The decision to switch from new pallets to quality used pallets is often described as a simple cost comparison: new pallets cost $10-15, used Grade A pallets cost $4-7. The math looks obvious. But the real cost analysis is more nuanced — it includes pallet lifecycle, rejection rates, product damage risk, buyback revenue, and total management costs. This guide walks through a comprehensive cost analysis framework so you can calculate the real savings opportunity for your specific operation.
The True Cost of a New Pallet
When most businesses calculate pallet costs, they look only at the purchase price. But the true cost of a pallet includes every expense from initial purchase through final disposal or sale.
- Purchase price: $10-15 per new pallet (varies by size, wood type, and quantity)
- Delivery cost: $0.50-2.00 per pallet depending on distance and order size
- Quality inspection on receipt: Labor cost to inspect incoming pallets for damage
- Storage cost: Warehouse space for pallet inventory (often underestimated)
- Disposal or sale cost: What happens when you are done with the pallet?
New Pallet Total Cost Example (500 pallets/month)
- Purchase price: 500 × $12 = $6,000/month
- Delivery: 500 × $1.00 = $500/month
- Storage (30-day supply): 500 pallets × $0.50/month = $250/month
- End-of-life disposal: 500 × $0.50 = $250/month (dumpster fees)
- Total estimated cost: $7,000/month or $84,000/year
The True Cost of Quality Used Pallets
Quality used pallets have a different cost structure. They are cheaper to buy, have a slightly higher rejection rate on receipt, and can be sold back through buyback programs at end of use — converting disposal cost into revenue.
Used Pallet Total Cost Example (500 pallets/month, Grade B)
- Purchase price: 500 × $4.50 = $2,250/month
- Delivery: 500 × $1.00 = $500/month
- Storage (30-day supply): 500 pallets × $0.50/month = $250/month
- Rejection rate adjustment (3% non-conforming): 500 × 0.03 × $4.50 = $68/month
- End-of-life revenue: 500 × $2.50 = ($1,250)/month credit
- Total estimated cost: $1,818/month or $21,816/year
The Buyback Revenue Opportunity
One of the most underappreciated aspects of used pallet economics is the buyback opportunity. When you are done with used pallets, a pallet recycler like Pallet Wichita will pay you for reusable ones. This transforms what would have been a disposal cost into a revenue stream. For our 500-pallet-per-month example, the buyback revenue of $1,250/month represents a $1,500/month swing versus paying $250/month to dispose of new pallets — an annual difference of $18,000 from this single factor.
Savings Summary
- Monthly savings (used vs. new): $7,000 - $1,818 = $5,182/month
- Annual savings: $5,182 × 12 = $62,184/year
- Savings percentage: approximately 74% cost reduction
- For a 1,000-pallet/month operation, annual savings approximately double to ~$124,000
- For a 5,000-pallet/month distribution center, annual savings can exceed $600,000
Quality Considerations That Affect the Calculation
The savings calculation above assumes Grade B used pallets perform similarly to new pallets for standard applications. For most warehouse and shipping use cases, this is accurate. However, some applications warrant higher-quality pallets, and these affect the numbers.
- Grade A used pallets ($5.50-7.00 each) are appropriate for retail, automated systems, and high-value loads
- Grade C pallets ($1.00-2.50 each) can reduce costs further for light-duty internal use
- New pallets remain the best choice for international export and regulated pharmaceutical or food applications
- Mixed grade strategies optimize costs across different operational needs
Calculate Your Own Savings
To calculate savings specific to your operation, you need to know: how many pallets you use per month, what you currently pay per pallet, what percentage are for applications that require Grade A quality or new, and how many pallets you currently dispose of versus sell. With these numbers, you can build a comparison using the framework above.
Not sure where to start? Contact Pallet Wichita for a free cost analysis specific to your operation. Our team will analyze your current pallet spend, identify savings opportunities, and show you exactly how much you could save by switching to a managed used pallet program. Most businesses are surprised to find the annual savings significantly exceed their initial estimates. Visit our used pallets page to see current pricing on all grades, or learn about our pallet buyback program to understand what we pay for your surplus pallets.