Dealer prices higher than retail. Why?
veryfine
Posts: 1,763 ✭✭✭
The following is a question I've been wanting to ask for a long time. I notice that certain coin dealers consistently list coins with much higher prices than the current retail prices.
Is it as simple as them paying too much and needing to sell it higher for a profit?
Is it because certain coins are red hot in popularity and in turn, will generate interest, regardless of listed retail prices?
For example, I see a coin I would love to own sitting in a dealer's inventory. The coin is a key date in a very desirable grade with nice eye-appeal. It is very hard to locate this date. The coin retails for $2500 but the dealer's price is $3200.
I realize that certain coins are so desirabe that the price sheets become irrelevant, but some dealers list higher than retail on almost every coin.
At what point, if any, is it too much to pay?
Is it as simple as them paying too much and needing to sell it higher for a profit?
Is it because certain coins are red hot in popularity and in turn, will generate interest, regardless of listed retail prices?
For example, I see a coin I would love to own sitting in a dealer's inventory. The coin is a key date in a very desirable grade with nice eye-appeal. It is very hard to locate this date. The coin retails for $2500 but the dealer's price is $3200.
I realize that certain coins are so desirabe that the price sheets become irrelevant, but some dealers list higher than retail on almost every coin.
At what point, if any, is it too much to pay?
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Comments
and it sets us apart from practitioners and consultants. Gregor
<< <i>Veryfine, all good questions, but I see you failed to mention quality. How nice is the coin for the grade? Is the eye-appeal better than the grade? Strike? Luster? Color? etc. The price guide says they're all worth the same in the same grade. They're not. >>
I neglected to mention quality because all of those attributes are a given when I look for a coin, especially when graded by a third party service. For example, when I see an ms-65, I expect nice luster, excellent strike for the issue and few marks. I realize that that not all ms-65s are equal but EVERY ms-65 should be an above average coin in every way. If not, then it is not an ms-65. I would pay more for a coin with spectacular eye-appeal and marks that are better disguised. However, if that's the case, an ms-64 could conceivably be more desirable than an ms-65.
Given what I've said, should I be paying much higher than retail for a TYPICAL ms-65?
<< <i>they did well for decades because they appealed to buyers who, for whatever reason, didn't mind paying a stiff premium for their coins. >>
Yes, I agree with you and this leads me to another question. Are buyers in general still paying much higher than retail prices for quality coins? Collectors have online auctions available at their fingertips with an opportunity to often buy at less than retail.
Decades ago, collectors did not have online auctions where collectors bid on other collector's coins on such a grand scale.
""The coin is a key date in a very desirable grade with nice eye-appeal. It is very hard to locate this date.""
If the coin is a key-date, and has a lot of demand and especially tougher to locate, then the price is going to be stronger as they know they can get it. In fact sometimes they are not priced high enough, and money gets left on the table?
jim
<< <i>What is your retail price based upon? >>
Yes, that's the big question, Very Fine. There are some retail price guides that have prices that are lower than the Coin Dealer Newsletter for some items. And there are some coins that just are not traded enough to establish a market price for them, although most any $3,200 coin should not fit in that category.
And there are some dealers who charge high prices and have developed the customers who believe in them and are willing to pay it. It's a bit like the home town auto dealer who can get away with charging the sticker price or even more as opposed to the guys on auto row who will cut deals.
Apparently, most of you disagree with that statement.
As for online auctions, collectors seem to be looking for bargains and I suppose, sometimes they do find them.
<< <i>What is your retail price based upon?
Yes, that's the big question, Very Fine. >>
How about Coin World's monthly price guide, for example?
some are close to MS64 and some are close to MS66
if the MS64 guide price is $1200
the MS65 guide price is $2500
and the MS66 guide price is $5000
wouldn't it be easy to assume most MS65 would be priced near $2500 but soe as low as $1200 and some as high as $5000 (and a few even higher)? I would consider $3200 close to $2500
There is ar least one MAJOR dealer who rants here occasionally that boasts only havong coins that are the top 5% for the grade -
On the other hand, there are those things you can hunt for and have one heck of a time finding (got a 1919-D merc in XF? AU? Cheap coin in the price sheets, but practically nonexistent on the ground), or those things you can find easily but that everybody and their brother wants (CC DMPL's?) As a seller, I think it makes perfect sense to price this sort of thing ambitiously if the market will bear it, as it very well may. Look the coin over -- can you find another one as nice for less money? If so, perhaps they're asking too much. If not -- how badly do you want the coin?
