Reverb Seller Glossary
The fees, margins, and cash-flow terms that decide whether your Reverb shop actually makes money. Plain-English definitions, the formulas, and a real example for each.
Reverb fees
Reverb selling fee
The Reverb selling fee is a flat 5% commission charged when an item sells, calculated on the item price plus the shipping you charge the buyer. It has a $0.50 minimum and is capped at $500 per item for USD sales up to $10,000. Listing is free; you only pay when it sells.
Reverb payment processing fee
Reverb Payments charges a processing fee of 3.19% + $0.49 per order (2.99% + $0.49 for Reverb Preferred Sellers). It is calculated on the full order total, including shipping and any sales tax, and is separate from the 5% selling fee.
Reverb Bump
Bump is Reverb’s optional promoted-placement program. You set a rate from 0.5% to 30% (in 0.5% increments; Reverb suggests 5%) and are only charged that percentage of the sale when a Bumped listing sells. It stacks on top of the selling and processing fees.
Reverb payout
Your Reverb payout is the amount deposited to your bank after Reverb subtracts its fees from the order total. It is your gross sale minus the selling fee, payment processing, and any Bump. Importantly, the payout is not your profit, because it still includes what the item cost you.
Effective fee rate
Your effective fee rate is the total of all Reverb fees on an order expressed as a percentage of the gross sale. It rolls the selling fee, payment processing, and any Bump into one number so you can compare the true cost of selling across orders and against other marketplaces.
Reverb Preferred Seller
Reverb Preferred Seller is a status for high-performing sellers that reduces the payment processing rate from 3.19% to 2.99% (the fixed $0.49 stays). Eligibility is based on sales volume, shipping speed, and customer satisfaction. The 5% selling fee is unchanged.
Profit & margin
Net profit
Net profit is what you actually keep from a sale after every cost: Reverb fees, what the item cost you, and your shipping cost. It is the single most important number for a Reverb seller and the one most often confused with the payout.
Cost of goods sold (COGS)
Cost of goods sold (COGS) is the direct cost of the items you sold in a period: what you paid for the gear, plus directly attributable costs like repairs, setup, and inbound shipping. It is the foundation of every profit and margin calculation.
Gross margin
Gross margin is the percentage of a sale left after the cost of the item itself, before fees and operating expenses. It measures the raw spread on your gear and is a quick gauge of whether a product is worth selling at all.
Net margin
Net margin is your net profit as a percentage of the gross sale, after Reverb fees, item cost, and shipping. It is the truest measure of profitability on a sale, because it accounts for everything that actually comes out of the order.
Markup vs. margin
Markup is profit as a percentage of cost; margin is profit as a percentage of the sale price. They describe the same dollar profit from different angles, and confusing them leads to underpricing. A 50% markup is only a 33% margin.
Break-even price
Your break-even price is the lowest you can sell an item for and still come away with zero profit after Reverb fees and your costs. Sell below it and you lose money. It is the floor that every offer and discount should be measured against.
Return on investment (ROI)
ROI measures your net profit as a percentage of the cash you put into an item, including purchase price, repairs, and shipping. It is a favorite metric among resellers because it shows how efficiently your capital worked, regardless of the sale price.
Gross margin return on investment (GMROI)
GMROI measures how much gross profit you earn for every dollar invested in inventory. It combines margin and inventory efficiency into one number. Above 1.0 means you are making money on your stock; resellers generally aim for 2.0 or higher.
Average order value (AOV)
Average order value is your total revenue divided by the number of orders over a period. It tells you how much the typical sale is worth and is a key lever for growth, since raising AOV grows revenue without needing more buyers.
Landed cost
Landed cost is the complete cost of getting an item ready to sell: the purchase price plus inbound shipping, repairs or setup, import duties, and any handling. It is the true cost basis for pricing, and it is almost always higher than the sticker price you paid.
Refund rate
Refund rate is the percentage of your sales (by value or count) that get refunded or returned over a period. It directly reduces realized revenue and can erode an otherwise healthy margin, especially when return shipping and restocking come out of your pocket.
Cash flow
Operating cash flow
Operating cash flow is the actual cash moving in and out of your shop from selling gear: payouts received minus what you spend on inventory, shipping, and expenses. It can differ sharply from profit because of timing, and it is what keeps you able to buy your next piece.
Working capital
Working capital is the liquid money you have available to run and grow your shop, calculated as current assets minus current liabilities. For most Reverb sellers, inventory is the largest piece, so unsold stock ties up the very capital you need to buy more.
Cash conversion cycle (CCC)
The cash conversion cycle measures how many days it takes to turn money spent on inventory back into cash from sales. A shorter cycle means your money returns faster and you can reinvest sooner. For marketplace sellers, how long inventory sits is usually the biggest driver.
