Dealers/Frequent Sellers: what is a FAIR profit for you?

SeattleSlammer

This was a good point that came up in another thread (and probably has been discussed in this forum many times in the past if I had to guess...but I'm relatively new, so bear with me please).

I'm just curious what you dealers/frequent sellers think: what percentage do you insist upon making on your prettiest coins? Of course, monster toned coins kind of blow everything out of the water....but would you say $5 on every $50 is good? Consider your relatively common yet still PQ coins.....consider the stuff you sell the most of on a weekly basis.....

As an avid buyer, I'm just curious. I'm one of those guys that knows the seller has to make a profit. What's a good margin to you?

JJacks

I consider any profit to be good since I'm not a dealer, but I think most retail dealers out there are looking for quite a bit more then a 10% profit, whether or not they will admit to it on this board! Maybe alot of them look for at least 30%. Think about this - if a dealer offers say an MS65 Walker for $120, what do you think they pay for it? $110? No. $100? No. $80? Maybe....

JJacks

my3cents

50 to 100% is GOOD. Less is not as good.

Just my 3 cents...

Russ

<< <i>but would you say $5 on every $50 is good? >>



Not even close. A gross margin of only 10% is a rocket sled to bankruptcy; not just for coin dealers, but for the vast majority of businesses.

Russ, NCNE

thadd

Whatever a dealer decides they need to live the lifestyle they desire. No ones pulling my wallet out for me.

Oh, before you throw the “why complain about Coin Vault” argument out there, I’ll answer it now. Coin Vault (Shop at Home) can charge what ever they want for their coins. It’s the hype they try to pull over on less educated collectors/investors that bugs me.

SeattleSlammer

I think the real problem comes when potential buyer after potential buyer wants to buy everything for greysheet bid.

By the way, anybody know when the greysheet first fell into the hands of Joe Blow collector?

WWBillman

Fair? The word fair does not even factor in. Its not a matter of being fair or unfair. Profit is profit and like any business the more profit can be maximized the better the business. Profit margin is king. If I buy a stock at $1.00 and sell at $100.00 am I being unfair? No matter what the business is the name of the game is buy low and sell high. No one forces anybody to spend their money people do it of their own free will based on their own knowledge. Some win and some lose that will never change.

Dog97

I'm just a collector so here goes......
I've slowed down a lot in the last several years & about once a year I'll cull my collection and sell about 20 coins on the BS&T Board and about 20 on eBay. All I care about is the quick cash so any green is instant profit to me.

If you want numbers Coin Elite says I'm running +25.81% profit on PCGS graded coins, -4.04% on NGC, and -4.31% for ANACS.
That gives me an overall profit of +20.84% including other brand holders & raw coins.
That's strictly buy/sell with no fees, juice or associated costs such as postage etc figured in and some very lucrative PCGS crackouts & raw submissions to skew the results.

Russ

<< <i>If you want numbers Coin Elite says I'm running +25.81% profit on PCGS graded coins >>



It says I'm at 56.94%.

Russ, NCNE

DanC

"Fair" (IMHO) is when a seller provides a product or service to a buyer for a price the buyer is willing to pay, and the buyer based his/her buying decision upon reasonable, and truthful data -- regardless of what the seller paid for it.

ergo - 10% is "fair" - and 10,000% is "fair" provided the above is true.

gsaguy

So far I think JJacks has it about right. A pre-tax profit of 30 - 35% is a reasonable goal for most specialty businesses.

GSAGUY

SeattleSlammer

WWBillman,

While I agree with the notion that nobody is forced to buy a coin, I disagree with the notion that fairness and coin buying should be mutually exclusive.

Sellers work to create a fair reputation so that buyers will keep coming back. Sellers appreciate buyers that also understand the idea of a good, fair deal--a deal where the seller makes a profit, but also a deal where the buyer gets the coin at a reasonable level.

The market determines what is reasonable. And you can sell a coin for a big profit and still make a fair deal.....you just have to have the nice, PQ coins that everyone wants. If I pay ten times over sheet for a rainbow toned Morgan, I'll often still consider it "fair" in the context of the exploding toned market.

cointagious

a fair profit is as much as possible without having to put a gun into the ribs of the person you buy from or from the person you sell to. margins vary wildly from one sale to the next. we usually buy raw and sell slabbed or raw. from a minimum of 5% on something like proof sets to percentages well into the 4 figure range for cherry picking coins.

Russ

I once bought an album toned 1964 Kennedy at a show for $2.50 and sold it for $77.00. Is that fair?

Another time I bought an envelope toned 1942-D Jefferson for $12 (also at a show) and sold it for $85. Is that fair?

