How profitable is a thrift store?

Data provided here comes from our team of experts who have been working on business plan for a thrift store. Furthermore, an industry specialist has reviewed and approved the final article.

thrift store profitabilityHow profitable are thrift stores, and what is the typical monthly income for thrift shop owners?

Let's check together.

Revenue metrics of a thrift store

How does a thrift store makes money?

A thrift store makes money by selling donated items at discounted prices.

What can you sell if you open a thrift store?

When you open a thrift store, you can sell a wide variety of second-hand items that appeal to budget-conscious shoppers and those interested in sustainable consumption.

These items typically include clothing for all ages, accessories like jewelry, handbags, and belts, shoes, vintage or retro fashion items, household goods such as kitchenware, small appliances, décor items, and furniture, electronics like phones, laptops, and gaming consoles, books, vinyl records, DVDs, and CDs, toys and games, collectibles, antiques, and unique or quirky items.

Your thrift store can offer an ever-changing selection as people donate items they no longer need, providing a treasure trove of goods at affordable prices.

By curating and organizing your inventory effectively, you can cater to diverse tastes and preferences, making your thrift store an appealing destination for those looking to save money and contribute to a more sustainable shopping culture.

What about the prices?

Thrift stores offer a wide variety of items at affordable prices, making them a budget-friendly option for shoppers.

Clothing, which is a popular category, typically ranges from $2 to $15 for shirts, $5 to $20 for pants, and $10 to $30 for jackets and coats. Accessories like hats, scarves, and belts usually fall within the $1 to $5 range.

Household items such as kitchenware, small appliances, and decor can vary widely, with prices ranging from $1 for basic utensils to $30 for larger items like furniture. Books and media often start at $1 for paperbacks and go up to around $5 for hardcovers or special editions.

Electronics, including items like headphones, speakers, and small gadgets, might range from $5 to $50, depending on the condition and brand.

Shoes generally fall between $5 and $20, while children's clothing and toys can be found for $1 to $10.

Category Price Range ($)
Clothing $2 - $30
Accessories $1 - $5
Household Items $1 - $30
Books & Media $1 - $5
Electronics $5 - $50
Shoes $5 - $20
Children's Items $1 - $10

What else can a thrift store sell?

In addition to offering a variety of secondhand items, thrift stores can also enhance their revenue by:

  • Hosting special upcycling and DIY workshops or crafting classes
  • Allowing local artisans or designers to use their space for creative events
  • Assisting customers in finding unique and affordable items
  • Organizing engaging craft challenges or upcycling competitions
  • Renting out space for private shopping events or filming
  • Teaming up with local community organizations for exclusive collaboration deals
  • Offering online crafting tutorials and virtual thrifting sessions

business plan secondhand storeWho are the customers of a thrift store?

Thrift stores cater to a variety of customer types, including budget-minded shoppers, bargain hunters, and those looking for vintage or unique items.

Which segments?

We've made many business plans for projects like this. These are the groups of customers we usually see.

Customer Segment Description Preferences How to Find Them
Bargain Hunters Price-conscious shoppers looking for deals and discounts. Low prices, frequent sales, bulk discounts. Advertise sales on social media, deal websites.
Vintage Enthusiasts Collectors seeking unique and rare vintage items. High-quality vintage items, retro fashion. Participate in vintage fairs, collaborate with retro-themed events.
Eco-Friendly Shoppers Environmentally conscious individuals looking to reduce waste. Second-hand goods, eco-friendly products. Promote sustainability initiatives, collaborate with green organizations.
DIY Crafters Creative customers repurposing items for DIY projects. Upcycling potential, unique materials. Offer crafting workshops, collaborate with local art groups.
Thrift Store Supporters Community members who value and support thrift store missions. Donations, volunteering opportunities. Engage with local community events, social media updates.

How much they spend?

Through careful analysis of market trends and consumer habits, we've determined that customers generally spend between $5 to $30 per visit at a typical thrift store. This spending range is due to the diverse assortment of items available, varying from low-priced clothing to more valuable collectibles or second-hand electronics.

