Your eBay payout isn't your profit Your eBay payout isn’t your profit

The platform deposits a number and your head files it as profit. It usually isn’t. The amount that lands in your account and the amount you actually kept are two different numbers, and most selling platforms do a good job of hiding the second one.

I’m an accountant. I’ve kept the books for a few clients over the years who sell online, on eBay, BrickLink, Etsy, places like that, and they nearly all turned up with the same blind spot. They were treating the payout as the profit. A couple of them were quietly losing money on part of what they sold and had no idea.

What one sale actually looks like

Take a single order and pull it apart. These numbers are made up to show a typical case, not anyone’s real figures, but this is the shape I kept seeing.

Sale price: 20.00

Platform fee: -0.60

Payment fee (PayPal and the like): -0.80

Postage you actually paid: -3.20 (you charged the buyer 2.50, so you’re already 0.70 down)

Packaging and printing the label: -0.50

What the goods cost you: -9.00

The payout lands at a bit over 19. Looks like a 20 sale with a small fee taken off.

What you kept is 20.00 minus all of that, which is 5.90.

So the 20 sale was really a 5.90 sale. The payout made it look about three times better than it was. And none of that counts your own time, or the trip to the post office, which never show up on any line anywhere. Run a few hundred orders a month like that and the difference between what you think you made and what you made is not small. It’s basically the question of whether the shop is worth keeping open.

Why nobody sees it

The platform gives you a net figure and not much else. Fees, shipping, payout, all rolled into one tidy number that tells you nothing about the margin on any individual sale.

Then there’s the spreadsheet, which is fine right up until it isn’t. It holds together for ten orders. Add a second platform, a foreign currency, a few refunds, the postage you got partly reimbursed for, the cost of restocking, and at some point it stops being trustworthy without ever telling you it has.

Underneath both of those is a thinking problem. People treat a sale as one transaction with a fee on it. It isn’t. The sale, the platform fee, the payment fee, the postage, the packaging, the cost of the goods, those are separate things that all happened to ride along on the same order, and they pull money in different directions.

It’s an old problem with an old answer

What I’d tell any of those clients is that double-entry bookkeeping was invented for exactly this.

Every movement has two sides, and once you record things that way you can split them apart and add them back up however you like. Put the sale, the fee, the postage, the packaging and the cost of goods down as the separate things they are, mark which channel each belongs to, and “what does BrickLink make me compared to eBay” stops being a guess. The answer is just sitting there, because you built it in from the first entry.

This isn’t some clever spreadsheet layout. It’s what accounting has used to answer “did I actually make any money” for about five hundred years. Small sellers skip it because the serious tools are a pain to use and the easy tools don’t really do accounting.

What I ended up building

I’d seen the problem enough times that I built the thing I wish I could have handed those clients. It’s a desktop app, double-entry, runs locally, and it’s the same one I use for my own money. You record each side of a sale and file it under whichever channel it belongs to, and at the end of the month you’re not looking at a heap of payouts, you’re looking at what each channel actually brought in.

For the avoidance of doubt about what it is: it’s for working out what you actually earn. It doesn’t do invoices and it doesn’t do tax. It’s the internal bookkeeping for the kind of selling where there’s no formal invoice, just orders coming in and the nagging question of whether they add up to anything.

If you sell on a platform, how do you keep track of real profit after the fees come out? I’d like to know if anyone’s found a way that holds up, because most of the people I saw hadn’t.

— Antony S.<br>Try K-Id<br>Join the waitlist