Russ, NCNE

JJacks

Not trying to assume too much here, but I think what SeattleSlammer was asking was in general. We all understand that it is up to the buyer to be knowledgeable and so on. However, if a dealer has a standard (by that I mean not wildly rainbow toned or super hot type of coin) slabbed coin for sale lets say for $400, that retails around $400, what do you think it would be fair for that dealer to have paid for that coin? If you found out he paid $100 for it and bought it recently, you probably wouldn't feel he was a fair dealer who you would want to offer your coins for sale to. Also, most people wouldn't expect he paid $380 or something for it. Most people would probably imagine he should offer $200-$340 or so depending on how hot the coin is (I don't mean stolen!) and how quickly he can turn it.

Personally, I have never asked a dealer how much they paid for a coin that I was looking at buying, but sometimes if they have a coin priced at say $170 and I ask if they will do $160, they might say something like "Well, I guess so, but I'm only making $5 then.". Usually I don't really believe that! They probably have selective memory and forgot they only paid $120-130 or something.

JJacks

thadd

<< <i>I once bought an album toned 1964 Kennedy at a show for $2.50 and sold it for $77.00. Is that fair?

Another time I bought an envelope toned 1942-D Jefferson for $12 (also at a show) and sold it for $85. Is that fair?

Russ, NCNE >>



Yes and yes.

Askari

I agree with JJacks except to the point that how much the dealer is "in for", it's nobody's business but his own. If a mutually acceptable deal is negotiated, that's it. Changing your mind just because you later found out he made a 100% profit on it is "unfair." No one forced you to take out your wallet.

Let's turn this on its head. If a dealer is selling you a coin at a loss to get it out of stagnant inventory for cash, isn't that "unfair"? Instead of you bragging about your "rip", shouldn't you insist on paying more ... if only to Greysheet? Isn't cherrypicking immoral too? Shouldn't you point out what he missed and offer him full price for it? Fairness goes both ways, right?

To me, "fairness" comes into play more where knowledgeable dealers are ripping off unsophisticated buyers with exaggerated claims.

thadd

How much a dealer pays for his coins is really no ones business. A dealer is going to get coins in many different ways. One guy might come in with his $10,000 collection and say “I need to sell these now would you give me $2,000 for them”. Another guy could come in with the same coins and ask what he can get for them. The dealer is going to look them over and then offer a price. Let’s say its $6,000. When the coins go out in the display case they’re going to have the same price on them regardless.

topstuf

I am retired from the coin shop as of 1/3/03.

Bullion 1%

Quick flip coins.....(proof sets, generic stuff) 10%

Rare coins 20% - 30% except gold which would be 5-10%

BUT...........I was ALSO a pawnbroker so I got a LOT of ..........CHEAP........stuff.

People would actually pawn ROLLS of maple leafs for $150-$200 per coin and LEAVE them.
CA state law required that we send them a notice with a 10 day grace period and they would STILL leave them. Lemme tellya............THAT...........is profit. Also coin collections for almost nothing.

They borrowed the cash and left the coins. REPEATEDLY.

And the coins weren't even HOT as we reported each pawn to the police.

khayse

Geez, I see no one but JJacks wants to answer the question.

Let's turn this on it's head. Let's say I take a coin I paid $400 for last week to a dealer.
What do you think he would offer me? Please no "it depends". Take the average across
all moderately popular, moderately available U.S. coins.

Well?

-KHayse

thadd

$250

JJacks

I just wanted to reply here one more time. KHayse has it right I think. The question relates to normal situations, not where people are panic selling or whatever. What percent would you expect a dealer to pay for a normal quality $400 slabbed coin or a normal quality $10,000 collection assuming they agree the coins are graded proper or are in PCGS/NGC slabs.

Of course, it is nobody's business what a dealer paid for a collection. I think the point is this however. Say you brought in an average $10,000 coin collection represnting a variety of popular coins, but all of good quality slabs for example to a retail dealer that proclaims "Buying coins...Please offer!!" or whatever. How much would you normally expect to be offered? Assuming the coins are good quality, in PCGS or NGC holders, etc., I would imagine most people would say $1000 would be very unfair, and $9900 would be way too fair!

JJacks

gsaguy

<<Let's turn this on it's head. Let's say I take a coin I paid $400 for last week to a dealer.
What do you think he would offer me? Please no "it depends".>>

Assuming you paid a fair retail price for the piece and it's the type of coin the dealer specializes in or can move easily, I would expect him to offer 15 - 20% less than your purchase price. I've certainly done it before working with typical greysheet bid ask prices.

