Liquidation pallets are a great way of obtaining a wide range of stock at extremely discounted prices. However, there are many things that can affect the upfront cost of a pallet, including the category of items, pallet size, retailer, and condition.
Unfortunately, the advertised pallet price is not the only cost you need to account for, and today we will run through these factors to help you have a more realistic idea of your profit margins.
Price Ranges by Category and Condition
Price Ranges by Category and Condition
There isn't a one-size-fits-all approach when it comes to the price of liquidation pallets, as this will vary depending on your product category, condition, and whether you are able to view the contents beforehand. However, here is our general guide below:
- General Merchandise: Household goods, clothing, and beauty items are likely to be available at lower price points, compared to alternatives. For example, a truckload of these goods could cost you $10,000.
- Electronics: Electronic devices generally have greater resale value; therefore, the costs of these pallets are likely to be higher. You may expect to pay around $16,500 for a truckload.
- Branded Products: Again, branded items attract more attention and therefore require more of a premium. Some truckloads are sold for $15,000 or more at times.
- Condition: New or overstock products will nearly always attract a higher price as they are immediately ready for resale. Customer returns are likely to be cheaper upfront but may also include damaged or faulty merchandise that will require repairs or won't be suitable for resale. For example, a salvage truckload can cost around $3,500.
Typical Category Mix per Retailer
Typical Category Mix per Retailer
Manifested
Manifested
Manifested pallets will provide some sort of inventory checklist or information regarding their contents. This helps resellers predict the potential resale value, but this will come at an additional cost.
Unmanifested
Unmanifested
The most information you are likely to know with unmanifested pallets is the general category. This creates a greater risk when it comes to reselling; however, the upfront cost of these is usually lower.
Retailer
Retailer
Well-established retailers with popular brands will charge a premium compared to those less in the limelight.
Condition
Condition
New from the shelf or overstock products will likely cost more than customer returns or salvage stock, as the closer the item is to being ready to be resold, the more valuable it is likely to be.
Manifested vs Unmanifested
Manifested vs Unmanifested
- Freight: Delivery charges are perhaps the most expensive additional cost you will incur, and the price of this will depend on the pallet's weight, how far it needs to travel, and whether specialist equipment is required.
- Storage: You'll need somewhere to store your merchandise, and the price of this varies due to the size of your pallets and how long it takes you to sell them.
Estimating ROI Before Buying
Estimating ROI Before Buying
Before purchasing a pallet, it is worth estimating your potential return based upon a realistic value, rather than the stated resale value. Once you've got your total, you'll need to remove the following to estimate your return accurately:
- Initial cost.
- Freight and delivery.
- Storage fees.
- Selling costs.
- Packaging.
- Repairs.
- Unsellable inventory and other unexpected costs.
Budgeting for First-Time Buyers
Budgeting for First-Time Buyers
It would be wise for first-time buyers to proceed with caution and not spend all of their budget on the first pallet. Once you have become more confident with stock, then you can build this up. Remember to set money aside for additional costs such as delivery fees, packaging and repairs.
It's important to know that the cheapest liquidation pallet isn't always the best deal, and instead, you need to weigh up upfront costs, the condition of the items, and potential resale value in order to receive the greatest returns.
