The Max Bid Formula Every Reseller Should Memorize
One equation, five inputs, unlimited leverage at auction.
ROI GuidesThe short answer
The reason experienced buyers stay calm at auction: they set a max bid before the price moves. Here is the formula.
The formula
`` Max Bid = (Expected Recovered Value × Sell-Through Rate) − (Freight + Labor + Fees + Storage + Returns) − Required Profit ``
Each input is knowable before you bid. If you cannot fill in a number, replace it with your worst-case estimate. Bidding without this equation is not investing, it is speculation.
Working through an example
A pallet of mixed small kitchen electronics with $4,800 MSRP:
- Expected recovered value: $4,800 × 40% recovery = $1,920
- Sell-through rate: assume 85% sells within 90 days → $1,632
- Freight in: $150
- Buyer fees (10%): apply after we know the bid, so hold
- Labor to test/list: 12 hours × $20 = $240
- Storage: $50
- Returns reserve: 8% of recovered = $130
- Required profit: 30% of recovered = $490
Subtracting: $1,632 − $150 − $240 − $50 − $130 − $490 = $572
Then apply buyer fee: $572 / 1.10 = $520.
Your max bid is $520. Full stop. If auction climbs above $520, you walk.
Where most resellers cheat
They inflate recovered value because they *want* to win the pallet. Or they zero out labor because "I would be sitting around anyway." Both moves feel small in the moment and cost you thousands over a year.
PalletIQ enforces this math on every analysis. Try the ROI calculator to see how a change in any input moves the max bid.