Liquidation pallet ROI calculator

What a pallet really costs

A liquidation or customer-returns pallet is bought on a hammer price, but that is not the number your profit has to beat. The calculator above starts from the same invoice math as an auction: hammer, buyer's premium, lot fee, sales tax and card surcharge. It then adds freight to get the pallet to you, which gives the landed cost. Everything after that -- how many units are sellable, what they sell for, and what the channel keeps -- has to cover that landed cost before there is any profit. The results are estimates only. The channel fees are the published Canadian rates shown in the sources list; the buyer's premium and fees are whatever the auction's terms say, because this site does not store auction-house rates.

Worked example: landed cost

A $400.00 pallet at an Ontario auction with a premium of 15 percent, no lot fee, paid by e-transfer, plus $150.00 of freight:

The $400.00 pallet is a $669.80 pallet. Freight alone is more than a fifth of the landed cost, which is why a pallet that looks cheap three provinces away often loses to a dearer one you can pick up. If the freight invoice carries GST or HST and you are not registered, enter the freight with its tax included.

Manifest versus what is on the pallet

A manifest is the seller's list of what should be on the pallet, usually with a retail or MSRP value per line. Treat it as a starting point, not a count:

• Units go missing. Lines on the manifest are sometimes not on the pallet at all, or the quantity is short. Returns pallets are the worst for this, because the manifest is built from return records, not from what was physically stacked.
• Retail value is not resale value. The MSRP column is what the item once sold for new. Open-box and returned units sell for a fraction of it. Price from recent sold listings on the channel you will use, not from the manifest.
• Identifiers are often missing or wrong. Returned Amazon stock frequently carries an FNSKU label (a code starting X00) instead of a UPC. That code identifies the unit in Amazon's warehouse; Walmart.ca and most other channels need a real UPC or GTIN. Units you cannot match to a barcode take longer to list and may only be sellable on eBay or at auction.
• Unmanifested pallets are sold with no list at all. Price them on what you can see in the photos and assume the worst about what you cannot.

Sellable share: the input that matters most

The "sellable share" is the percentage of manifest units you expect to sell after removing the missing, damaged, incomplete and unsellable ones. It drives the whole result, because the landed cost is spread only over units that sell. In the example, 60 manifest units at a 70 percent sellable share is 42 units, so each sellable unit carries $15.95 of landed cost ($669.80 / 42). At 50 percent, 30 units carry $22.33 each. Same pallet, same price paid, and the cost per unit you can sell rose by $6.38.

Set this from your own history with the same seller and the same load type. Shelf-pull and overstock loads are mostly new in box. Customer-returns loads mix new, open-box, used, missing parts and broken. Electronics returns tend to have more non-working units than housewares; clothing returns tend to have more stained or tagless items. If you have no history, start low and treat the first pallet from a new source as the test that tells you the real number.

The calculator counts only whole units: 70 percent of 61 units is 42.7, which it rounds down to 42.

Prep cost per unit

Every sellable unit needs something before it can be listed: testing, cleaning, replacing a missing manual, a new poly bag or box, a barcode label, photos and a listing. Enter a per-unit dollar amount for materials and, if you pay yourself, labour. A dollar a unit for bags and labels is a floor; units that need testing or photos cost more in time. Prep is subtracted from the net of every sellable unit, so on cheap items it can matter as much as the channel fee.

Warehouse channels add their own prep requirements. FBA and WFS both expect each unit labelled and packaged to their standards, and a unit that arrives wrong can be charged for or refused. If you will send units in, include that labelling and packaging in the prep figure.

Which channel to model

Pick the channel most of the sellable units will actually go to, and run the calculator again for any large group that will go somewhere else. The channels behave differently on pallet goods:

• eBay.ca and Shopify use the shipping you charge and your shipping cost per unit. When the buyer pays shipping that covers the label, the fees are a percentage of the sale (eBay's final value fee is 13.6% of the total in most categories; Shopify Payments Basic is 2.8% plus a fixed fee). They also take used and open-box items that the warehouse channels may not.
• Walmart.ca WFS and Amazon.ca FBA charge a fulfillment fee per unit by weight and size, plus monthly storage. Walmart storage is $0.80 per cubic foot per month; Amazon's is $40.00 per cubic metre per month from January to September and $77.00 from October to December. Their reach is larger, but a cheap unit pays the same fulfillment fee as a dear one.
• Shopify's plan fee is not included on this page, because a pallet is usually a small part of a store's monthly orders. If the pallet is your whole Shopify volume, subtract the plan from the profit yourself.

