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Cost of sales – makes you wonder why you bother

It’s amazing how quickly cost of sales tot-up. An item I am going to be selling costs me £12 to purchase from the supplier (as long as I buy more than £200 at a time and pay before shipping and don’t want express shipping) – however, to sell it, I’ve got to add postage costs of £2.24 to get it to the customer (well, I will come the 1st of April when UK postage prices go up again), then I’ve got to add VAT at 17.5% on top, then I’ve got to add Paypal fees of 20p and 3.4% on top of that – giving me the final “cost of sale” of £19.54 – that’s £7.54 I’ve got to pay to third parties just to sell this item. One of my more expensive items costs me £21 to purchase, and the cost of sale is £31.19 as Paypal and the VAT man both want a larger cut….

I’ve then got to try and make a profit on it, remember that if I do make a profit I’ll then have to put around 30% of it to one side to pay as Corporation Tax – I’ve also got to try and account for “shrinkage” (i.e. when a package gets lost in Royal Mail’s systems and I’m not able to reclaim the full amount), got to try and account for the costs of running the server and website I’m running the site from (around £120 per month, plus bi-yearly domain registration fees and SSL certificate costs), any bank/charges and interest, telephone line usage (even if it’s just for incoming calls, I’ve still got to pay line rental), £35 monthly accountancy fees, £15 annual return fees and various other little bits and bobs (insurance/storage costs etc): and that’s all before I can even consider paying myself some money for the time and effort I’ve put in. Oh and if I do start paying myself money, I’ve then got to pay National Insurance contributions, Employers and Employees tax, Payroll fees and other little annoying bits…

I do sometimes ask myself why I’m bothering: all this work for very little (if any payoff) – but if I was just unemployed, I’ll actually end up, at the end of the day, with more money… Meh!

One Comment

  1. I know – it sounds so very familiar; my wife tried to set up a baby sling shop online ( Buying slings from America would often result in customs tax; other slings come from Germany etc and both are subject to the whims of the exchange rate for a start. By the time she gets her hands on them, and actually makes a sale….

    On the other hand – we Brits love to moan about the fact something costs $x dollars in the USA and (effectively) £($x*2) in sterling after it’s been imported… “rip off Britian” etc etc.

    It does indeed make you think ‘why bother’. In her case, she’s decided to concentrate on hire instead of outright sale.

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