John funds 30 units of this beautiful bracelet at $9 each, which will be sold in our shop for a RRP of $18. So John invested $270 in total.
Mary also funds the same bracelet at the same price for 20 units, and $180 invested in total.
Suppose the target was 20 units, since there were 50 bracelets funded in total, the bracelet will be shortlisted and stocked for our next season.
Assuming all 50 units were sold at $18 each, total sales would be $900. However, assuming the cost involved in getting these sold is $350 (fees charged by distribution channels, affiliate commissions, or service charges etc), the total profit might only be $550.
The total profit is divided proportionally by the respective units funded. E.g., John gets a dividend of ⅗ x $550, which is $330, and Mary gets ⅖ x $550, which equals to $220.
Less the investment John and Mary initially made, John makes a total of $60 profit ($330 - $270), and Mary makes $40 profit ($220 - $180).
WEtailStore then charges 10% commission on the net profit, thus John makes $54 in profit, and Mary makes $36. That’s 20% profit!
Assuming the same figures as above, but only 80% of the stock sold. This means only 40 of the 50 units were sold at $18, so total sales would be $720. Less the cost involved in getting them sold, say $245, the total profit is $475.
John gets a dividend of ⅗ x $475, which is $285, and Mary gets ⅖ x $475, which equals to $190. Thus John makes a total profit of $15 ($285 - $270) while Mary makes $10 profit.
Less the 10% commission charged by WEtailStore, John makes a net profit of $13.50 while Mary makes $9. Thus both John and Mary make a 5% profit!
Please note that the profit margin may vary from product to product.