Is it Better To Consign or Donate?  The Economics of Purging

Is it Better To Consign or Donate? The Economics of Purging

Babies don’t stay babies for long. My babies have grown out of baby bug rattles and what seems like thousands of adorable outfits. I can’t store them all, so I thought I’d try consignment sales. My clients are often tortured with the idea that by donating their goods, they are somehow losing money. Is selling at a consignment sale or store, on eBay, or on CraigsList any better? I decided to run the math on my own involvement in a community consignment sale and see how it compares to donation values.

Organizing for consignment. The Economics of Purging: Consigning vs Donating

Let’s set aside the emotional distress tied up in pawing through teeny tiny clothes, hand-knitted sweaters and beautiful booties. Look, I’m a professional, and even I did a mini fashion show for my husband as I tagged items for sale. (Aaaaw, remember her in this cute little outfit? It hardly looks worn!)

Let’s examine facts. I had about 250 outfits, shoes, and baby gear that were consignable: in good shape, no stains or tears, matched in complete outfits, and basically looking like-new. I signed up to be part of a local one-day consignment sale, but working with a consignment store is similar.

First came the scramble for child-sized hangers. Clothes on hangers tend to sell better. Every dollar spent on prep reduces profit, so I scoured Freecycle and hit up friends and clients, but it was tough coming up with enough extra hangers. I used adult hangers for many outfits.

Using straight pins to attach sale tags is tough on the buyers. One dollar store package of safety pins cosst, yep, just one buck. Sale tags were provided by this event host, but some sales require consignors to print tags at home, adding paper and printer ink costs.

Then came the real cost. Little outfits had to be unpacked, put on hangers, steamed or ironed, grouped and priced. I spent at least 10 hours, maybe 15 hours or more.  At minimum wage of $7.25 my “cost” for time spent would have been at least $73 bucks. In real life I make way more than minimum wage.

Last, I trekked to the sale site for drop off. Loading items and delivering to the sale site took a little more than an hour, so rack up another minimum of $10 in opportunity cost and aggravation.

Now comes the fun part. Each sale works a bit differently, so read up on what’s available in your area. This sale gives 60% of the proceeds back to the consignor, which is pretty good.  I opted to volunteer at the sale and earn a higher percentage of the earnings, in my case 75%. I donated two hours of time for greater profit and an additional shot at end-of-day markdowns  I scored big, getting an all-wood three-piece play kitchen, which I repainted “Pottery Barn Pink”, for just $10.

I priced just about every item at $2. Price items to sell, for sure. Pricing something unreasonably high at a consignment sale lowers your chance of earning any profit at all. Most people come to these sales for deals and steals, so play along or don’t play. And really, you’re done with it, so let it go and feel happy it’s getting another life even if it sells at much less than what you paid for it.

  • potential gross = $500
  • potential take = $375 (that’s 75%)
  • potential net (minus my costs) = $292

My results?

  • actual gross = $192
  • actually paid to me =$144
  • actual net (minus my costs) = $61

I’m not surprised that $61 is just about what I spent that day at that very same sale. I received a check two weeks later. Unsold items can be donated by the host, but I picked up mine to take to another sale or donate for the tax deduction. That means I dragged home 150 outfits, which was no easy haul back out to the car. They are still worth another roughly $75 back on my taxes when properly documented.

So was it worth it? About one-third of taxpayers itemize deductions, who can claim charitable donations on Schedule A. If I had bagged and dropped off those same 250 items at my local Goodwill, I would have been able to assign a thrift value to them of the same $2, and taken the deduction on my taxes next April.  My donation would have reduced my taxable income by the value donated ($500), and reduce my tax bill by roughly $125. (Note: Taxes can be confounding. Please talk with a tax adviser for specifics.)  Hmmm, that is suspiciously close to my net earnings on this sale, but without the time that I spent preparing, dropping off and collecting my unsold items, and volunteering at the event. Click here for one guide to donation values.

These linked references get re-posted often, so if the links are broken, please email me so I can fix them!

So should you or shouldn’t you? If you enjoy consignment sales, if you could use the cash more than the time, or if you have some trendy, high-quality items that you know people are willing to pay top dollar for, then go the consignment route. I appreciate it, because I’ll probably be buying your stash. Watch out for emotion, though, since the longer you wait to consign, the less likely your stuff will be current, trendy and desirable. If, however, time is more valuable to you, then donate your goods to a charity like Goodwill or any local charity that will provide a receipt for tax purposes, knowing that the financial outcome to your bottom line will likely be about the same.

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11 Responses to Is it Better To Consign or Donate? The Economics of Purging

  1. I saw your comment on Jo-Lynne’s FB status and stopped over. This is so interesting. I often struggle with donating vs. trying to sell. I recently participated in my first consignment sale (I think it may have been the same one–W. Pres?), and my experience was about the same. Ohhhhh, the hangers!! I love these sales and it was great for me to be able to shop early and cherry pick a few things I really needed. I also brought home my unsold items thinking I would try to sell at another sale. But, just yesterday I dropped them at Liberty Thrift. I have too many other things to worry about, this stuff just had to go. Great article, thanks.

    • Jennifer, a they say, your mileage may vary, and I figured sharing my story would let a whole lot of moms let go of their guilt and their clutter when they are donating their treasures. Just remember to get those receipts!

  2. The real value of consignment to me is participation. By being a team member, I shop earlier, therefore getting some incredible values. For example, every consignor prices their own goods, so on drop off day, I see three radio flyer wagons. Identical, except for price. One is $80. One is $65. One is $12. Being one of the first to shop, before the public, I get to buy the $12 wagon (this is a real life true example! I also recently resold the same wagon for $45, after using it for 3 years) so the true value of consignment is the opportunity to rehome my sons well cared for but also well loved toys and clothes, while also saving a HUGE amount of cash at the same time. I buy and sell my sons wardrobe every sale, and never have I ever lost money, nor have a ever NOT made a profit. What I don’t sell at the end of the sale season, I donate, therefore assuring a tax benefit as well. SO worth it!

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