Business Tip: Keep Track of Your All of Your Expenses
Selling Books Online: What expenses are you keeping track of?
Books are the first thing that come to mind, right?
When you buy and sell books you need to be sure that you keep an accurate record of your expenses. This isn’t only for tax purposes, but also so that you can decide how much you need to charge to make a profit on a book.
Right off the bat, of course, you have the price of the book you buy. You can create a simple spreadsheet for that, and if you’re just starting out, you can add the information by hand like we did when we first started. This was a process we refined after a few months, adding more information to the spreadsheet which we knew would help us to assess whether or not to buy that book again if we saw it at a good price. Jim enters that information into our spreadsheets when he purchases the books online.
Additionally, we now have the ability to enter some of that information into our spreadsheets using a scanner when we purchase books live (like at a garage sale or from a book sale we go to.) That makes some of the process quicker.
Are you keeping track of mileage?
If you drive to another town to attend a book sale, are you keeping track of how much it costs you to acquire the book? Now if you’re buying the books online, you are probably including the shipping and handling costs in the cost for you to get the book into your hands. If you are driving out of town to get books, be sure to calculate that into the cost. This is more important if you’re making a journey that requires buying a plane ticket (Yes, we’ve done that) or driving more than an hour or so to get books (my son is doing that right now for our business.) We keep track of the travel expenses and factor that into the cost of the books.
I’ll add that when we’ve traveled far to get books, it’s always been because they were a great deal and we counted on making at least a hundred percent return on our investment in them (which included the expense of travel.)
One benefit of buying online, from home, is you don’t have the inconvenience of travel, but it can be more than worth it if you know how to find good enough deals.
Do you know how much it costs to ship your books?
If you use Amazon to sell their books, you can use Amazon’s Profitability Calculator to help you figure out what your profits will be after shipping costs. You can also use it to tell you how much your fees will be if you sell it using Amazon’s Fulfillment Center. When we decide what to set as a minimum for our books, we use data from the Amazon’s Profitability Calculator to help us do that. We want to make sure we are making more than we are paying!
Whether you sell books by shipping them straight to customers from your home, or if you’re sending boxes of books to Amazons to have them process them for Amazon FBA (Fulfilled by Amazon) there are going to be some supplies that you need to take into account. In our business, we don’t do it minutely, we generally figure about one dollar per book for our shipping costs to get them to Amazon. In reality, it may be a little less, but it’s a big mistake not to factor that in when you’re setting prices.
We have our adult sons packaging our books to send to Amazon and we pay them well to do that. By the time we factor in the cost of hiring them, purchasing boxes and our other shipping supplies it really does come out to about one dollar a book. It would be a mistake for us to just ignore that cost. By factoring it in, if we decide we need to lower prices to get them sold quickly, we really have a sense of what that book is truly costing and can make a more informed decision about how low we are comfortable for the minimum price on it.
What are some other costs we factor in?
We also factor in any equipment we’ve bought to make our business better or faster. This could include software.
We don’t tend to factor these tools into the cost of each book as much, because many are purchases we might make only once every few years, or, as we expand, to add to the number of people who can be buying or shipping books at the same time. Our purchase of a table would fall into that category and we expect to purchase another computer, monitors, and scanners soon.
We do have a software we purchased which helps us quickly source online books which are at a good price. To keep it up we pay a monthly fee (which, during slow months, we are able to pay for with only one day’s worth of sales.)
Here’s the spreadsheet I’m working on. I put in the date, a link to the invoice and the amount spent. This includes equipment and shipping supplies.
What to take away from this if you’re just starting out?
When you’re just starting out, you may not be purchasing any software to help you source books online quickly, or extra tables to help you process a dozen boxes of books at once.
However, don’t make the mistake of only thinking about what the book cost you when you think about how much profit you’ll be making on it. Make sure not only include the expense of postage for mailing it, but also the supplies you use to mail the book. This will give you a clearer idea of where to set your prices to ensure that you are making a profit on the books you sell.