is worth taking. Here’s how to calculate your minimum acceptable profit per item.

The Time Factor

Calculate your effective hourly rate for a flip:

Total time per item:

• Sourcing time (finding + evaluating): 5-15 min
• Photography: 5-10 min
• Listing creation: 5-10 min
• Packaging and shipping: 10-15 min
• Customer service: 2-5 min average (including returns allocation)
• Total: 27-55 minutes per item

If you want to earn at least $20/hour and each item takes 40 minutes total:

$\text{Minimum Profit} = \frac{40}{60} \times $20 = $13.33 \text{ per item}$

Any flip that nets less than ~$13 after ALL costs isn’t worth your time at a $20/hour target.

Minimum Profit Thresholds by Selling Style

💡 Pro Tip: Set a “pickup threshold” at the thrift store. If an item won’t net you at least $12-15 in profit, put it back. This one rule eliminates the most common mistake in reselling: buying too many low-margin items that eat your time. For guidance on which items are actually worth picking up, see our guide to easy items to flip and use our break-even price calculator.

Profit Margins by Category: What to Expect

Different categories have dramatically different margin profiles. Here’s what realistic margins look like across major reselling categories.

Margin Benchmarks by Category

For specific item recommendations by category, see our best things to flip for profit guide.

Category Strategy Based on Margins

Highest net margins (easiest to profit):

1. Vintage jewelry (45-65% net) — Tiny to ship, huge markups
2. Vintage clothing (35-50% net) — Low COGS, premium pricing
3. Furniture via local sale (35-55% net) — No shipping costs
4. Vintage kitchen/Pyrex (35-50% net) — Dedicated buyer communities

Lowest net margins (hardest to profit):

1. Electronics (10-20% net) — Returns, testing, competition
2. Books (20-35% net) — Low sale price per unit
3. Sports equipment (20-30% net) — Shipping cost kills margins

💡 Pro Tip: Don’t chase revenue—chase margin. A reseller doing $30,000/year in vintage clothing at 40% net margin earns $12,000 in profit. A reseller doing $50,000/year in electronics at 15% net margin earns $7,500. Less revenue, more money. Focus on the categories where your margins actually support your income goals.

Improving Your Margins: Three Levers

There are only three ways to improve your profit margins: lower your costs, increase your prices, or turn inventory faster.

Lever 1: Lower Your Costs

Reduce COGS:

• Source at Goodwill Outlet bins (price by the pound = lowest COGS)
• Negotiate bundle deals at estate sales and garage sales (“I’ll take all 10 for $20”)
• Buy liquidation lots for per-unit costs under $3

Reduce shipping costs:

• Use Pirate Ship for discounted USPS/UPS rates (10-30% savings)
• Use free USPS Priority Mail boxes (available at any post office)
• Recycle packaging materials from your own online orders
• Buy polymailers and bubble wrap in bulk (500+ units)

Reduce platform fees:

• eBay Store subscription reduces final value fees by 1-3% per sale
• Choose the lowest-fee platform appropriate for each item type
• Use Facebook Marketplace local pickup for heavy items (0% platform fees on local sales)

Lever 2: Increase Your Prices

Better photography: Images sell items. Investing 5 extra minutes in styling and lighting can add $5-$15 to your average sale price. See our photography guide.

Better descriptions: Keyword-rich, detailed descriptions attract more views and justify higher prices. Use our listing title optimizer to craft titles that get clicks.

Platform selection: Some platforms command higher prices. Etsy vintage items sell for 15-40% more than the same items on eBay. Poshmark fashion items often sell higher than Mercari. Match items to the platform where buyers pay the most—use our crosslisting platforms comparison tool to strategize.

Condition restoration: Cleaning, pressing, or minor repairs can dramatically increase sale price. A $15 vintage shirt becomes a $35 shirt after steaming, stain removal, and professional photos.

Lever 3: Faster Inventory Turnover

Faster turnover improves margins by reducing storage costs, dead inventory risk, and capital tied up in unsold items.

Strategies for faster turnover:

• Price to sell within 14-30 days, not 90+
• Drop prices 10% every 2 weeks on items that haven’t sold
• Crosslist on multiple platforms simultaneously
• List during peak demand seasons for each category
• Accept reasonable offers instead of waiting for full price

Use our inventory turnover calculator to measure how quickly your inventory converts to cash. Target a turnover rate of 4-6x per year (items selling within 60-90 days on average).

The Danger of “Revenue” Thinking vs. “Profit” Thinking

The most common mindset trap in reselling is optimizing for revenue instead of profit.

Revenue Thinking (Dangerous)

“I sold $5,000 worth of items last month!”

But if your total costs were $3,500, you only profited $1,500. And if you spent 80 hours on your reselling business that month:

$\text{Effective Hourly Rate} = \frac{$1,500}{80} = $18.75/\text{hour}$

Profit Thinking (Smart)

“I profited $1,500 last month on 80 hours of work, giving me an effective rate of $18.75/hour. To hit my goal of $25/hour, I need to either increase my average profit per item from $15 to $20 or reduce my time per item from 40 minutes to 30 minutes.”

This is how you actually grow a reselling business. You identify the specific metrics that drive profitability and improve them systematically.

Key Metrics to Track

💡 Pro Tip: Create a simple spreadsheet tracking each item’s purchase cost, platform, sale price, fees, shipping cost, and net profit. After 50-100 tracked items, patterns emerge: which categories earn the best margins, which platforms net you the most, and which sourcing channels produce winners. This data is worth more than any reselling course.

Margins for Part-Time vs. Full-Time Resellers

Your margin targets should differ based on whether reselling is a side hustle or your primary income.

