there sure are a lot of banned members that responded to this thread!!
When considering purchase of a coin that appears surprisingly highly priced, consider factors other than the dealer’s cost which may be contributing to the inflated price.
--- instead of "me" considering that "I" need to cover that dealer's costs, perhaps the dealer should decide how to lower his overhead.
The previous cost of the coin and dealer overhead have nothing to do with what a coin will sell for today, except as a tool/story to influence a purchaser to pay what is asked.
With the information available and the multitude of venues to buy/sell, dealers MUST sell coins at market levels. Since the value of each coin varies based on the individual attributes of each coin, there is usually wiggle room to buy and sell. Based on today's markets, margins are much thinner than say, 20 years ago. To say a dealer must be prudent with their expenses in today's market is an understatement. I've always said, whether buying or selling, the individual's cost is totally irrelevant.
If a coin is worth approximately $5000 in the marketplace to either buy or sell, it doesn't matter if the owner paid $50 or $10,000. It's worth what it's worth, period.
I agree with profit, and only people that made a profit stay in business.
I disagree with what should be considered as overhead.
Meals: OUt of town, home, dumpster diving, you eat. So what you spend is your choice. Toss it out of the equation.
Travel, hotel, bus boy, in room entertainment, etc. Big Fat Zero. Where on the PCGS slab is a value apportioned for that kind of expense. Taking it downtown, the fewer coins a dealer buys, the more costs ascribe to each coin, so the more $$ it is "worth" when sold. Really? That sounds like recipe for extinction.
Non Value Added Junk: Almost everything mentioned in the article. How did the coin become more valuable with airplane ticket, meals, hotel, admission, etc. All it did was move from point A seller to Point B seller. Costs increased but Value did not. Buyers purchase value not your costs.
(Camera zooms in on coin dealer and customer looking at 5 PCGS MS65 Morgan Dollars, same date mint mark, eye appeal, variety, font, generational slab, whatever)
Customer: How much is Coin A?
Dealer: $150
Customer: How much is Coin B?
Dealer: $195
C: Why is it higher?
Dealer: Paid more for it 6 years ago when the market was higher, and I am not losing money.
C: How much is Coin C? $215
C: Why is it higher? I dropped the slab, and it cost me $65 to get it reslabbed.
Customer: How much is Coin D? $295
C: Why is it higher? When I bought it, I thought it would go MS66, so I cracked it and sent it in, and it came back MS65, so I gotta cover the regrading cost, and the extra I paid for the coin over it's MS65 value.
Customer: How much is Coin D? $1650
C: Wow, why so much? When I bought this and another coin, on the way back to the shop, I lost my wallet and it had $3000 in cash, so I had to add $1500 to each coin to cover the expenses.
Customer: So if you sent all 5 coins to XXXXXX to be auctioned off, will they bring higher prices because of all of this?
Dealer: Nope, all will be the same. None of what I said means anything to anyone, but I gotta make a profit on each one. The value of each coin is the same, but my costs are different, so I gotta sell at different prices.
@Abuelo said:
The reason why I resurrected this thread is because there is a coin I was browsing on eBay. I went to PCGS to check the certificate and saw how much it sold last year (2019) in auction, and how much the seller wanted (nearly 3 times the money). On top of that, had an offer option. And I spent some time thinking what would be a fair offer now that I think I know how much the dealer paid for the coin. I thought the sell price at 3x was excessive, but being conscious of the dealer's expense, ruined my capacity to come up with a fair price and would like to know how others deal with this...
With a offer, you never know what the seller is going to accept, though knowing the cost certainly helps for the offers I’ve made. It helps me get aligned with the seller more on recouping costs.
Need more information. Is it a $20 coin, a $100 coin or a $10,000 coin? Has the market for the coin changed at all (up OR down) since it sold last year? Was the price last year in-line or out-of-line with the market last year and this year?
Need more information. Is it a $20 coin, a $100 coin or a $10,000 coin? Has the market for the coin changed at all (up OR down) since it sold last year? Was the price last year in-line or out-of-line with the market last year and this year?
Agree, it’s very different for those ranges which I’ve had experience with making successful offers.
I will say I try not to be too low on the low end as one time the seller packaged it badly and the item fell out and was lost. I’m guessing insurance would pay more than me!
@Abuelo said:
The reason why I resurrected this thread is because there is a coin I was browsing on eBay. I went to PCGS to check the certificate and saw how much it sold last year (2019) in auction, and how much the seller wanted (nearly 3 times the money). On top of that, had an offer option. And I spent some time thinking what would be a fair offer now that I think I know how much the dealer paid for the coin. I thought the sell price at 3x was excessive, but being conscious of the dealer's expense, ruined my capacity to come up with a fair price and would like to know how others deal with this...
I'm with others here who don't care what someone paid. (I've been on the other end as a collector seller too.)
If it's a non-US coin as I suspect, I see a lot of that. There is a coin up for auction this month that I want for my collection. I won't identify it but the dealer had it listed on their website for more than twice what it sold for in a foreign auction in 2018. It's been on their website for over a year. I was the under bidder in the prior sale.
The reserve is about half the dealer "retail price" but given what I paid for about the closest comparable coin in 2019 (same mint, different date and denomination, but similar TPG grade), it's probably still above "market" at the reserve. I don't actually know, as I don't believe the coin has ever sold at auction or if it did, too long ago to matter.
