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PCGS just announced a new 1% GP on all successful regrade submissions.....How will this affect you?
drddm
Posts: 5,303 ✭✭✭✭✭
Just curious if this will impact how often you submit for regrading?
Will this impact dealers more so than collectors?
What are your thoughts on this new announcement by PCGS?
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I personally don’t understand where the added risk to justify the premium is. When the GP applied to crossovers I could grasp where there is risk in cracking a coin which they did not grade only to find undisclosed problems.
With regrading and reconsidering PCGS coins I would think that any underlying issues should fall with the guarantee.
In fact it seems like an incentive to under grade coins to further benefit when the coins are later upgraded. Not suggesting that they would ever do so of course. I would prefer a straight price increase if needed vs added complexity. As the CFO of a business, I tend to find that simplicity is generally best in these matters.
Overall the year has been positive for PCGS and Brett and team seem to be doing a great job.
Latin American Collection
Sorry, what is GP?
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Guarantee premium. Basically 1% charge on the full value of the coin if it crosses or upgraded via reconsideration or regrade.
Latin American Collection
If I received a coin graded 45, I disagree and returned it, and comes back 50, that should be just their guarantee. They undergraded the coin the first time, why should I pay again so the coin is correctly graded? I understand a charge if I return and stays at 45 as that would mean the coin was correctly graded the first time. I agree with you @Boosibri as works as an incentive to have coins re submitted.
I thought that the premium had been in place for 5 or more years.
In the past it was on crossovers and reconsiderations, now it is regrades as well.
Latin American Collection
Perhaps it is to take advantage of or, perhaps, tamp down the numerous upgrade attempts? It likely won’t affect me with how I do things and I was already facing it for a few crossovers I’m considering.
TurtleCat Gold Dollars
Thank you for the clarification.
Don't get me ranting about trying to make 58+'s! My avatar should've +'d the first time and it took 5 tries!
I agree with @Boosibri as I see no added risk on the part of PCGS, so why the premium?
As far as the OP's question of how it will affect me, the answer is in two parts. Directly it will not effect me in the least as I don't sub coins for Reconsideration or any other service. Indirectly is another story. It may affect me in that if a coin was just bumped, the seller may bump up the price of the coin I'm trying to buy, not just to the upgraded level, but a bit more to recoup some or all of the 1% cost for getting the bump.
Donato
Donato's Complete US Type Set ---- Donato's Dansco 7070 Modified Type Set ---- Donato's Basic U.S. Coin Design Set
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My impression is that the only reason that PCGS didn't charge a percentage of the value on ALL submissions from DAY ONE is that it would create an incentive to grade everything higher. Since that no longer seems to be a concern, I would think that the latest move is just one more step along to the inevitable. And FWIW, I would have no problem with that, subject to certain conditions.
Doggedly collecting coins of the Central American Republic.
Visit the Society of US Pattern Collectors at USPatterns.com.
What the market will bear. Just what it will bear?
If a submitter/seller gets a $1000 value upgrade on a regrade submission, he will pay an extra $10 to PCGS. I’m not convinced that a lot of sellers will bump up their prices, as a result of the 1% fee.
I am curious as to what justification, if any, PCGS gives for the added fee.
Mark Feld* of Heritage Auctions*Unless otherwise noted, my posts here represent my personal opinions.
Seems unethical and something that hurts buyers who already have to pay multiple times to have a coin graded correctly. One of those most surprising and disappointing moves I have ever seen from PCGS
My Early Large Cents
The GP is not assigned on a percentage of the value increase but on the total value of the coin.
Latin American Collection
Thank you.
Mark Feld* of Heritage Auctions*Unless otherwise noted, my posts here represent my personal opinions.
To the point I made earlier on simplicity in pricing, I would prefer a value based flat pricing rate vs a tiered price and then a fee ONLY if the coin (already in PCGS plastic) upgrades. It achieves the pricing objectives of capturing the value of the coin (or upgrade) while minimizing any conflicts, real or perceived.
Latin American Collection
This, I don't ever expect to submit for reconsideration or regrade but it certainly could be an effect that gets passed down to the end buyer.
My Collection of Old Holders
Never a slave to one plastic brand will I ever be.
I think the reality is that PCGS wants to share in the value of your upgrade. In general, the business model of the grading services is a little backwards. If they undergrade a coin, they will actually generate more revenue. It's one of the few businesses that where they actually get more revenue for "getting the grade wrong." Not saying this is done intentionally, but clearly that is the result. The other "hidden" increase in fees for 2020 is the lowering of Maximum Insurance values for certain tiers. For example, the Express maiximum insurance value is now $10,000 instead of $20,000. If you have a coin worth $12,500, you'll now need to submit it "Walkthrough" which costs $150 instead of $65 (Their published prices). These are, technically, price increases in my opinion. Any thoughts?
Grading fees NEVER get passed along to the buyer. Look at it this way. Yes, a buyer might very well pay more for a coin if it’s slabbed, but he completely doesn’t care if it took $25 or $2500 in fees before the coin found its way into the holder. And because smart sellers know this, they price their coins accordingly, ignoring the certification costs.
Doggedly collecting coins of the Central American Republic.
Visit the Society of US Pattern Collectors at USPatterns.com.
