How much do dealer markups affect your coin budget?

MrEureka

I was at the Chicago International Coin Fair last weekend. As a collector, I saw a fair number of coins I liked, but nothing I "had to own". As a result, I bought very little for my collection. It occurred to me that I would have bought more - much more - if I was confident that I could easily recoup close to my cost on anything I later decided not to keep.

Am I the only one that thinks like that? How much do dealer markups affect YOUR coin budget?

jbsteven

If it something I have to have it is mine.

I am suprised if your statement is true Andy, about yourself.

ARCO

Depends on the coins condition and the dealers grading. Many of the dealers in my area price coins exactly the same whether they are scratchy cleaned or completely original. Also, they tend to undergrade a tad more rather than being too liberal with a coins grade.

Sometimes the universe aligns and my local dealer will have a key date in totally original condition slightly undergraded! Damn...Now that is what I am talking about! I have purchased at least ten key date coins all of which will return much more than I paid. Five Key date Walking Lib's already have. Most coins however would have had the reverse effect had I bought them.

Tyler

MrEureka

I am suprised if your statement is true Andy, about yourself.

It's true. But remember, I said there was nothing I "had to own". Then again, there's really not much that I "have to own". It's all a matter of degree.

Wondo

I usually get a one-year buy back gaurantee on my high end coins. How do you spell garauntee?

nwcs

Greatly affects my willingness to purchase. A local coin shop owner has ridiculous markups and treats the grade on the slab equal regardless of PCI Gold Label, ANACS, PCGS, NGC, or ACG. He prices them all the same. And that is usually VERY high. His junk box is the only thing worth looking through. Found a few MS66 toned roosevelts for $1 and some nice other coins for <$3 each. But gave up going there.

I do look at a greysheet before buying. I don't demand the price for ask, but I want to see how much markup they want to charge me. Typically I'll ask them for their best offer and if I like it I will buy it. I don't haggle. So I probably end up paying a little more than I could otherwise, but the grief saved is worth it. And if a dealer sees me buying several times at reasonable prices, I have found they are more willing to give me a decent deal later and point out nice coins.

Neil

fcloud

It doesn't! A dealer needs to make a profit to stay in business. If I buy a coin and need to sell it before it has increased in value enough to not pay me back in full, oh well! If I have to take a loss due to whatever, I completely understand. If however, the coin increases all the better, but I don't expect retail, I understand it will be wholesale. (If a show is available, there is a better chance of getting a bit better price due to the competition.)

jbsteven

fcloud:

I wish more people understood your point of view!

Singapore

I'll overpay for quality. Plain and simple - so dealer mark-ups aren't part of my equation.

FatMan

Ok.....to all the dealers out there. What markup should I expect to pay that is fair to the dealer and makes the purchase a good deal for me? And what should I use to help me determine that number. I read here that graysheet is really not the true wholesale price. That many dealers are selling coins that they purchased at 20-30%+ under sheet prices. I want to be fair so any honest answers would be greatly appreciated.

MrEureka

I'll overpay for quality. Plain and simple - so dealer mark-ups aren't part of my equation.

Pullleeeeaze! Are you saying that you would pay infinite multiples of "market"?

MrEureka

What markup should I expect to pay that is fair to the dealer and makes the purchase a good deal for me?

Phatman -

To answer your question, it depends on many factors. But you didn't answer MY question!!!

Singapore

Fair question Andy. And what would 'fair market' be, for example, on that French Colonies coin you know so well?

Funny, I can't seem to find it on my Graysheet.

MrEureka

And what would 'fair market' be, for example, on that French Colonies coin you know so well?

It melts at 4K and could sell for 15K on the right day to the right person. That coin is the perfect example for this thread. How many people would have the cajones to pay even 6K for a coin like that, even if they loved it?

roadrunner

I don't really consider dealer markups in the equation especially since all the listed price guides are at odds. I figure out what I think a coin is worth wholesale to a knowledgeable dealer and go from there. I try to get it as close to wholesale as I can. And in many cases wholesale could be either higher or lower than what I paid. Depends on the coin. If you try to buy one-of-a-kind type coins that don't show up too often, it's much harder for the dealer as well as the collector to come up with the "price." Sort of levels the playing field a bit. I like to buy coins where there is no easy market to refer to. Neither Trends, CDN, CCE, Redbook, etc. would be right.

roadrunner

Singapore

Actually, I think thats a bad example for this thread, but its your thread and therefore you get to decide.

I think its a bad example because its an essentially irreplaceable coin for any price.

A great majority of the coins that trade at shows, or in auctions or get discussed in this forum are replaceable and trade within generally well defined and published price ranges. For those kinds of coins the dealer mark-up or the price paid in general becomes a more measureable and important consideration in my opinion.

MrEureka

Actually, I think thats a bad example for this thread, but its your thread and therefore you get to decide.

Ooops! Of course it was a bad example.

FatMan

MrEureka....fair enough. I'll answer your question first.



<< <i>How much do dealer markups affect your coin budget? >>



Not being a smart *ss but my budget is reduced by one dollar for ever dollar I spend in dealer markup. I figure I'm going to spend about 10 grand a year. So if I pay more in markup, I purchase less coin value.



<< <i>It occurred to me that I would have bought more - much more - if I was confident that I could easily recoup close to my cost on anything I later decided not to keep.
Am I the only one that thinks like that? >>



I am always quicker to pull the trigger on a purchase if I have the confidence that I can recover most of my costs down the road if I should find a more desirable coin. In fact, your answering my previous question would be very helpful to me in feeling more confident in my purchases, which in turn could have an affect on what I choose to spend per year. I really do not collect for investment reasons. My budget is nothing but entertainment dollars. However, feeling good about my purchases is important to me regarding my entertainment value. Being confident in receiving a good deal (fair to me and the dealer) would certainly add to my entertainment.

