How Price Per Item Plays a Vital Role
You have likely noticed some details like the total price, the number of items the box contains, or the category while looking at a BULQ lot. However, have you wondered how bottom line could be potentially affected by a Lot’s price per item?
Price per item is the average cost you incur while paying for each item of the pallet. You only have to divide a Lot’s total price (how much you have to pay for it + shipping costs – NOT original retail value) by the number of items it includes for the price per item. Therefore, the price per item of a Lot containing 100 items whose total price is say $ 400 would be $4.00 each.
How the Price per Item Matters
While it’s easy to understand the price per item, it still involves complex calculating to gauge the Lot’s potential return on investment. If you were to buy a lot with a price per item that’s too high, you would end up spending more on the inventory than what you would be able to charge for it. Again, you’ll end up earning less than what you pay for shipping and fees if the price per item for a pallet is too low.
How do you avoid such a situation? You should pose a few questions before yourself when you invest in an inventory and avoid liquidation-
- Is there generally enough demand for the inventory among your buyers?
- Is the usual value of the inventory low or high?
- Does the inventory include items you are confident about being able to sell at a high price?
There might be instances when a pallet has a high price per item as it may contain high selling popular products. You might be tempted to go for the Lot if you can afford it but we still suggest that you do some research on the average price at which you can sell the items on the platforms you plan to sell them.
Calculating the Price per Item Threshold
Ensuring a profit therefore involves research. It’s easier if you’re familiar with the value of the products you want to sell. Judging a Lot’s potential value based on its price per item involves easy steps:
- Arrive at a rough estimate of what you can sell each item in the Lot for after checking the Lot’s manifest. The best way to do so is to check the price at which the items are being sold on eBay, Amazon, and other platforms
- Try to estimate the costs you’ll have to incur for shipping pallets, fulfillment, and other platform costs. This is decided by the item’s weight and dimensions and the buyer’s location.
- Here’s the formula to calculate your likely profit- Potential revenue - shipping and selling fees - total lot price = total potential profits
- The average profit per item is derived by dividing the potential profit by the number of items the Lot has. If it’s more than the Lot’s price per item, it’s a profit, a loss if it’s not so.
If you use price per item calculations wisely, you make higher profits and avoid liquidation. It helps you form an effective selling strategy by deciding the pricing and selling platform.