Observations indicate that the frequency at which customers visit a thrift store varies, with average regular customers making purchases from 1 to 4 times a month. This pattern can fluctuate based on seasonal changes, personal needs, or promotional events that attract more foot traffic.

The estimated lifetime value of an average thrift store customer would thus be from $60 (1x5x12) to $1,440 (4x30x12), assuming the customer remains active for a full year. This calculation considers both the lower end of spending and visit frequency, and the higher ends respectively.

Considering these variables, we can approximate that an average customer contributes around $750 in revenue to a thrift store annually. This estimate splits the difference between the lower and upper limits of our customer lifetime value range.

(Disclaimer: the figures provided above are generalized averages and may not accurately reflect your specific business scenario. Various factors such as location, store appeal, and local market trends can significantly impact these numbers.)

Which type(s) of customer(s) to target?

It's something to have in mind when you're writing the business plan for your thrift store.

The most profitable customers for a thrift store typically fall into two main profiles: budget-conscious shoppers and vintage enthusiasts.

Budget-conscious shoppers are attracted to thrift stores due to the affordability of gently-used items, making them profitable as they frequently purchase a variety of goods.

Vintage enthusiasts, on the other hand, seek unique, one-of-a-kind items often found in thrift stores, and they are willing to pay higher prices for rare finds, increasing profitability.

To target and attract them, the thrift store can use marketing strategies like social media campaigns showcasing budget-friendly deals and unique vintage items.

Retaining these customers can be achieved by offering loyalty programs, personalized recommendations, and creating a welcoming shopping environment with helpful staff, ensuring they keep coming back for more affordable treasures and rare discoveries.

What is the average revenue of a thrift store?

The average monthly revenue for a thrift store can range significantly, typically between $2,000 and $30,000. Let's explore this in more detail across different business scenarios.

You can also estimate potential revenue for your own thrift store, using different assumptions, with a financial plan tailored for retail businesses.

Case 1: A quaint little thrift store in a small town

Average monthly revenue: $2,000

This type of thrift store, often located in a small community, caters to a limited customer base. It is typically a place where locals drop by to find everyday items at bargain prices, and the selection may be quite random, depending on donations or procurement sources.

Such stores don't usually have a large advertising budget and rely on word-of-mouth within the community. They often operate in a smaller space and may not have a high turnover of items.

Assuming an average purchase value of $5 and around 400 transactions per month, the monthly revenue for this thrift store would be approximately $2,000.

Case 2: A popular thrift store in an urban area

Average monthly revenue: $15,000

Located in a busier urban area, this thrift store attracts a variety of customers looking for affordable and unique items. The store is larger, offers a wider assortment of goods, from clothing to furniture, and often receives fresh items, making it a treasure trove for thrifters.

This type of store usually invests in marketing efforts, perhaps through social media or local events, attracting more foot traffic. It also might organize special discount days or themed events to draw in customers.

With an average purchase value of $10 and around 1,500 transactions per month, this thrift store could realize monthly revenue of $15,000.

Case 3: A large, almost boutique-like thrift store with curated items

Average monthly revenue: $30,000

This thrift store represents the high end of second-hand retail. It's spacious, located in a prime area, and presents a curated selection of items. It may specialize in vintage clothing, antique furniture, collectibles, and rare finds.

Such a store often attracts a different demographic, including collectors and enthusiasts willing to pay a premium for rare items. It's not just about finding a bargain but about the experience and the unique selection that can't be found anywhere else.

This business likely invests significantly in its interior setup, staff training, online presence, and possibly e-commerce, ensuring that items are displayed attractively and available to a wider audience online.

With higher price points due to the quality and uniqueness of the items, assuming an average sale value of $30 and around 1,000 transactions, this type of store could generate a monthly revenue of $30,000.

It's important to note that these scenarios are simplifications and actual revenues can be influenced by a multitude of factors including location, management, market trends, and the economic environment.

business plan thrift store

The profitability metrics of a thrift store

What are the expenses of a thrift store?

