MSTC · HOW-TO

How to Calculate Profit Margins on Scrap Auction Purchases

Accurate margin calculation is what separates a sustainable scrap trading business from one that erodes capital through underpriced wins.

5 min read Action Guide By LeegAl Advisory Team

Accurate margin calculation is what separates a sustainable scrap trading business from one that erodes capital through underpriced wins.

How To Approach This

Start with the material's genuine current market value based on real research, not assumption or a competitor's apparent behavior.
Add logistics costs (lifting, transport, any processing) and compliance costs (GST treatment, PCB clearance where relevant) to establish your true landed cost.
Build in a realistic margin reflecting your actual business risk and capital cost, not just a token markup.
Set your maximum bid price based on this full calculation, ensuring the winning price still leaves genuine margin after all costs are accounted for.

What's the most commonly underestimated cost?

Logistics — lifting and transporting bulky or distant material is frequently underestimated relative to material value.

Should margin calculations differ by material category?

Yes, different categories carry different logistics, compliance, and market volatility profiles that should inform your margin expectations.

Talk to LeegAl's WIN advisory team about mstc e-auction participation — clear process, transparent pricing, no obligation.