Friday, January 02, 2009

The Economics of Selling CDs

Hopefully someone out there is interested in these numbers - my hope is these details may be useful for anyone thinking about selling their own CD collection. With that in mind, here are some concrete numbers after my first batch of CDs was processed. This post will focus mainly on the associated overhead - at the moment, I'm only shipping in the US, so these numbers are all limited to that context.

When you sell merchandise through Amazon, you receive a credit to help cover the shipping costs. These are fixed by Amazon, so will not necessarily correspond directly to your own costs. At the moment, I'm getting a credit of $2.98 for each CD I sell, regardless of the CD.

My costs depend on the supplies I buy to ship, and the postage. In my first batch, I picked up the supplies from the post office. To ship a double CD set costs me $1.99 for a small box and $2.70 for postage - that means I'm losing $1.71 against my selling price. In other words, I want to make sure I'm charging more than $1.71 on those sets, or I'm losing money.

For a regular single CD in a jewel case, I pay $1.09 for a card sleeve, 16 cents for bubble wrap, and $2.02 for shipping. That's a total of $3.27 for a loss of 29 cents. On the cheaper side, for CDs which come in cardboard sleeves, shipping drops to $1.85.

After running the numbers, I decided to get some cheaper supplies. At Target, I can buy CD-sized padded envelopes for 65 cents each. This means I will actually be making a small profit against the shipping credit for most CDs, and only losing on the larger disc sets - which tend to have higher selling prices anyways.

If you have any questions, feel free to ask them in the comments.

1 comment:

Eric D. said...

You may have already figured this out...but i went through the same packaging struggle recently. I've found i can order 6" X 10" padded mailers through amazon for around 32 cents each (when purchasing 250 at a time). This size allows me to ship both CD's and DVD's. Reducing packaging costs has been the easiest way to improve profitability for my small scale operation.