Now its your turn.

MrEureka

In fact, your answering my previous question would be very helpful to me in feeling more confident in my purchases, which in turn could have an affect on what I choose to spend per year.

OK, Phats. Now that we're agreed that the downside (caused by markup) affects the AMOUNT that you are willing to spend, I'll answer your question. Fair markups range from 1% (on large value bullion related transactions) to 1000%+ (on small value "top pops" transactions). It's all "fair" as long as you have shopped around. Sorry, but that's the truth.

So, now you get to answer my question. If markups were always tiny for anything you might buy, how much more than your current "10K a year budget" would you spend?

roadrunner

The same concept works for everyday collector coins that trade all the time. Buy gravitating towards positive attributes that make common coins less common, you can do better and often beat the house. Just in the past month it was FB on the Roosies. There will be more permutations. It may be strike, color, die varieties, errors, uncleaned (esp. on early bust coinage), orig skins, etc.

Eventually "full claw" barber quarters will be eagerly sought after. If we are talking plain jane run of the mill coins that have no extra or unusual "character," then 10% within wholesale is one number to strive for.

roadrunner

berylcoin

In the situation you describe (coins I like, but don't NEED) I definitely consider the markup above what I could sell a coin for. Personally, I call it the coin's downside and it's a consideration in every purchase, but much moreso on NON "have to have it" coins.

Is that what you were asking?

BC

FatMan

<< <i>OK, Phats. Now that we're agreed that the downside (caused by markup) affects the AMOUNT that you are willing to spend, I'll answer your question...............

So, now you get to answer my question. If markups were always tiny for anything you might buy, how much more than your current "10K a year budget" would you spend? >>



The markup does not directly affect the amount I am willing to spend as much as the satisfaction of knowing I received a fair deal. Remember I said I collect for entertainment....fun, learning, history,feeling good. I do not want to win at the dealer's expense. I would prefer a win-win in all my transactions. So where I am going with this is that what holds me back from spending more money is a) my limited knowledge at this time; I have spent the past 4 years learning as much as I can & b) the integrity problems running rampant in the industry. Frankly, I have a very hard time trusting many of the dealers I have met. Obviously if I get screwed, I don't feel good. Getting screwed equates to not getting a fair deal for my money. Every time I look at the coin I will not think in terms of beauty, history, grade, luster, eye appeal. I will think "boy did I get screwed by that guy". What fun is that.

Now, obviously if all my markups were tiny and every coin I purchased could be turned for even money this would be too easy. Everyone would do it. If that happened today I could easily double my budget as my disappointments would be minimized.

But this isn't fantasy land so I get back to different version of my question..What should I do to get that win-win situation I am looking for.

MrEureka

What should I do to get that win-win situation I am looking for?

You're already doing it. You're collecting slabbed US coins listed on a Graysheet instead of world coins, counterstamped tokens or Beanie Babies. I posted the thread to expose the dynamic relationship between markup and the size of the market. Nothing more, nothing less.

BTW, I collect counterstamped world coins.

Julian

FYI, I price coins for sale in my store, as a guide, @ 25% over GS ask. I am fairly confident that I can replace most numismatic items @ ask. That is not always the case. Last nite, I had to pay 15% over ask to replace something.

At shows, where I primarily have more valuable coins, I generally price them between 10 & 25% over ask. If I receive a counter offer, I have to decide whether I wish to replace that item and how difficult it would be.

There are only guidelines to pricing. With the exception of special orders, nothing is priced at a function of actual cost, unless it is consigned. In fact, I do not even remember the actual cost of most of my inventory.

Gilbert

It occurred to me that I would have bought more - much more - if I was confident that I could easily recoup close to my cost on anything I later decided not to keep.

I can't answer that question. I simply don't shop with resale in mind. Granted, MOST of the time, I don't intentionally pay greatly more than current value, so, theoretically, I should be able to recoup most of my expenditure, if I had to flip it at that time.

As a collector, I generally only purchase what I intend to keep.

barberlover

There is
no set percentage that i stick to like glue.

I do think that the only coins i would pay well above sheet levels for are coins that i have to have. There are many examples right here everyday listed with peoples sig. lines.

There is one collector here with a m.s. 64 seated half that has better luster than the majority of 67's that i've seen, if i had seen that coin before he did it would have been mine. Or the very colorful proof 68 barber half in an ngc holder.
my 1892 S barber half would be in my sig. if i had the capability [but not with a web tv lol]

It always depends on the coin. For me to pay more than 25% above sheet the coin has to grab me and that doesn't happen very often [of course if a coin grabbed me right now, it would be sheer torure but you get the idea. Ive said before that 95 % of the coins on the market are genaric trash and not in my opionion worth more than blue sheet money. Another 2 % are worth grey sheet ask, the best 3 % are worth varying degrees above greysheet to me, depending on the coin, the only ones worth way over sheet are the top 1 % coins. They are hard to find and often when i due i have to compete with other people for them.

Whats wrong with those other people competing with me for the same coin !!! {LOL}

Okie

How much a dealer's markup affects me depends on 2 things:

1. How well I negotiate.
2. How motivated the dealer is to sell.

fishcooker

Yes, markup matters. If I have $200 per month available to spend, and if prices are so ridiculous that I don't spend it all. Then next month I'm back to just my $200 allotment.

If I budget $10,000 per year, and get to December and have only spent $6000 because dealers are overpriced, will I seek out and find a way to dump $4000 on the coin market?

No.


If I did decide just to spend my $200 each month, then the *best* thing dealers could do is to raise prices. Why give me four coins for $200, when you could raise prices and give me only three?