Expenses for a thrift store include purchasing secondhand inventory, rent or lease payments for the store, staff wages, and marketing efforts.

Category Examples of Expenses Average Monthly Cost (Range in $) Tips to Reduce Expenses
Rent and Utilities Store rent, electricity, water, gas $1,000 - $5,000 Consider a smaller space, negotiate rent, use energy-efficient lighting
Inventory Purchasing second-hand items $2,000 - $10,000 Source items from donations, negotiate bulk deals with suppliers
Employee Wages Salaries, benefits, payroll taxes $1,500 - $7,000 Optimize staffing levels, consider part-time or volunteer help
Marketing and Advertising Online and offline marketing, advertising materials $500 - $2,500 Focus on cost-effective online marketing, use social media
Store Maintenance Repairs, cleaning supplies $200 - $1,000 Maintain equipment, DIY repairs when possible
Insurance Property and liability insurance $100 - $500 Shop around for insurance providers, consider higher deductibles
Accounting and Legal Accounting services, legal fees $100 - $500 Consider outsourcing or using accounting software
Point of Sale System Software, hardware, transaction fees $50 - $300 Choose cost-effective POS systems and negotiate processing fees
Taxes Sales tax, income tax $100 - $1,000 Properly track and report taxes, consider tax deductions
Miscellaneous Office supplies, security, licenses $100 - $500 Buy supplies in bulk, review licenses and permits regularly

When is a a thrift store profitable?

The breakevenpoint

A thrift store reaches the threshold of profitability when its total revenue surpasses its total fixed and variable costs.

In more straightforward terms, a thrift store begins to see profits when the income generated from selling second-hand goods exceeds the expenses borne for rent, utilities, employee wages, and other operational costs. This is when the thrift store has hit a critical milestone in its financial journey, known as the breakeven point.

For instance, let's delve into a hypothetical scenario where a thrift store incurs monthly fixed costs of around $10,000.

The breakeven point for this thrift store, therefore, would be approximately $10,000 in revenue. This revenue might stem from selling between 1000 to 2000 items per month, considering the price range of these items varies from $5 to $10. It's crucial to recognize that this figure doesn't account for variable costs that may apply, including inventory acquisition, transactional fees, or fluctuating utility charges.

It's important to acknowledge that this metric can differ significantly based on numerous factors including the store's location, size, pricing, operational efficiency, and competitive dynamics. A larger thrift store with a more extensive inventory and higher overheads would naturally have a higher breakeven point compared to a smaller outlet with minimal expenses.

Are you pondering over the financial sustainability of your thrift store? Explore our tailor-made financial plan designed for retail businesses in this niche. By entering your specific assumptions, you can leverage this tool to calculate the precise earnings threshold you need to meet or exceed to ensure your thrift store is a profitable venture.

Biggest threats to profitability

The biggest threats to profitability for a thrift store are rising operating costs, such as rent, utilities, and employee wages, which can eat into the store's revenue and erode profits over time.

Additionally, fluctuations in the economy and consumer spending habits can affect the volume of donations and sales, making it challenging to maintain consistent income.

Competition from online resale platforms and other thrift stores can also reduce customer traffic and sales.

Inventory management is crucial as poorly chosen or overpriced items can lead to stagnant stock that ties up capital.

Theft, damage, and spoilage of donated items can further impact profitability by increasing losses.

Lastly, limited marketing and outreach efforts can hinder the store's ability to attract new customers and donors, potentially stagnating or declining revenue streams.

These threats are often included in the SWOT analysis for a thrift store.

What are the margins of a thrift store?

Gross margins and net margins are key indicators used to gauge the profitability of a thrift store business.

Gross margin represents the difference between the revenue earned from selling second-hand goods and the direct costs associated with acquiring those items. Essentially, it's the profit remaining after deducting the costs directly tied to the procurement and preparation of the store's inventory, such as purchasing from suppliers, cleaning items, and staff wages for sorting and pricing.

Net margin, conversely, incorporates all expenses the thrift store experiences, including indirect costs like operational expenses, marketing, rent, and administrative costs.

