How to calculate landed cost per item on an auction lot
Add up everything you paid to get the lot home (winning bid, buyer's premium, invoice fees, sales tax if you paid it, and shipping, freight or your pickup costs), then divide that total among the items you expect to sell. Split it evenly only when the items are worth about the same; otherwise split it in proportion to what each should sell for, so every item carries the same cost per dollar of expected sales.
Federal tax rules use the same two ideas: inventory cost adds "transportation or other necessary charges incurred in acquiring possession of the goods" to the net invoice price (26 CFR 1.471-3(b)), and when part of a larger property is sold, its cost is "equitably apportioned among the several parts" (26 CFR 1.61-6(a)), by fair market value in that section's own example. How they apply to your books is a question for a tax professional.
Rates verified on
The formula
Landed cost of the lot = winning bid + buyer's premium + invoice fees + sales tax (if you paid it) + shipping, freight or your pickup costs.
Per item, split by expected price = landed cost × (that item's expected sale price ÷ the expected sales of everything you'll sell).
Per item, split evenly = landed cost ÷ the number of items you'll sell.
Leave out the items you'll throw away or can't sell: they don't earn anything, so the items that sell have to carry their cost.
Landed cost per item calculator
The starting numbers are the worked example below (a $100 win at GovDeals' 12.5% ceiling); type over them. Nothing you enter leaves your browser.
Your landed cost
Worked example: a $100 lot of 30 items
A $100.00 winning bid at the 12.5% buyer's premium ceiling in GovDeals' 2022 Maine price schedule, a 6% example rate (Kentucky's statewide rate, which has no local add-ons) on the bid and premium, and $20.00 of gas and time to pick it up (an illustrative figure). The lot has 30 items you expect to sell for $280.00 in all, plus 5 you'll throw away.
| Part | Amount |
|---|---|
| Winning bid | $100.00 |
| Buyer's premium, 12.5% | $12.50 |
| Sales tax, 6% of $112.50 | $6.75 |
| Gas and time to pick it up (illustrative) | $20.00 |
| Landed cost | $139.25 |
| Items | Expected price each | Split evenly, each | By expected price, each | By expected price, group |
|---|---|---|---|---|
| Books (20) | $8.00 | $4.64 | $3.98 | $79.57 |
| DVDs (8) | $5.00 | $4.64 | $2.49 | $19.89 |
| Small electronics (2) | $40.00 | $4.64 | $19.90 | $39.79 |
- Split evenly, a $5.00 DVD carries $4.64 of cost, almost its whole price, while a $40.00 gadget carries the same $4.64. Split by expected price, each item carries about $0.50 per dollar it should sell for: $2.49 for the DVD and $19.90 for the gadget.
- The whole lot cost 49.7% of what it should sell for, before selling fees and postage. Our fee calculators show what each platform takes from the sale.
- Working backwards: if you'd decided to spend no more than 40% of expected sales ($112.00), the highest bid that fits is $77.15: with the premium, tax and the $20.00 trip it lands at $112.00. (The 40% is an example, not a rule.)
What goes into landed cost
- The buyer's premium. A percentage on top of the winning bid, set per agency or seller: up to 12.5% at GovDeals in its 2022 Maine schedule, 9.75% at one county on Public Surplus, none on most PropertyRoom items.
- Flat fees on the invoice. PropertyRoom charges its Customer Pick-up S&H fee on every auction, even several collected at once, and a palletizing fee of $50.00 may be mandatory for freight (Customer Pick-Up Policy (Shipping)).
- Sales tax, unless your resale certificate was accepted. What it's charged on varies: PropertyRoom says its tax generally includes item-level shipping and handling (Do I Have To Pay Sales Tax?), and a 2016 GovDeals sheet says the premium is usually taxable (Berea GovDeals sheet).
- Getting it home. The delivery fee, freight quote, or your own fuel, time and rented truck for a pickup. Government sellers generally don't load or ship: under Standard Form 114C you arrange packing, removal and transport (SF 114C, Condition 8). Price it before you bid: in a 2021 GSA case the buyer of two vessels asked for a crane quote only after winning, got one of almost $100,000, never removed them, and lost a $13,580 default fee (CBCA 6958 (2021)).
- Storage or late fees, if you were slow. Oklahoma's current GovDeals terms charge $10 a day after 5 business days to remove (Oklahoma OMES auction terms); one county's 2018 GovDeals terms allowed a $25.00 daily storage fee after 10 business days (Baldwin County agreement).
- Not a cost: a refundable bid deposit (it goes toward your invoice or comes back), or the authorization hold a site puts on your card.
Lot traps that change the count
- "Times the money." On some auctions the bid is multiplied by the quantity: HiBid's example is a $20 bid on 5 items, for $100 (HiBid: Auction Terminology). Check before you bid, or your landed cost is five times what you planned.
- Quantity can vary. On federal sales by unit, Standard Form 114C lets the government deliver 10% more or less (25% by weight) and adjust the price; a "price for the lot" sale has no adjustment (SF 114C, Condition 12). Count what you actually received before you split the cost.
- Discards and broken items. Leave them out of the split. If the whole lot turns out worse than expected, redo the split over what actually sells.
