o.pwuaioc wrote:So basically a trade-in to the store would be something like this formula:
Price of game sold on ebay = x
Price of shipping = y
Convenience fee = z (the amount of which depends on how big x is, don't have a formula for that yet tho :/)
Amount given on a trade-in = p
x - y - z = p
And then price the game at around x, and you have an awesomely priced game store.
I think the "convenience fee" could be calculated by taking the man-hours it takes to sell something online multiplied by minimum wage or some other way to value a unit of time. So let's say it takes about 1/4 hour in all to put up an auction, pack the item up, print a shipping label, and drop it off at the mailbox. Let's also say you could have earned $10 an hour for your time. So the convenience factor is (1/4)(10) = 2.50.
You're also forgetting ebay and Paypal fees, which we'll estimate at 15% cumulatively. Let's call that F, and modify the formula. x - f - y - z = p
Essentially, your model lets the store owner pocket the costs that the seller avoided by choosing to trade in at the store rather than selling online; ie: ebay/PP fees, shipping costs, and the cost of the time it would have taken to sell online.
Let's pretend someone sells a copy of Earthbound, which for ease of calculation we'll assume to sell for $100 on ebay. Assume ebay and PP fees are 15% cumulatively, shipping costs around $5, and the convenience factor is the same as above (1/4 * 10 = 2.50). Using your formula, the owner would offer this much as trade-in:
100 - 15 - 5 - 2.50 = 77.50
The owner then turns around and sells it for $100. Essentially, the owner is pocketing a 22.5% margin.
Assuming just rent is $500 a month, he'd have to source and sell over $2000 worth of video games just to break even for that month. Divide that by 30 days and he needs to source and sell $67 per day to break even.
This isn't even taking into account other overhead costs and the time that it takes to convert the the inventory into cash (ie: time value of money).
