It's easy to get carried away when you first start listing on eBay by the sheer volume of work. I remember working well past midnight running on pure adrenalin and excited by the fact that there was money coming into my Paypal account daily from the items I was selling.

But like the great basketball coach John Wooden says, "Never confuse activity with actual achievement". Just because you are moving like a whirling dervish doesn't mean that you are necessarily meeting your financial objectives.

So how do you know how much you are really making on eBay? It is possible to figure it out but you have to start with real numbers. The traditional profit calculation:

Revenue - Expenses = Profit

can be somewhat helpful but only if you plug in the accurate numbers. The guy who bought something for $1.00 sold it on eBay for $5.00 and thinks he make a $4.00 profit is way wrong. He has actually lost money on the sale.

But to understand how he lost money we need to look at the right way to calculate your eBay earnings. If you have set $30,000 a year as your financial objective then you need to actually clear about $82 per day on eBay.

If you are looking to sell an item that costs you $10.00 and generally closes at auction for about $20.00 with a 70% sell-through rate, then you need to list 12 of these actions a day, everyday, in order to clear your $82.00 per day.

This translates to 70 auctions a week for your item and it better continue to produce for you. If your weekly auctions go much over this 70 auctions per week you will surely have to hire help thereby adding to your expenses and wreaking havoc on your financials as outlined above.

This scenario is not meant to scare you but to make you aware of the real dollars and cents of selling on eBay. So what is the solution to this? To find and sell item that you can sell over and over again, thereby reducing the amount of labor involved and being sure that you buy low and sell high.

You have to continually evaluate what your time is worth and factor that into the items you sell and the time that it takes to list them. All auctions are not created equally. Some items are decidedly more difficult and/or labor intensive to list than others; with clothing being one of the most time-consuming.

Photographing your items for auction is one of the most labor-intensive tasks you will have to do for your auction. So having an item that you can just sell over and over again makes the process of listing and relisting a lot easier. If you are selling unique, one of a kind items then it becomes important to factor in additional time for photographing items, in your calculations of the hourly rate you pay yourself.

Just like in any business, keeping track of the numbers will let you know if you are on the right financial track with your eBay business.