Part-Time Reseller (10-15 hours/week)

• Revenue target: $1,000-$3,000/month
• Net margin target: 35-50%
• Net income target: $350-$1,500/month
• Focus: High-margin items that sell quickly. Skip low-margin items that require time.
• Key advantage: Lower overhead (no storage unit, no subscriptions)

For a detailed 10-hour-per-week plan, see our part-time reselling guide.

Full-Time Reseller (30-50 hours/week)

• Revenue target: $5,000-$15,000/month
• Net margin target: 25-40%
• Net income target: $1,500-$6,000/month
• Focus: Volume + margin balance. Accept slightly lower margins if turnover is fast.
• Key challenge: Overhead increases (storage, tools, vehicle, health insurance, self-employment tax)

Full-time resellers often see lower net margins than part-timers because overhead scales with volume. The path from side hustle to full-time income requires careful planning—see our income expectations guide.

Calculating Your Break-Even Point

Every item has a minimum price at which you break even—zero profit, zero loss. Knowing this number prevents you from accepting offers that actually cost you money.

Break-Even Formula

$\text{Break-Even Price} = \frac{\text{COGS} + \text{Shipping} + \text{Supplies} + \text{Fixed Cost Allocation}}{1 - \text{Platform Fee Rate}}$

Example: You paid $8 for a vintage mug. Shipping will cost $6. Supplies cost $1. You allocate $2 for overhead.

$\text{Break-Even Price} = \frac{8 + 6 + 1 + 2}{1 - 0.1325} = \frac{17}{0.8675} = $19.60$

Any sale below $19.60 means you’re losing money on this item. Your listing price should be well above break-even to account for potential discounts and negotiation.

Use our break-even price calculator to instantly calculate this for any item, or use our negotiation range calculator to set smart minimum offer thresholds.

💡 Pro Tip: Calculate break-even BEFORE you buy inventory. At the thrift store, quickly estimate: “This costs $5, shipping will be about $7, fees about $4. My break-even is roughly $18-20. Can I sell this for $30+?” If yes, buy it. If not, put it back. This 10-second mental math filter eliminates bad purchases.

Frequently Asked Questions

Q: What’s a “good” net profit margin for reselling?

A: 30-50% net margin is a strong target for most resellers. Vintage clothing and jewelry sellers can achieve 40-65% net margins, while electronics resellers often work with 10-20% net margins. Anything above 30% net is considered healthy for a sustainable reselling business.

Q: How do I calculate profit on a specific flip?

A: Net Profit = Sale Price − (COGS + Platform Fees + Shipping Postage + Shipping Supplies + Allocated Overhead). Use our flip profit calculator to automate this calculation with accurate fee rates for each platform.

Q: Which selling platform has the lowest fees?

A: Facebook Marketplace local pickup has effectively 0% fees. For shipped items, Depop (~8% + processing) and Facebook Marketplace shipped (~8% total) have the lowest fees. Poshmark (20%) has the highest. But lower fees don’t always mean higher profit—platform audience and average sale price matter too. Use our platform fee comparison to compare.

Q: How do I track all these costs?

A: Start with a simple Google Sheet with columns for: item name, purchase cost, platform, sale price, fees, shipping cost, supplies, and net profit. After 50 items, you’ll have clear patterns. Apps like Sellerboard, SellerAmp, or inventory management tools can automate this as you scale.

Q: Should I count my time as a cost?

A: For profitability analysis, yes. If you spend 40 hours per week and profit $800, you’re earning $20/hour. You need to decide if that rate meets your goals. For tax purposes, your time is not a deductible expense (you pay yourself from profits), but for business decisions, time value is critical.

Q: What’s the biggest hidden cost most resellers miss?

A: Dead inventory. Most new resellers overestimate their sell-through rate. If 10-15% of your sourced inventory never sells at a profit, that’s hundreds of dollars per year in wasted COGS plus the storage cost of holding those items. Being selective at the sourcing stage is the best fix.

Q: How much should I spend on shipping supplies?

A: Target $0.30-$0.75 per shipment for clothing and lightweight goods, and $1.00-$2.00 for fragile or heavy items. Buy in bulk, recycle packaging from your own purchases, and use free USPS Priority Mail boxes. Annual supply costs for a part-time reseller: $150-$400.

Q: Is it worth selling items with only $5-$8 profit?

A: Generally no, unless you can list and ship them in under 15 minutes total. At $5 profit and 30 minutes of work, you’re earning $10/hour—below minimum wage in most states. Focus on items that net $12+ per flip to maintain a sustainable hourly rate. Use our margin vs. markup calculator to validate margins before listing.

Q: How do returns affect my profit margins?

A: A single return on a $50 item typically costs $15-$25 in lost shipping, time, and potential item depreciation—enough to wipe out the profit from 1-2 other sales. Average return rates for resellers run 3-8%. Budget 4-5% of revenue as a return cost allocation in your margin calculations.

Q: Do I need to track margins differently for each platform?

A: Yes. Your net margin on the same item can vary by 10-20 percentage points depending on the platform. An item that nets 45% margin on Poshmark (because the buyer pays shipping) might only net 30% on eBay (where you pay shipping to stay competitive). Track per-platform margins to make smart listing decisions.

Start Tracking Your True Margins Today

The difference between resellers who build sustainable businesses and those who burn out after six months almost always comes down to one thing: understanding their real numbers. Revenue is vanity. Profit is sanity.

Start today. Pick your last 10 sales. Calculate the true net profit on each one, including every cost we’ve covered in this guide. The results will be eye-opening—and they’ll immediately improve your sourcing decisions, pricing strategy, and platform selection.

Want to know your profit potential before you buy? Underpriced gives you instant AI-powered deal analysis on any item. Snap a photo, get real-time market comps and estimated profit margins, and make data-driven sourcing decisions in seconds. Start with 10 free analyses—no credit card required—and stop guessing whether a deal is actually profitable.