Net margin offers a more comprehensive view of the thrift store's profitability by accounting for all operational expenses, both direct and indirect.

Gross margins

Thrift stores generally have an average gross margin between 30% and 50%.

This means that if your thrift store generates $8,000 in a month, your gross profit would be approximately 40% x $8,000 = $3,200.

Let's delve into this with an illustrative example.

Consider a thrift store that procures various items at a total cost of $5,000. After the items are cleaned, repaired, and presented in the store, they are sold for a total of $8,000.

The store's direct operational costs for staff, cleaning supplies, and minor repairs come to $1,000. Thus, the store's gross profit calculates as $8,000 (revenue) - $1,000 (direct costs) = $7,000.

In this scenario, the gross margin for the thrift store is calculated as $7,000 / $8,000 = 87.5%. However, this is an ideal scenario, often not accounting for unsold inventory and other variable costs, which are why the average industry standard hovers around 30% to 50%.

Net margins

Typically, thrift stores have an average net margin in the range of 5% to 15%.

Using straightforward terms, if your thrift store's revenue stands at $8,000 per month, your net profit, considering all expenses, might be around $800, constituting 10% of the total revenue.

For consistency, we'll continue with the same example.

Our thrift store, after deducting direct costs of $1,000, faces additional indirect costs like rent, marketing, administrative costs, and utilities. Let's assume these additional costs amount to $1,200.

Upon subtracting both direct and indirect costs, the thrift store's net profit equates to $8,000 - $1,000 (direct costs) - $1,200 (indirect costs) = $5,800.

In this situation, the net margin for the thrift store would be $5,800 divided by $8,000, resulting in a net margin of 72.5%. Like the gross margin, this ideal scenario is subject to variables like unsold inventory, seasonality, and specific operational inefficiencies, leading to a more industry-standard range of 5% to 15%.

As a thrift store owner, comprehending the net margin (in contrast to the gross margin) is pivotal, as it gives a clearer insight into the actual profitability of your store by encompassing all associated costs and expenses.

business plan thrift store

At the end, how much can you make as a thrift store owner?

Understanding that the net margin is your go-to indicator for profitability is essential in the retail industry, especially for a thrift store. It reveals what's left financially once all expenses are covered.

Your earnings as a thrift store owner will largely depend on your execution, management skills, and market savvy.

Struggling thrift store owner

Makes $800 per month

Starting a small thrift store requires more than just a love for vintage finds. If your choices involve a poor location, limited selection, lack of online presence, and ignoring community engagement, your total revenue might stall at around $4,000 a month.

Furthermore, if your expenses aren't monitored and minimized (rent, utilities, sourcing of items, etc.), your net margin might barely reach 20%.

This would mean your monthly earnings hover around just $800 (20% of $4,000), placing you in a challenging financial position.

Average thrift store owner

Makes $6,000 per month

If you're operating a thrift store with a decent location and a fair variety of items, perhaps even some collectibles, your store might pull in about $25,000 in revenue. You might also engage with the local community, have a social media presence, and occasionally organize events or sales.

Prudent management of expenses could help you secure a net margin of around 30%, considering the relatively low cost of goods—if you source smartly.

This scenario might leave you with a more comfortable $7,500 per month (30% of $25,000), marking a stable, if average, business operation.

Outstanding thrift store owner

Makes $20,000 per month

As a thrift store owner who excels, you're doing everything right: prime store location, a fantastic and wide array of offerings, active online sales through your website or platforms like Etsy and eBay, and robust community engagement. You might also be known for unique finds or vintage collections, driving up your store's reputation and customer base.

Such excellent execution could see your revenues soaring to $70,000 or more. Keeping a keen eye on expenses and leveraging a favorable supply chain (donations, estate sales, etc.) could enhance your net margin to about 35%.

In this ideal situation, your monthly earnings could reach an impressive $24,500 (35% of $70,000), reflecting your exceptional management and business acumen.

May your thrift store reach such heights of success! It all starts with a comprehensive, well-thought-out business plan, passion for the work, and consistent customer engagement.

business plan secondhand store
Back to blog