What the tax rules say
The federal regulation on inventory cost says that for merchandise bought during the year, cost is the invoice price less trade discounts, and: “To this net invoice price should be added transportation or other necessary charges incurred in acquiring possession of the goods.” (26 CFR 1.471-3(b), eCFR current as of Oct 21, 2026). Resellers subject to section 263A have more costs to include, under §§ 1.263A-1 and 1.263A-3.
For a purchase that is sold off in parts, the regulation on gains says “the cost or other basis of the entire property shall be equitably apportioned among the several parts” (26 CFR 1.61-6(a)). Its second example splits a $25,000 purchase by the fair market value of each part at the time of purchase, $15,000 and $10,000, which is the same idea as splitting a lot by expected price.
Damaged and broken items have their own rule: inventory goods “unsalable at normal prices or unusable in the normal way because of damage, imperfections, shop wear, changes of style, odd or broken lots” should be valued at bona fide selling prices less the direct cost of disposing of them (26 CFR 1.471-2(c)). That is a rule for valuing inventory on your books, separate from how you price a lot before bidding.
This is general information, not tax advice. Whether to treat sales tax, the premium and your pickup costs as inventory cost or as expenses, and how to record discards, are questions for a tax professional.
What to do
- Before bidding, write down the premium, fees, tax and pickup or freight cost from the listing, and work backwards from your budget to a maximum bid.
- After you win, total the invoice plus your shipping or trip costs.
- List the items you expect to sell with a realistic price each, leave out what you'll discard, and split the total by expected price.
- Keep the invoice and your split with your records; ask a tax professional how to treat sales tax, discards and leftovers.
Questions
What is landed cost?
Everything you pay to get an item into your hands: the price, plus buyer's premium, fees, any sales tax you paid, and shipping or freight. US tax rules for inventory cost add transportation and other charges needed to take possession of the goods to the net invoice price (26 CFR 1.471-3(b)).
Should I divide lot cost evenly or by value?
Evenly works when items are about the same. When they aren't, splitting by expected sale price keeps a $5 DVD from carrying the same cost as a $40 gadget. 26 CFR 1.61-6(a) calls for an equitable apportionment and its example splits a purchase by fair market value; ask a tax professional which method fits your records.
Is the buyer's premium part of my cost?
It is money you paid to get the goods, so it belongs in landed cost. Sales tax is usually charged on it too: California, Idaho, Missouri, Nebraska, New York and Wisconsin tax agencies all treat the premium as part of the taxable price. PropertyRoom says its tax generally includes item-level shipping and handling.
What if some items in the lot won't sell?
Spread the cost over only the items you expect to sell; that gives each a truer break-even price. In the worked example below, the $139.25 lot is $3.98 an item over all 35 items but $4.64 over the 30 that should sell. How to record unsold or discarded items for taxes is a question for a tax professional.
What about damaged or broken items in a lot?
For pricing, leave them out of the split, as above. For your books, the federal inventory regulation (26 CFR 1.471-2(c)) says goods unsalable at normal prices because of damage, imperfections, shop wear or "odd or broken lots" should be valued at bona fide selling prices less the direct cost of disposing of them. How that applies to your inventory method is a question for a tax professional.
How do I work out my maximum bid?
Start from the most you want to spend in total, take off the fixed costs (trip, freight, flat fees), then divide by (1 + premium rate) and by (1 + tax rate) when tax is on the bid and premium. The calculator does it to the cent.
Should I count gas, a rented truck and my time?
For pricing a lot, count what you spend to get it home: fuel, a rented truck or trailer, freight, storage if you are late. Your own time isn't on any invoice, so decide separately what it's worth to you. Packing supplies and selling fees come out of the sale instead. How each is treated for taxes is a question for a tax professional.
General information from each site's and agency's own published pages, checked Oct 23, 2026; not legal or tax advice. Each auction's own terms control, so read them before you bid, and check with a lawyer or tax professional where it matters.
Sources
Rates verified on from each official page below.
- Kentucky Department of Revenue: Sales & Use Tax
- 26 CFR 1.471-3, Inventories at cost (eCFR, up to date as of Oct 21, 2026)
- 26 CFR 1.471-2, Valuation of inventories (eCFR, up to date as of Oct 21, 2026)
- 26 CFR 1.61-6, Gains derived from dealings in property (eCFR, up to date as of Oct 21, 2026)
- State of Maine, Bureau of Procurement: GovDeals price schedule, Attachment C, 2022 (PDF)
- PropertyRoom Help: Customer Pick-Up Policy (Shipping section)
- Baldwin County Commission (Alabama): GovDeals Online Auction Memo of Understanding, V7 9/12/2018 (PDF)
- HiBid Help Center: Auction Terminology (Aug 4, 2025)
- Standard Form 114C (rev. 4/2001): Sale of Government Property, General Sale Terms and Conditions (PDF)
- City of Berea, Kentucky: GovDeals information sheet (PDF, created Apr 11, 2016)
- PropertyRoom Help: Do I Have To Pay Sales Tax?
- PropertyRoom Help: Buyer's Premium
- Civilian Board of Contract Appeals: Daniel J. Etzin v. General Services Administration, CBCA 6958, decided Mar 11, 2021 (PDF)
- Oklahoma Office of Management and Enterprise Services: Public Online Auction Information (last modified Jun 17, 2026)
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