Lock Levels

Today we will explore a more traditional way of making money, buying and selling goods.

It is our philosophy that the best way to learn a new avenue to wealth building is by taking on a smaller version of the larger project as a prototype. Prototyping allows you to learn the ins, outs and pitfalls without the cost and risks associated with exploring an idea on a larger scale. The project we will be exploring is learning the fundamentals of buying a good at a wholesale or discount price and selling that good for a profit.

For this exercise, you will need:

A digital camera. A Pay Pal account. Something to sell

We will be joining Ebay and selling the product you have chosen in an online auction. By participating in the exercise, you will gain experience in marketing a product, assessing demand and distributing the product to the customer. In a later lesson, we will expand this interaction by adding additional suppliers with discounted products to your supply chain. Product selection for this exercise is any item you own that you feel comfortable selling. If you do not have an item, browse Ebay and purchase an inexpensive item to re-sell for at or a little greater than cost. Remember, regardless of the profit margin, the true value will be gained in experience and your comfort with the process.

Concept: [Velocity of Money]

Finance majors in school are taught about the Velocity of Money. Money's true value is based, not on the dollar value, but on the frequency (speed) of which it changes hands.

For example consider this for the Ebay exercise.

$100 used over the same time period with a greater number of transactions has a different profit potential. Consider a DVD Player that is sold at the maximum retail value of $125 dollars within a period of 30 days. Now consider that the same brand and model of DVD player is sold 10 times at a wholesale value of $105 in the same 30-day period. If a seller considers the velocity of transcations, it is clear that it is more profitable to sell the item at a lower price more frequently.