The table below is an example of a summary of what i was hauling a week ago – or more correctly, contracting to PushX Industries to haul.
I had a small contract to haul 1 item that cost me 95m ISK at Amarr which i believe i can sell for 150m ISK in Dodixie and so generate a profit of 55m ISK. That gives me a nice 37% gross profit margin (= 55 / 150). I always work on profit per sales, and the gross profit margin is merely the profit margin i make on selling the product for a higher price. Some might call it the product contribution.
However, there are other costs involved in the sale.
I need to take away 0.80% broker fee to post the item for sale (=1.2m ISK) and a further 0.90% sales tax when it sells (=1.35m ISK). In addition, i need to account for the courier fee of 6.12m ISK. That will leave me with profits of 46.33m ISK (and of course that assumes i don’t need to reduce the price as competitors come in to undercut).
That 46.33m net profit on the 150m sale gives me a net profit margin of 31%, which is a good level of profitability.
The bigger contract is for 13 items i bought in
Jita. I bought them all for 710.2m ISK
and hope to sell them for 1.173bn ISK in Dodixie giving me a good gross profit
margin of 39% (=463.124m ISK). Taking
away broker fees and sales tax + the 20.76m ISK it costs for a “Rush Job” from
PushX Industries leaves me with a very healthy 36% net profit margin, or 422.417m
ISK – though i suspect i will be reducing prices as competitors undercut.
Below these numbers i also show how the net profit margin
is made up. For the Jita contact the 36%
net profit margin is made up from 60.5% product costs + 0.8% broker fee + 0.9%
sales tax + 1.8% courier fee totalling 64% cost of sales and so leaving me with
36% profits.
In general i don’t want the gross profit margin to be
below 20% which will lead to a minimum net profit margin of c16 to 17%. Though if the actual ISK profits are high i
am willing to let the gross profit margin fall to 15%.
My strategy is to focus on slow moving items which
therefore don’t attract much competition – and so are high margins but low
sales volumes. That is fine with me.
Note how low the “Rush Job” courier fee is in the big
scheme of things, 1.77% is not much for the chance of being able to put these
items on sale within a few hours of buying them vs the normal 12 to 24 hours
for a normal hauling contract. Of course,
the fastest way is the haul it myself, but that is also the most dangerous way.
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