There's also the value of your time. I think we get hung up around here on dollars sometimes -- but I can find coin X tonight for $600. If I make seven phonecalls, surf dealers' pages for two hours, and finally break down and drive four hours each way to a large regional show where I spend three hours hunting the floor for it, I can get an equivalent to coin X for $470. Maybe I can do this without giving in to the temptation to buy a junky, inferior example of whatever on ebay or some such. When I finally get my good deal in hand, it was only worth doing if I'm happy to work for less than ten dollars an hour.
<< <i>The last show I did, I had a nice Very Fine PCGS 1916 D Mercury dime. I had it priced $150. over GS ask, which was fair in my opinion. One guy came up and told me how crazy I was, because I was wanting "more than double what it was worth." When I found out what he was using to gauge my price by, I found out he was using a book that was over 4 years old. He had the nerve to show me his book. So, when I see questions like this, I always wonder if the person asking is following the current market. Needless to say, I got my full asking price and I'm sure the guy who bought it flipped it quickly for a profit. You pay for quality. If "The coin is a key date in a very desirable grade with nice eye-appeal." you can bet you're not going to get it for bid. >>
1916-D Mercury dimes have been trading among dealers for well over Gray Sheet "bid" for many months. If I could have seen the coin, I might have bought it for inventory. Any "collector" coin that is better than Good but less than Mint State (for mega bucks) is really hard to find these days.
<< <i>So, when I see questions like this, I always wonder if the person asking is following the current market. >>
I see your point and it is well-taken. Given what you've said, are the price guides of any value whatsoever? The print publications are always being updated, so are they terribly out of touch?
Or, is the market moving upwards so fast that they can't accurately keep up?
<< <i>
<< <i>So, when I see questions like this, I always wonder if the person asking is following the current market. >>
I see your point and it is well-taken. Given what you've said, are the price guides of any value whatsoever? The print publications are always being updated, so are they terribly out of touch?
Or, is the market moving upwards so fast that they can't accurately keep up? >>
Generally the prices in "Coin World's" "Coin Values" magazine are on the high side, although there are few areas, like Bust Dollars that can be too cheap for really nice, original coins for the grade. Usually I can sell coins for less than the "Coin Values" prices, and be quite happy with the results.
Similarly, if the coin were instead graded 65 and it was weaker than the typical 65, you'd expect to pay less. Either way, this coin would likely be priced between the pricesheet values for 64 and 65.
MS63-----$1000.
MS64-----$1800.
MS65-----$3500.
many collectors look at a price structure like the above for XXX coin in MS64 and assume that if they pay more than $1800 for the coin they've paid a premium and at less than $1800 they got a RIP. from my lofty perch, the sheet prices are only averages to begin with and aren't fixed. the XXX coin graded MS64 should cost on average $1800, so some will be less and some will be more.
<< <i>If he's asking more than you think it's worth, just make an offer!!!! In the collectible world, whether its antiques, paintings, cars or coins, it seems to me that EVERYONE, myself included, expects to 'dicker'....if that dealer asked the going retail price (he was a "retail" dealer wasn't he??) I'll bet you'd expect to get it for less .....human nature, or at least collector nature, I guess!! >>
BINGO.
It's either this scenario or the other. Your definition of "retail" could be off, and it could be a super special amazing coin that deserves the extra money, OR its just negotiating room. It's usually one of the two. Trick is to know which is which.
When a coin is rare and truely PQ for the grade, in a tight market, the seller can ask top dollar, and he very well may get it. If they do, and another one comes along and sells at that level, then the prices reflected in the guides eventually start to move up.
If it's really a POS, then they probably won't get it ... and if there are three more just as nice for less, then they'll probably be holding it for a while and the price guides probably will stay the same.
All price "guides" (no matter how ridiculous one way or the other) are trailing indicators.
Keep in mind that the spectrum of eye appeal and quality -- subjective as they are -- is fairly continuous, but the grades that can be listed on the price sheets are discrete. Thus there's a lot of room for coins that are (say) graded 64 but look nicer than almost all other 64s. These are rightly valued more highly than the "average" 64 which, in theory, is what the pricesheets are listing.
Very well put Ziggy, but I believe that your point has one error that many people follow, and therefore mis-price coins. It plays out in two ways ... sellers sometimes leave noticable money on the table, and buyers sometimes complain that the price is too high on a wrthwhile coin (and therefore pass on what might really be a good deal).
