Stupid Question about calculating ROI

[Bhisma_Ataaru]

When I first got started trading in EVE I was doing station-flipping and calculating ROI using the very basic formula: (revenue-costs)/costs
and similarly for margin: (revenue-costs)/revenue
I was setting the costs as the buy price+broker fees and the revenue as sell price - broker fees and tax
But I’m getting into some cross-region trades and I’m realizing that one could take a few very different approaches to determining costs and revenue even for simple flips.
For instance let’s say I buy an item from a sell order at one location, pay a courier fee to move the items, and then list the item for sale elsewhere at a higher price. Now it seems reasonable that the courier fee is a cost, and the sales tax at the second location decreases my revenue but isn’t included in costs. But should the sales broker fee be counted as a cost, or as a decrease of revenue? Calculating this one way or the other can introduce quite some swing in the final ROI. One could even argue that sales tax is a cost as well…

Now, I realize that it doesn’t really matter which way I do it internally so long as it is consistent but I’m curious how other people are doing this kind of calculation since you often see trading advice using margin or ROI as a benchmark, e.g. “look for items to trade that have >10% ROI” or similar.

I’ve been hesitant to ask this because it seems like such a basic/obvious answer but for whatever reason I keep getting stuck on it so any advice is appreciated.

[Oreb_Wing]

From a real-world perspective, you’re better off reducing the taxes from the revenue and not costs, since it’ll reflect more accurately your return from regions which might have differing rates for imports.

[Runa_Yamaguchi]

IMO…

ROI is the total $ you invested in the endeavor so that would include fees, taxes, etc.

This gets tricky when using couriers though as if you send 10 things all with different volume and values, how do you divvy up the courier fee…so because of this, I don’t include courier costs but record them separately.

I agree though that you want consistency so it’s good to set your policies early.

Oreb’s point is good too as how you record things will be different depending on the scope of your transactions.

EDIT: Oh and welcome to your new job

[Bhisma_Ataaru]

Thank you both, I think I will stick with courier+broker fees are costs, taxes reduce revenue. Fortunately the dataframe I’m using to recommend items spits out courier costs for each item in a hypothetical shipment so I should be able to track that reasonably.

…and yeah, it really is a job but the money is good (I mean okay from what I hear not nullsec bloc capital ratting good but I’m not doing that)