I would like to start brokering liquidation merchandise to make some additional money. Could you give me some idea in reference to load pricing? What formula do you use when pricing pallets and truckload of merchandise? Also, when brokering loads from the large department stores, do I need to tell them [source], that I’m brokering?
Answer: Brokering merchandise can be very lucrative, especially if you price pallets and truckloads where your customer can make a good profit upon delivery of the goods. You must keep on the forefront of each transaction the fact that your buyer is in business to make money. Price loads giving yourself a modest profit and your buyer will return to purchase again. If you continuously chase new customers broking will not work. It costs too much money finding buyers through web advertising.
Here is an example of how I would markup a pallet purchase:
Let’s assume you have four pallets of name brand shoes to sell to a client, and this four pallet load costs you $500 per pallet. Because each pallet contains 100 pairs of shoes this breaks down to $5 per pair at cost.
If the average retail price of each pair of shoes is $30 per pair there is plenty of room for a $3-4 markup per pair. If the shoes happen to be lower-end brands that retail in the $15-20 range, I would say a $1 per pair markup would be the most you should charge.
- 400 pairs of shoes – Broker Cost $2,000 + $1,200 markup = $3,200 selling price
- 400 pairs of shoes – Broker Cost $2,000 + $800 markup = $2,800 selling price
Sometimes the Brokers cost will be a percentage of the original wholesale or retail price of merchandise. In this case, you would simply add additional percentage points to your cost to arrive at your customer cost.
Here is an example of an 8 pallet electronics loads with a retail value of $76,000:
- 8 Pallets of electronics – Broker Cost $19,000 (25% of retail) + $2280 (28% of retail) = $21,280. The $21,280 would be the Brokers’ customer price representing a 3% markup.
The most important key to brokering, again, is load pricing. If the load represents a good wholesale value for your buyer, he will keep coming back to you again and again. As far as your second question, no, you don’t need to tell the large department stores you are brokering because they truly do not care. In fact, once you purchase a load you will be scheduling the freight pickup and delivery to your customer. It’s the freight company that receives your buyers address.
Our 2020 Liquidators Guide chronicles 12 years of wholesale product sourcing experience and includes my personal black book of direct source contacts! As an industry expert, I'll share the success I've enjoyed along with the mistakes I've made buying and reselling liquidation merchandise.
If you are thinking about buying pallets of liquidation merchandise from a liquidator, broker, or direct from department stores, you need to check out The Liquidators Guide