With the default inputs (a home and kitchen item weighing 1.5 lb, a $24.99 average price, buyer-paid shipping of $12.00 against an $11.00 label), eBay clears the landed cost while WFS and FBA do not: per-unit fulfillment fees take a bigger bite from a $24.99 unit than the percentage fee does when the buyer pays shipping. Raise the average price or switch to a lighter unit and the gap narrows. Try each channel before you decide where the pallet goes.

Break-even average sale price

The calculator searches for the average sale price at which the net from every sellable unit, after channel fees, your shipping and prep, exactly covers the landed cost. Below that price you lose money on the pallet; above it you start to make some. It is the most useful number to have before you bid. Look up what the main items on the manifest actually sell for, and if the break-even is above that, the pallet is too expensive at your bid.

The average hides the spread. A pallet of one $150.00 item and 41 items at $5.00 averages $8.45 a unit, but each $5.00 unit still pays a full per-unit fulfillment or per-order fee and a full prep cost. Cheap units are where pallets lose money. If the manifest has a few valuable lines and a lot of small ones, run the valuable units on their best channel and decide separately whether the small ones are worth listing individually, bundling, or selling as a lot at a local auction. Units under $14.00 get a Low-Price FBA discount on Amazon, which helps but rarely rescues a $5.00 item.

Storage months: cash tied up

For WFS and FBA, "months in storage" adds storage fees for each sellable unit. The bigger cost is outside the calculator: the landed cost is cash you spent on day one and only get back as units sell. A pallet that returns 20 percent on landed cost and sells through in two months lets you turn the same money six times a year. The same 20 percent stretched over eight months turns it only one and a half times. Long-tail units also start to cost more: Walmart charges $7.00 per cubic foot per month for stock held over a year, and removing or disposing of unsold units carries its own fees (WFS disposal starts at $0.46 a unit for units of 2 lb or less). Enter the months the average unit will really sit, and decide in advance when the slow units get marked down.

Why ROI on landed cost is the number to watch

The calculator reports profit and ROI, where ROI is profit divided by landed cost. Margin on sales tells you how much of each sale you keep; ROI tells you what the money you put into the pallet earned. For a reseller whose limit is cash, ROI decides whether the next pallet gets bought. It also falls fastest when the inputs are wrong: in the example, dropping the sellable share from 70 percent to 50 percent takes the same pallet on eBay from a profit to a loss, while the margin on each unit sold does not change at all. Compare pallets and sources on ROI on landed cost, and check the result against what you actually earned once the pallet is sold through.

Tax on the buy

The pallet's sales tax is calculated on hammer, premium and lot fee in the auction's province. GST/HST registrants recover GST or HST as input tax credits, so it is a cash-flow cost rather than a final one. In British Columbia, Saskatchewan and Manitoba, a business registered for the provincial tax may be able to buy goods for resale without PST or RST by giving the seller its provincial number; check the provincial rule and the auction's terms first. The "buying tax-exempt for resale" box removes all sales tax from the buy, so use it only where that applies to you.

Frequently asked questions

What sellable share should I use for a returns pallet?

Use your own history with that seller and load type. Without one, start conservatively and treat the first pallet as the test. Returns loads vary far more than shelf-pull or overstock loads, and the manifest does not tell you how many units are damaged or missing.

Does the calculator use the manifest's retail value?

No. It uses the average sale price you enter. Retail or MSRP figures on a manifest are what the items once sold for new and are not a reliable guide to resale prices for returned or open-box stock.

Why is my break-even price higher on Walmart or Amazon than on eBay?

Warehouse channels charge a fulfillment fee and storage on every unit, regardless of price. When buyers pay shipping on eBay or Shopify, your cost per sale there is mainly a percentage of the sale, which is smaller in dollars on low-priced items.

Are unsellable units counted anywhere?

They are not given a value; they reduce the number of units the landed cost is spread over. If you sell the rejects as a lot or pay to dispose of them, adjust the result by hand.

Does it include income tax?

No. Profit and ROI are before income tax and before overhead such as rent, software and your own time beyond the prep figure.