GSAGUY

Edited to correct my ever-lousy spelling.

SarasotaFrank

idiot nephew walks into coin shop with a few hundred indian cents - all xf or less. My dead uncle left these to me - are they worth anything?

dealer looks then over one by one not flinching as he locates an 1877, 72 and 73 in the group.

Indian cents are pretty common, cosindering some are in better shape than others, we'll pay $1.00 each for the 200 of them.

wow - I'll take it.

idiot nephew leaves.

Customer witnessing transaction says -"seeing as how they are all common, let me take a look at them, I may want a few"

dealer says - "hang on" and removes a half dozen

Customer: "what were those?"

72, 73 and 77.

what do you want for them?

full freight

You know how much you ripped that guy off for?

yup.

shame on the idiot nephew for not checking them over, but he took them to a "knowledgeable professional" with a sign in the window that says "highest prices paid"

btw: I was the customer who watched this happen

darktone

I gave up trying to sell coins to full time dealers as they are alway's trying to low ball me so now I sell everything on ebay. Last time I took coins to a show a dealer offered me $35 for an NGC ms64 RED common date indian cent- I think that was about 30% of sheet I got about $150 on ebay for it. I tried selling some raw gold once at a show and I was offered less than bullion value on a $10 I later had slabbed MS64 by NGC. I know there are some honest dealers out there but none locally for me. I buy two types of coins- the ones I keep in my collection and the ones I buy to resell. The ones I buy for my collection are still in my collection for the most part but the ones I buy for resale I buy only if I think I can make a $100 or more. mike

RNCHSN

I'll usually try to sell my coins at Greysheet ask + 25%. Often times I work out interesting trades or deals for frequent buyers, or if they have something I'm looking for.

Again, "fair" is truly what the market will bear. I'm usually willing to buy in the bid-ask range, plus a little more for harder to locate stuff.

Bear

The key is AMATMWB ......................................................................................................................................................

..................................................................................................................(as much as the market will bear)

barberlover

Some very revealing answers here.

Some of the dealers like the one who bought the indian cents should put a sign in there window that says "how can I ripp you today" If anyone thinks what this dealer did was honost, well I remember my brake in to the hobby and I'm happy to say after an expensive hard nocks coin education, nothing on that level will happen to me again and in my mind if that dealer is patting himself on the back for lying to the customer about the value of his coins in order to ripp him and justifying it by saying the collector should have done his home work, Well that person may not be a crook, but he/she is an unethical scumbag. Les

RGL

Once again, people, it matters little what a coin is acquired for and what it sells for. If I can buy a coin for $1 and sell it for $100 or $1,000, so be it. That is the free market price, a transaction between a willing seller and knowledgeable buyer. Price matters not, it is the perception of value granted for price paid. If I am savvy enough to buy nice coins at low-ball prices, my margin will be high. If not, it will be low. It is perceived value -- not price -- that drives most collectibles. Coins are no exception. I begrudge no one a good price, either selling or buying, if they are smart enough to recognize the deal/value at hand.

nickel

in response to seattle - i dont know if the coin dealer newsletter was ever a publication for bona-fide dealers only . anyone can subscribe for $96 per year , or beg old copies . Seems like the original intent for dealer to dealer was to buy at bid and sell for ask , then add on for retail . This has been eroding for years . it's probably their ( the dealers ) fault in selling to joe public at below ask , then crying about profits , and evolving into buying at or below bid ( 10 back is a favorite ) Many good points are made in above posts . Also , on the weekly CDN , it states that retail should expect to pay a premium over ask , as this was the original intent of CDN pricing . My biggest beef with this business is that customers dont mind paying 50 % markup on the jeans they wear , or 30 % markup during a sale , yet i am looked upon as as overpriced , rip-off , uncaring , slime creature , for asking $45 on a coin that I paid $40 for .

Russ

<< <i>yet i am looked upon as as overpriced , rip-off , uncaring , slime creature , for asking $45 on a coin that I paid $40 for. >>



Not by me, you aren't. Here's an example:



That's an NGC PR67. I paid $80 for it. Do I care that the dealer probably paid $30? Not one bit. I like the coin, and it was worth the money to me, so what it cost the dealer doesn't matter in the least.

Russ, NCNE

SeattleSlammer

Russ, hey, that used to be my quarter! Yup, I'm sure that's the one, NGC PF67 '55. I paid $89.00 for that off of Ebay about three years ago. Nice to see it again, it's a pretty one.

Thanks everyone for the thoughtful responses. Looks like we've got all types here....and I mean that in the best way, really.