Updated September 2026 · 9 min read
Short answer: Pay only what leaves you a profit after freight, fees, and unsellable units. A common rule of thumb says to pay no more than about 16% of the listed retail value, but the right number depends on the load’s condition, your shipping costs, and where you’ll sell. The worked example below shows how to calculate your own maximum bid.
Start with the rule of thumb (then go past it)
DirectLiquidation, a large liquidation marketplace, suggests a quick check for new resellers: multiply the retail value (MSRP) by 0.4 to estimate what you’ll earn reselling, then multiply that by 0.4 again to get the most you should spend. That works out to 16% of MSRP.
It’s a useful sanity check, but it comes from a company that sells pallets, and it leaves out the costs that sink most first-time buyers. So let’s run a full example.
The example load
- One pallet of mixed home and kitchen customer returns
- Manifest retail value: $5,000
- Units: 120 (average retail about $41.67 each)
- Rule-of-thumb maximum: $5,000 × 0.4 × 0.4 = $800
Say you win it at $750, comfortably under $800. Here’s what that pallet actually costs you.
Step 1: Work out your landed cost
Landed cost is everything you pay to get the goods to your door. For a domestic pallet, that’s usually the price, any buyer’s premium or platform fee, and freight.
| Cost | Amount |
|---|---|
| Winning bid | $750 |
| Buyer’s fee (example: 10%) | $75 |
| LTL freight to your location | $325 |
| Landed cost | $1,150 |
| Landed cost per unit ($1,150 ÷ 120) | $9.58 |
Fees vary a lot by platform, so use the real number from the listing. For freight, DirectLiquidation says shipping “can cost anywhere from $250 to $450 per pallet, depending on the distance.” Get an actual quote before you bid. Also check sales tax: most states let you buy inventory for resale tax-free if you give the seller a valid resale certificate, but the rules differ by state.
Notice what just happened: a $750 pallet is really a $1,150 pallet. Freight and fees added more than 50% to the price.
Step 2: Subtract the units you can’t sell
Customer returns always include some items that are missing, broken, or not worth the effort. For this example, assume 15% of units are unsellable. That’s 18 units, leaving 102 you can sell.
Your cost per sellable unit is now $1,150 ÷ 102 = $11.27. Track your own loss rate on every load. After a few pallets from the same source, you’ll have a real number instead of a guess.
Step 3: Estimate what you’ll actually take home
The 102 sellable units carry about $4,250 in retail value (102 × $41.67). If you sell them at 40% of retail on average, that’s $1,700 in sales.
Then take out selling costs. If you sell on a marketplace, fees of around 15% are a reasonable planning number, but check your platform’s current rate. At 15%, that’s $255, leaving $1,445 in net revenue.
Step 4: Check the profit
| Net revenue | $1,445 |
| Landed cost | −$1,150 |
| Profit | $295 |
| Return on cost ($295 ÷ $1,150) | About 26% |
That’s before your time, packaging, storage, and shipping to customers. The pallet “passed” the 16% rule and still left very little room for error. If the loss rate were 30% instead of 15%, this load would roughly break even.
Step 5: Work backward to your maximum bid
Instead of starting from the price, start from the return you need. Here’s the formula:
Max bid = [(Net revenue ÷ (1 + target return)) − freight] ÷ (1 + fee rate)
If you want a 50% return on cost for this load:
- $1,445 ÷ 1.5 = $963 (the most you can spend in total)
- $963 − $325 freight = $638
- $638 ÷ 1.10 = about $580
So your maximum bid is about $580, or 11.6% of retail, not the $800 the rule of thumb suggested. That gap is where many new buyers lose money.
What changes the number
- Condition: New overstock can justify a higher percentage than returns because the loss rate is lower.
- Distance: Buying from a warehouse near you can cut freight or let you pick up yourself.
- Volume: Freight per pallet usually drops when you buy a full truckload.
- Retail value accuracy: If the manifest uses outdated MSRPs, your 40% resale assumption is too high. See how to read a liquidation manifest.
- Sales channel: If you sell to other businesses, keep in mind that off-price retail buyers typically pay a small fraction of MSRP. Industry sources commonly cite 5% to 20%.
Buying imported goods? FOB vs. landed price
If you buy closeouts or new goods from overseas, you’ll often see prices quoted “FOB.” Under the International Chamber of Commerce’s Incoterms 2020 rules, FOB (Free on Board) means the seller delivers the goods loaded on board the vessel at the named port, and the risk passes to you at that point. The ICC notes that FOB is meant for sea and inland waterway transport; for goods shipped in containers, it recommends FCA (Free Carrier) instead.
An FOB price leaves out ocean freight, insurance, duties, customs brokerage, and fees. For formal U.S. import entries, U.S. Customs and Border Protection charges a Merchandise Processing Fee of 0.3464% of the goods’ value, with a minimum of $33.58 and a maximum of $651.50 per entry in fiscal year 2026. Add all of those costs to the FOB price before you compare an import offer to a domestic one. If a seller quotes DDP (Delivered Duty Paid), the seller takes on import clearance and duties, so that price should already include them.
Bottom line
Percentage-of-retail rules are a starting point. Your real price comes from landed cost, loss rate, selling fees, and the return you need. Do the math backward from the profit you want, get a freight quote before you bid, and track your loss rate on every load so your next estimate is better than your last.
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