Flippd HelpWhat is ROI and profit margin, and what should I aim for?
ROI (Return on Investment) measures how much profit you make relative to what you spent. Profit margin measures how much of the sale price is actual profit. Both are calculated automatically by Flippd.
ROI Formula
ROI = (Net Profit / Cost of Good) x 100
For sold items, any expenses linked to the item count as part of its cost -- an item with a $5 cost and $2 in linked supplies uses $7 as the denominator.
Example
You buy a shirt for $5
You sell it for $25
After $5 in fees and shipping, your net profit is $15
ROI = ($15 / $5) x 100 = 300%
A 300% ROI means you made 3x your investment.
Profit Margin Formula
Profit Margin = (Net Profit / Gross Sale) x 100
Using the same example:
Profit Margin = ($15 / $25) x 100 = 60%
What to Aim For
Metric | Target | What It Means |
ROI | 100%+ | You're at least doubling your money |
Profit Margin | 40%+ | Good portion of sales is profit, not costs |
Flippd's star rating (shown in the Profit Calculator results and on each sold item's profit badge) is based on ROI: over 100% earns 5 stars, over 75% earns 4, over 50% earns 3, over 25% earns 2, anything lower earns 1, and a sale with no profit earns 0.
Good to Know
Most successful resellers aim for a minimum 100% ROI (doubling their money)
Higher-priced items often have lower ROI but higher dollar profit
Lower-priced items can have huge ROI percentages but less total profit
In Reports, the Status Breakdown section's Sold Items card shows your overall ROI and Avg Profit Margin for the selected year
The Profit Calculator shows projected ROI and margin before you buy