If you’ve ever looked at a BULQ Lot, you’ve probably noticed a few different details; total price, category, maybe the number of items in the box. But, have you ever considered how a Lot’s price per item could potentially affect your bottom line?
Price per item is a breakout of the average cost you pay for each item in a Lot. This is calculated by dividing a Lot’s total price (how much you’re paying for it + shipping costs – NOT original retail value) by the number of items included. So, for example, if a lot’s total price is $500 (including shipping) and there are 200 items in the Lot, then the Lot’s price per item is $2.50 each ($2.50/item).
Why Does Price Per Item Matter?
Although simple enough to understand, price per item can be a complex part of calculating a Lot’s potential return on investment. Buy a Lot with too high a price per item, and you might spend more on the inventory than you’ll be able to charge for it. Buy a box with too low a price per item, and you might get stuck paying more in shipping and fees than you’ll earn from a sale.
To avoid either situation, ask yourself a few questions before investing in inventory:
- Is the inventory generally high or low value?
- Are there a particular items that you’re confident you can sell for a good return?
- Is the type of inventory generally in demand among your buyers?
In some cases, a Lot with a high price per item may be priced that way because it contains well known, popular products. And though it may be tempting to grab those goods while you can, take a moment to research the average selling price of those items on the platform(s) where you plan to sell them. This will help you 1) estimate the potential profit from these items and 2) determine how much competition already exists for similar products.
Calculating Your Price Per Item Threshold
As mentioned above, conducting research before purchasing inventory is key to ensuring you’ll turn a profit. Especially for newer resellers, this process is easiest with products and categories you’re familiar with and know the value of.
Calculating a Lot’s potential based on its price per item takes four easy steps:
- Take a look at the Lot’s manifest and roughly calculate what you think you’d be able to sell each item for. This is your potential revenue. Remember- the MSRPs listed are the ORIGINAL, FULL MARKET PRICE for each of the items in the Lot, NOT what you can expect to sell them for. Again, the best way to calculate a potential selling price is to see what similar items are going for on eBay, Amazon, and other platforms. Try using a tool like eBay’s Terapeak to quickly and accurately pull recent selling price data!
- Figure out how much you’ll lose to shipping, fulfillment, and other platform fees. This can vary based on where you sell your items, as well as the item’s weight, dimensions and location of the buyer. Learn more about the fees and costs associated with popular reselling platforms by clicking here.
- Use this formula to calculate your total potential profits:
POTENTIAL REVENUE - SHIPPING AND SELLING FEES - TOTAL LOT PRICE
= TOTAL POTENTIAL PROFITS
- Take your total potential profits and divide it by the number of items in the Lot. This is your average profits per item. If this is above the Lot’s listed price per item, then it’s a profitable Lot; if it’s below, you’re likely to lose money on the investment.
Many resellers actually write these calculations out so they’re easy to refer to during the sourcing process. Watch how Heather Hooks of Hooked On Pickin’ uses these equations to explain why she picked certain inventory.
Making Price Per Item Work for You
Though this process may seem tedious, using price per item is essential to investing in profitable inventory. By completing these calculations, you can optimize your selling strategy and figure out where each product will have the best return. Bigger, heavier items? Sell them on Facebook Marketplace to avoid shipping and handling costs. Charging $14 for a sweater? Consider listing it on eBay and pay only $1.40 in final value fees rather than Poshmark’s flat $2.95 commission.
Using price per item takes time and patience, but, when done correctly, it can lead to a big payoff. Resellers- do you use price per item when buying inventory? How much does it affect your decisions? Leave your thoughts in the comments below!