Anyway, these are my observations;
In therory, the CDN sheets price coins not at the average, but at the minimum acceptable coin for that grade (especially the Blue Sheet). And of course it was designed for dealer to dealer transactions, and not for general use by the collecting public. Of course this is only in therory, and most of us know the CDN is often wrong and can be out-of-date.
Also in therory, the Retail Guides such as Trends and the PCGS Price Guide usually center around a coin that is of true premium quality for the grade. Strike, Luster, Origionality, Eye Appeal ... a coin that has it all ... and probably priced with some profit incentive for a dealer to sell at or near. The one 65 (or 64 or 67) that stands above the rest without deserving to be in a higher-graded dinner jacket. This is only in therory also, and most of us know the Retail guides can also be skewwed, sometimes by sheer marketing hype.
Anyway, since most coins do not equal either of these scenarios ... if you can ascertain where the coin is in that spectrum, the price guides can often be very helpful. Finding the combinations of ones that work for a particular series is a little challenging, but with all the data and auction archives available, it's a worthwhile venture to know what the right price should be if you're buying.
Finally, since I'm just rambling anyway ... a good cup of coffee after work
If the wholesale guides truely are not for anyone but the dealers, how much do we begrudge them a profit?
Personally, I'm glad we have both "real" dealers and some of the "wannabe's" alike, that can provide an active marketplace available to someone like me who doesn't have the time to be on the lookout for coins everyday. Like any business person I hope they make a fair profit so they can still be around tommorow. The laws of economics tell me that if they get to greedy they'll eventually get shot down in flames ... and if they get to lean they'll inevitably go broke.
Okay, I'll stay quiet now
“We are only their care-takers,” he posed, “if we take good care of them, then centuries from now they may still be here … ”
Todd - BHNC #242
The pricing guidelines are helpful to me to establish some paramaters for value. I would expect to pay slightly higher that guidelines for "the right coin" but am fearful for doing so on a normal coin.
To me, this one issue limits the amount I wish to risk in this hobby. Not every coin can be a PQ coin but many, many are advertised so.
AlaBill
<< <i>As a newbie here one of my principal concerns is what happens when you have to sell your coins. >>
Thats where you learn about the real market. If you paid stong money even for very nice coins and you expect to sell at a profit you had better sell to a collector or have been lucky enuf to have purchased in a rising market and the coin is now easily worth more than what you paid.
Trends is a guide, not the law, and is usually a lagging indicator of pricing information. Do I prefer to pay over Trends? Of course, not. I like to buy coins at 70-80% Trends (and less if possible). Would I pay over Trends again to get a cool rare coin I really want? Yes.
Some coins just are very popular and Greysheet pricing, if available, is a joke. Ie., try to get a nice Seated $ in MS 63 for sheet. It's not going to happen. Some dealers are known for carrying "top drawer" material, and price it accordingly.
A lot depends on you, what you are looking for, how soon do you want it, and what are you willing to spend. Personally, I'm never in a hurry to buy a coin (sometimes I've looked three years to find a particular type coin), and no coin out there "has my name on it." It's really a matter of personal preferences. Re dealers, ask people who have dealt with them about their experiences.
"Seu cabra da peste,
"Sou Mangueira......."
I think my problem, as stated earllier, is my definition of retail. I look at Coin World trend prices as a general barometer of what I should be paying, but obviously it depends on the specific coin in question.
Instead of using the monster dream coins that show up once in blue moon, let me give you a more mundane, low budget scenario, catering to the date/mintmark collector:
One dealer might have a nice inventory of mercury dimes, buffalo nickels and walking liberty halves. Again, I'll use the Coin World monthly price guide to make the point. One circulated common date dime will trend at $20, His price will be $30, another coin trends at $50, He'll charge $65 and so on and so forth. These are not rare coins and bull markets only slightly affect most of these issues. The prices are higher than the listed trend for every single coin is his inventory, regardless of quality and rarity.
Is it assumed that I should always try to bargain with this type of dealer for a better price?
great scarce in demand coins with extraordinary qualities and eye appeal
and i am talking about "michael approved sight seen" coins these coins you cant buy at so called price guide prices
the market sets the price not some price guide if you have price guides and they say one price and you see another higher price for an actual coin for sale
then write the price guide and ask them to send you the coin at their price in the guide
the key is that wannabes work for and write price guides
maybe crap and widgets and non special common generic coins you can buy at price guide prices
NOT GREAT COINS
AND GREAT COINS ARE FANTASTIC OPPORTUNITY VALUE COINS