How to Calculate Costs of an Auction

Know the full purchase price before you bid

In order to profit within the reverse supply chain industry, all costs need to be factored into your bidding.

The price you pay for an auction isn’t just one figure – it’s a few figures added together. In order to ensure your bidding is aggressive against other buyers, while still maintaining a profit on the resell side, there are a few numbers to calculate.

BUYER’S PREMIUM: is a standard auctioneering fee that helps cover the costs associated with sourcing products, marketing auctions, running the marketplace, and managing services such as payment collection, fulfillment, testing, shipping and inspection.

The premium on Liquidation.com ranges between 5-10% and can differ by seller as well as within the seller’s listings – so always check! As your bid value increases, this premium will also increase so it’s definitely one that needs to be factored before submitting any bid.

SHIPPING COSTS: depending on the auction, you may have a few options when it comes to this added cost. While this cost is irrelevant if you’re fortunate to pick it up, those who need the merchandise shipped will need to heavily weigh these costs into the other expenses. Liquidation.com does offer shipping consolidation when purchasing multiple lots from the same warehouse, but auctions need to be won close together in order to consolidate.

BID PRICE: is the one price completely controlled by you – the bidder. Knowing the potential shipping costs and the buyer’s premium, your bid price should still give you wiggle room to increase should you get outbid, but not too much where you avoid making a profit when reselling.

These costs are your upfront expenses; however, your time is also an expense. If you have employees, their time is also an expense especially if they are sorting the inventory as it arrives and getting it prepared for listing. Identify your hourly costs and projected time it’ll take to sort and factor it into your fees. The more you can estimate, the better idea you’ll have on profits – thus growing your business.