The new 1% fee on successful regrades will not affect me. If I think a coin is under graded, I have been using Reconsideration, which already imposes the 1% fee on upgrades. Here’s the subtle differences between those two services:
My speculation on each point above could be wrong. These are just my perceptions on the psychological factors involved based on my understanding of the processes of these two services. But I honestly cannot say my understandings are accurate.
My collecting “Pride & Joy” is my PCGS Registry Dansco 7070 Set:
https://www.pcgs.com/setregistry/type-sets/design-type-sets/complete-dansco-7070-modified-type-set-1796-date/publishedset/213996
I just wonder how are they doing the evaluation of price jump. Hopefully not on their price guide estimates because nobody pays that
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I typed out a response, but I enjoy being a member here and thought it best keep it to myself. Let’s just say I give it two thumbs down. It seems less justifiable than applying it to reconsideration and crossover services.
How will it affect me? Well, I can do math and all of these incremental changes alter the risk/benefit equation.
If a coin is submitted multiple times without an upgrade, is an eventual upgrade actually "correct" and the other, more consistent, grades "incorrect"?
Prior to this new policy the 1% premium applied to only reconsiderations and crossovers, both of which entailed some risk for PCGS. Decisions had to be made on views through holders. Surprises could happen.
Regrades are a different story. The coins are cracked-out before judgments are made.
Maybe there are different reasons for the past 1% premiums, introduced several years ago. I recall PCGS saying something about their overall risk due to higher values that come with upgrades. I don't think I understood the reasoning and it certainly didn't jive if regrades were exempt.
My impression is that this is simply a way to improve the bottom line while touting holding the line on grading fees. "No increase in grading fees for 2020! Well, except for popular regrades."
I don't like it. Upgrades will be more profitable. Where does that go?
Here's an idea, PCGS: Instead of imposing a 1% premium offer a small discount on a future submission with any successful regrade. That will encourage more submissions and probably improve revenues more significantly. Plus, the other TPG's will hate it.
Lance.
The only thing I don't like is it's an incentive to overgrade .......
Sort of like going to the doctor I suppose. Either you trust them or you don't.
You want to play the plastic game pay up.
i'm a "the glass is half full" sort of guy. ln the same email from Brett he announced this will be the only fee increase for all of 2020. Good job Brett.
Keep an open mind, or get financially repressed -Zoltan Pozsar
I guess I won't be regrading my stack of Pan Pac's this year..
Check out my iPhone app SlabReader!
Guess I should have sent in my regrade order last week.
It's an insurance cost, it should depend on the value of the upgrade. This has been the case with stamp expertization forEVER. The cost of expertization was always a percentage of the catalog value.
[Side note: This is a huge problem with stamps because the fee was 2% of catalog but the catalog prices are so hopelessly high that for some items 2% of catalog is really 10 to 20% of what you could actually sell it for.]
Aren't they paying multiple times to try and get the coin graded INCORRECTLY.
Isn't the solution to just crack it out?
In this case they are charging you a penalty to acknowledge what they believe to be a mistake they made. And it gives them a financial incentive to both undergrade initially and then overgrade on the second try. The appearance here is wrong in every direction.
My Early Large Cents
I kind of agree. It really should be 1% of the value on all submissions to be consistent (or 0.5% or whatever). That way it is clearly an insurance cost for the guarantee you are getting.
Reaffirmation of my standard practice.
I buy coins already graded that meet both my approval of the grade and the eye appeal.
More power to you guys who like the casino, though.
Then you lose the grade guarantee.
If you're sending in a coin that you're sure is undergraded, why do you need a guarantee of the current grade?
The current system makes sense in that those submitters who actually make the money end up paying the fee. Which is fine for dealers who will theoretically realize those gains in the short term. It's less ideal for collectors who might hold the upgraded coins for long periods of time. I suspect it's structured as it is because the majority of Regrade submissions are presumed to come from dealers.
Yes, but I presume you are resubmitting it trying to upgrade it not re-evaluate its authenticity.
???
If you crack, the grade can go down or the coin can end up in a Genuine holder. You get no compensation for the lost value in either case. With a Regrade, none of that can happen. Much bigger downside to a crackout.
If one is worried about the coin one thinks should be graded higher actually getting a lower grade instead, it sounds like one needs to work on one's grading skills a bit before submitting coins for regrading.
When I first got back into this hobby some twenty years ago, I purchased a 1917-D Mercury dime in a PCGS MS63FB holder, which I cracked out and sent back to PCGS. Long story short, it took six (!) submissions to get it back into an NGC MS63FB holder. In between, it was either bagged for AT or graded lower than 63FB. So I guess at least a few of those professional graders needed to work on their grading skills since they got the "wrong" answer?
Anyway, that turned out to be a relatively cheap education and I never did a straight crackout again for a coin of any substantial value.
There are no answers, just opinions. If it took six submissions to get the coin back with the original grade, that would seem to indicate that particular grade was about as high as one could reasonably hope for. Probably best to not send that kind of coin in for regrading, you think?
I can't do it in my situation as some of my 58's would graduate to MS and I just want a +!
Right, I was newly returned to the hobby and didn't know what I was doing. The point of the story is you never know what a TPG will grade a coin on any given day. I take back my statement about not cracking a coin of value ever again. A little while back I cracked out an early commem from an NGC 67 (with CAC) holder and sent it to PCGS. Result: MS65. Now I'm definitely cured!
Anyway, this is getting OT, so I'll leave it there.
That makes sense. A flat rate for the service level and a small percentage based on value.