Inventory & velocity
Inventory turnover ratio
Inventory turnover ratio measures how many times you sell and replace your entire inventory in a period. It is cost of goods sold divided by average inventory. Higher turnover means your capital cycles faster; online gear resale commonly runs 6 to 12 turns per year.
Days sales of inventory (DSI)
Days sales of inventory (DSI), also called days to sell, is the average number of days it takes to sell through your inventory. It is your period length divided by inventory turnover. Lower is faster: at six turns a year, DSI is about 61 days.
Sell-through rate
Sell-through rate is the percentage of available units that sold in a period: units sold divided by units available. It measures demand for a specific product or batch. For online resale, 70% or higher is generally healthy.
Weeks of supply
Weeks of supply estimates how many weeks your current inventory will last at your recent sales pace: current units divided by average weekly units sold. It is the weekly companion to days-to-sell and is useful for planning reorders.
Dead stock
Dead stock is inventory that has not sold for an extended period and is unlikely to sell without a markdown. It ties up space and working capital while earning nothing. For most sellers, items unsold for 12 months are treated as dead stock.
Carrying cost
Carrying cost is the total cost of holding unsold inventory over a period, expressed as a percentage of inventory value. It includes tied-up capital, storage, insurance, and the risk of obsolescence, and typically runs 20% to 30% of inventory value per year.
Inventory valuation (FIFO, LIFO, WAC)
Inventory valuation methods decide which costs are assigned to the items you sell. FIFO assumes the oldest stock sells first, LIFO the newest, and weighted average cost blends all purchases. The method changes your reported COGS, profit, and taxes.
Reorder & planning
Reorder point
The reorder point is the inventory level at which you should place a new order to avoid running out before it arrives. It combines how fast you sell with how long your supplier takes to deliver, plus a safety-stock buffer.
Safety stock
Safety stock is extra inventory held as a buffer against demand spikes or supplier delays. It is your insurance against stockouts during the lead-time window. Too little risks running out; too much ties up cash.
Economic order quantity (EOQ)
Economic order quantity (EOQ) is the order size that minimizes total inventory cost by balancing ordering costs against holding costs. Order too little and you overpay in shipping and handling; order too much and capital sits in excess stock.
Lead time
Lead time is the total time between placing a purchase order and the inventory being ready to sell. It includes processing, production, shipping, customs, and receiving. For overseas sourcing it can run 30 to 90 days or more.
Min/max inventory levels
Min/max inventory levels are a simple reorder rule: when stock falls to the minimum (your reorder point), you order back up to a set maximum. It gives clear guardrails for purchasing without complex forecasting.
Classification & forecasting
ABC analysis
ABC analysis ranks inventory into three classes by revenue contribution. Class A items (about 20% of SKUs) drive roughly 80% of revenue, Class B the next slice, and Class C the long tail. It focuses attention where it pays off.
Pareto principle (80/20 rule)
The Pareto principle, or 80/20 rule, observes that roughly 80% of results come from 20% of causes. In a shop, about 80% of revenue typically comes from about 20% of listings. It is the idea behind ABC analysis.
SKU rationalization
SKU rationalization is the periodic process of deciding which products to keep, reduce, or discontinue based on profitability, turnover, and demand. It combats SKU proliferation, where too many low performers add complexity without proportional revenue.
Product lifecycle
The product lifecycle describes the stages a product moves through: introduction, growth, maturity, and decline. Each stage calls for a different inventory and pricing approach, from building stock during growth to clearing it before decline.
Demand forecasting
Demand forecasting estimates future sales using historical data, trends, and seasonality. It is the foundation for purchasing, inventory planning, and cash flow. Methods range from a simple moving average to weighted models.
Seasonal index
A seasonal index is a multiplier that captures how much a period’s demand deviates from the average. An index of 1.0 is average, 1.3 is 30% above, 0.7 is 30% below. It adjusts a baseline forecast for predictable seasonal swings.
Moving average
A moving average forecasts the next period using the average of the most recent periods, dropping the oldest as each new one arrives. It smooths out short-term swings and is the simplest practical forecasting method.
Listings & catalog
SKU (stock keeping unit)
A SKU (stock keeping unit) is a unique code you assign to each distinct product or variant to track it. SKUs are seller-defined and usually encode attributes like brand, model, or condition. Each variation should have its own SKU.
Consignment
Consignment is an arrangement where a supplier or owner places goods with you to sell while retaining ownership until they sell. You pay only for what sells and return the rest. The consignor carries the risk of unsold stock.
Variant
A variant is a specific version of a product that differs by an attribute such as color, finish, size, or year, grouped under one parent listing. Each variant typically has its own SKU so it can be priced and tracked separately.
Bundle (kit)
A bundle, or kit, is two or more products sold together as a single unit under one SKU. Bundles raise average order value, can move slower stock alongside popular items, and create a distinct listing that is harder to price-compare.
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