The usual way to start a business is to plan, buy and hope. The lean way reverses it: run the smallest possible test, measure what happens, and only then decide whether to go further. Scrap trading suits this approach unusually well, because a deal can be small, quick and cheap to run, and the numbers that decide success, margin, time and rejection, show up in the first few loads. This guide gives you a method: choose one metal and one buyer, run three test deals, track four numbers and apply stop-or-go rules at the end.
The deal examples are invented to show the method and use ScrapTrade Price Index values as of 26 October 2026 as reference points. They are not results anyone should expect.
The method in five steps
| Step | What you do | Output |
|---|---|---|
| 1. Pick one metal | The one you can grade and price without help | A narrow starting point |
| 2. Pick one route | One source and one buyer, or one buyer request to answer | A single supply chain |
| 3. Run three small deals | Keep each lot small enough to survive a mistake | Real numbers |
| 4. Record four metrics | Margin per hour, rejection rate, days to cash, repeat rate | A scorecard |
| 5. Decide | Stop, repeat or expand using set rules | A clear next move |
Step 1: pick one metal
Choose a material where you can tell grades apart, such as aluminium extrusion, which is separated from steel with a magnet, or clean copper. Avoid mixed or hazardous material at the start. A narrow focus means you learn faster and make fewer expensive mistakes. The grading guide and the material guides for copper, aluminium and steel set out the grades and indicative prices.
Step 2: pick one route
Choose a single source of supply and a single buyer, ideally with the buyer lined up first. The buyer requests show what buyers want now, which tells you the grade and form to look for. A route this narrow keeps the test clean: if the numbers are bad, you know where the problem is.
Step 3: run three small deals
Make each deal small enough that a failure costs a lesson, not a crisis. Write down the buying price, selling price, weights, costs and hours, plus anything that went wrong. An invented example for aluminium extrusion shows the layout.
| Deal 1 | Deal 2 | Deal 3 | |
|---|---|---|---|
| Weight | 400 kg | 300 kg | 500 kg |
| Bought at (per kg) | A$2.30 | A$2.35 | A$2.30 |
| Sold at (per kg) | A$2.55 | A$2.50 | A$2.55 |
| Gross margin | A$100 | A$45 | A$125 |
| Fuel and handling | A$30 | A$30 | A$35 |
| Net margin | A$70 | A$15 | A$90 |
| Hours | 3.5 | 3 | 4 |
| Margin per hour | A$20 | A$5 | A$22.50 |
| Rejected or re-graded? | No | Partly | No |
For comparison, the index put clean extrusion at A$2.63 a kilogram on 26 October 2026, so these buying and selling prices are plausible reference points, though the numbers here are invented.
Step 4: track four metrics
| Metric | How to calculate it | What it tells you |
|---|---|---|
| Margin per hour | Net margin divided by hours worked | Whether the time is worth it |
| Rejection rate | Deals with a re-grade or refusal divided by all deals | Whether your grading is good enough |
| Days to cash | Days from paying your source to being paid | How much working capital you need |
| Repeat rate | Sources or buyers who would deal again | Whether you are building something |
In the invented table above, margin per hour ranged from A$5 to A$22.50. That spread, driven by one partly rejected, thinly priced deal, is exactly the kind of information a test is for. It points to a specific fix: tighter grading and a firmer price with the source.
Step 5: stop, repeat or expand
Decide your rules before you start, so the results cannot be argued away afterwards. For example:
| If after three deals... | Then |
|---|---|
| Margin per hour is below what your time is worth, and no clear fix | Stop, or change the metal or route |
| Margin is acceptable but one metric is poor | Repeat with a specific fix |
| All four metrics are healthy and a source and buyer would repeat | Expand: more volume, a second source, or a second metal |
These thresholds are yours to set. Be realistic: early deals are slow, and an hourly figure that looks poor in week one can improve with practice, as long as you can name what you will change.
Keep the downside small
- Sell before you buy where possible, so you are not holding stock. See Scrap Business Without a Warehouse: Can You?.
- Cap the lot size at an amount you can afford to lose.
- Check the price on the day. The live material prices are indicative and refreshed daily.
- Keep records, including where each lot came from. In many places buying scrap from the public is regulated, so confirm the rules.
- Consider working as an agent first, which tests the demand side with no stock. See How Scrap Agents and Brokers Make Money.
For the full picture of ways to begin, read Starting a Scrap Business With Little Capital.
Frequently asked questions
What is a lean approach to a scrap business?
Testing the idea with small, cheap deals and measuring the results before committing money or building anything large.
How many test deals should I run?
Three is a practical minimum to see a pattern. More is better if each is small.
What should I measure?
Margin per hour, rejection rate, days to cash and whether sources and buyers would repeat.
How do I limit my losses?
Keep lots small, sell before you buy and check prices on the day.
When do I scale?
When your metrics are healthy and you have a repeatable source and buyer.
Sources
- ScrapTrade Price Index, scrap.trade/market-prices, retrieved 26 October 2026. AI-generated indicative estimates, not quotes. The three deals are invented examples.
Figures are indicative and as at 26 October 2026. The deals, margins and hours are invented to illustrate the method. ScrapTrade operates a marketplace and has a commercial interest in the scrap trade. This article is general information, not financial or legal advice, and promises no income.