Cost of Acquisition
Understand Your True Costs to Make Smarter Buying Decisions
Welcome to the next module in your onboarding journey! In this section, we’ll dive into the concept of cost of acquisition and why it’s a critical factor in making profitable purchasing decisions. Understanding your total costs—including hidden ones—will empower you to evaluate inventory effectively and set your business up for long-term success.
What is Cost of Acquisition?
Cost of acquisition is the total amount you spend to acquire your inventory, including both obvious and less obvious costs. While many buyers focus solely on the percentage of MSRP (Manufacturer Suggested Retail Price), that’s only part of the story.
Key Components of Cost of Acquisition:
- Purchase Price: The upfront cost of the inventory.
- Freight Costs: The expense of shipping the inventory to your location.
- Time Costs: The time it takes to process, repair, or prepare the inventory for resale.
- Marketability: The ability to sell the inventory quickly and at a profit.
By calculating your cost of acquisition accurately, you’ll avoid overpaying for loads that appear to be great deals but fail to deliver value.
What You’ll Learn in This Module
In this video, Matt from Neu Appliance Wholesale will walk you through:
- How to calculate your total cost of acquisition.
- Why focusing solely on MSRP percentages can lead to bad buying decisions.
- How to evaluate the true retail potential of your inventory.
- Tips for spotting high-value loads that fit your business model.
[Watch the Cost of Acquisition Video]
Why MSRP Can Be Misleading
Many liquidation vendors rely on MSRP percentages to make their loads seem more appealing. For example, a $100,000 MSRP load offered at 28% might sound like a great deal—but what’s really inside that load?
Common Pitfalls:
- High-MSRP items like $5,000 wall ovens that move slowly or require niche buyers.
- Inventory that’s difficult to sell due to low demand in your local market.
- Hidden freight costs that eat into your margins.
Pro Tip: Always look beyond the MSRP percentage and evaluate the actual products in the load. Focus on items that are in demand and will turn quickly.
How Neu Appliance Wholesale Helps You Save
At Neu Appliance Wholesale, we take the guesswork out of cost of acquisition. Here’s how we help you make smarter buying decisions:
- Transparent Freight Costs: We provide upfront freight pricing so you know your total cost before you buy.
- Detailed Listings: Each load includes product models, descriptions, and retail values so you can calculate your margins.
- Tailored Inventory: We avoid loading you up with slow-moving items, ensuring you get inventory that sells.
Tips for Managing Your Cost of Acquisition
- Do the Math: Calculate your total cost per unit, including freight, before making a purchase.
- Evaluate Marketability: Focus on inventory that fits your local market and customer base.
- Plan for Profit: Use your cost of acquisition to project your potential margins and decide if the load is worth it.
Take the Next Step in Your Onboarding Journey
Now that you understand how to calculate and manage your cost of acquisition, you’re ready to explore the psychology behind pricing and relative value. In the next module, we’ll show you how customer perception influences sales and how to use it to your advantage.
Click the button below to continue to the next module: Psychology of Relative Value.
