How to Calculate Your True Cost Before You Bid
The biggest mistake new resellers make at government auctions isn't bidding too high on the wrong item — it's forgetting that the winning bid is never the real price. Here's the simple formula that keeps you profitable.
Your winning bid is only the beginning
When you win a government auction lot, several costs stack on top of your bid. Miss any one of them and a "great deal" can quietly turn into a break-even — or a loss. Calculate them before you bid, not after.
The True Total Cost formula
| Add up everything |
|---|
| True Total Cost = Winning Bid + Buyer's Premium + Sales Tax + Pickup/Transport + Repair/Refurbishment |
1. Buyer's premium
A percentage fee added on top of your bid, collected by the platform. It varies by listing, so check each one. On a $1,000 win at 10%, that's an extra $100.
2. Sales tax
Often applies unless you have a valid reseller's permit. Rates vary by state and locality.
3. Pickup & transport
Fuel, time, and the right vehicle. A cheap item two hours away may not be cheap at all.
4. Repair or refurbishment
Most items are "as-is." Budget for cleaning, parts, or testing before resale.
A worked example
Say you win a lot of office laptops:
- Winning bid: $420
- Buyer's premium (10%): $42
- Sales tax: $35
- Pickup fuel: $25
- True total cost: $522 (about $52 per laptop in a lot of 10)
If those laptops realistically sell for $135 each, the deal works with room to spare — even accounting for a couple of duds and resale fees. If they only sell for $60, your margin is gone. The formula tells you which is which before you commit.
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Get the Free Chapter Get the Manual — $47Set a maximum bid — and stick to it
Work backwards from resale value: estimate what the item sells for, subtract your target margin and all the costs above, and the number you're left with is your maximum bid. Write it down. Auctions are designed to make you emotional; the number protects you.
Bottom line
Profit in government auction reselling is made at the moment you decide your maximum bid — not at the moment you sell. Run the True Total Cost formula every single time.