My guess is that if it doesn't sell (and I don't think it will unless I buy it), the dealer will put it back on their website at a similar price. That's what they did with a second coin where I was also one of the under bidders. This second coin didn't sell in the live (second) auction, received an offer after the sale which was rejected, and is also now back on the dealer website near the original price.
My guess is that if I or someone else were to make an offer directly to the dealer close to what I think is a more realistic price, the offer would be rejected. If the dealer is well capitalized as I believe, they may prefer to hold out for top price on two coins that aren't available elsewhere. Near zero interest rates probably encourages this thinking.
If I really want an item, it’s not really about being fair but what price will work to get a deal done. This comes down to what the seller is willing to let something go at and what I’m willing to pay, which includes how much I’m willing to risk it going to another buyer.
Need more information. Is it a $20 coin, a $100 coin or a $10,000 coin? Has the market for the coin changed at all (up OR down) since it sold last year? Was the price last year in-line or out-of-line with the market last year and this year?
This is the US forum but I'm guessing he's talking about a non-US coin, a scarce or rare one which hardly sells at all (if ever) based upon what I have seen him post. That's why I provided the response I did in my last post.
For the coins I buy, I have little if anything to use compared to what most here do. I'm basically guessing and offer or bid the maximum I'm willing to pay. There is no CDN, electronic market or anything else for the type of coins I buy.
This may (and probably will) work to my detriment if and when I eventually sell. But that's one of the primary reasons I actually have to like what I buy a lot or else I wouldn't buy it. It's also a primary reason why most other collectors don't and won't collect what I do either.
If I really want an item, it’s not really about being fair but what price will work to get a deal done. This comes down to what the seller is willing to let something go at and what I’m willing to pay, which includes how much I’m willing to risk it going to another buyer.
This, along with how long I might have to wait for a second opportunity.
As @WCC points out is an uncommon issue that does not sell frequently but it is not particularly expensive. When it sold in auction earlier, sold for a fair/market price (about what the price they constantly sell in auction similar examples) in the 350 or so (as I said it is been listed at nearly 3 times he money). So it is not expensive. But the exercise is not about that coin specifically. It is about fairness. If a coin sells in auction at X, what is a fair offer to the owner. I do not want to piss the dealer, and I am not interested in overpaying either. I am sure the dealer bought the coin knowing that would keep it for a while. The market on these is not that volatile. Better now @Zoins ? What do you think?
I don’t lose sleep on what some dealers markup is or desire deny him the reward for his hard work.
I go for the deal and buy accordingly.
When I hear a crackout artist doubled his money good for him! Glad to hear treasure to be found may go prospecting.
Considering overhead, It takes about cost plus an avg of 40 pct make it in the coin biz, not easy in this market. Some items one might sell at cost plus 5 pct or keystone markup cost plus 100 pct to get there.
@Abuelo said:
As @WCC points out is an uncommon issue that does not sell frequently but it is not particularly expensive. When it sold in auction earlier, sold for a fair/market price (about what the price they constantly sell in auction similar examples) in the 350 or so (as I said it is been listed at nearly 3 times he money). So it is not expensive. But the exercise is not about that coin specifically. It is about fairness. If a coin sells in auction at X, what is a fair offer to the owner. I do not want to piss the dealer, and I am not interested in overpaying either. I am sure the dealer bought the coin knowing that would keep it for a while. The market on these is not that volatile. Better now @Zoins ? What do you think?
Here, I will assume the seller knows the market price. If the piece consistently sells for $350 and he is charging $1050, I would say the seller should not get upset with an offer at 50-100% more than the previous auction price, so $525 - $750. So, if they are asking for 3X and you offer 1.5-2X, you won't upset them. At $525 you are at half their ask but 50% over their acquisition cost. Now they might not accept, but hopefully you won't get blocked. If you don't want to bid 1.5-2X on an ask of 3X, I would typically just wait for the next specimen to appear on the market and try to buy it at auction. You don't mention how frequently this item appears on the market, but that's important to consider as well. I'm assuming this item will appear at least once within your acceptable waiting horizon, say one year, so you're willing to wait.
And again, I really don't like to use the word "fair" because it's making a judgement from one perspective. When a piece sells at an auction, it's a live event that happens at a specific time. You are either present or not present. You either have technical bidding glitches or you don't. When a dealer has a piece in inventory and makes it available for some time, there's some cost for them them to own a piece that's not selling. I appreciate that a dealer is holding the piece in inventory at a higher than auction price because that makes it available to me for a longer period of time. I value and don't mind paying for the dealer's inventory holding costs.
@Abuelo said:
As @WCC points out is an uncommon issue that does not sell frequently but it is not particularly expensive. When it sold in auction earlier, sold for a fair/market price (about what the price they constantly sell in auction similar examples) in the 350 or so (as I said it is been listed at nearly 3 times he money). So it is not expensive. But the exercise is not about that coin specifically. It is about fairness. If a coin sells in auction at X, what is a fair offer to the owner. I do not want to piss the dealer, and I am not interested in overpaying either. I am sure the dealer bought the coin knowing that would keep it for a while. The market on these is not that volatile. Better now @Zoins ? What do you think?
My point is that "X" matters.
If I spend $20 on a coin and list it at $40, you can argue that I doubled the price, but it's only $20. If it's $10k and I list it at $15k, it is less than double but it is a large $5k profit. So, if I'm looking for a "fair" offer on the 1st coin, you could argue that $22 is a 10% profit, but it's only $2 to cover my costs, the risk of shipping and profit while a $11k offer on the second coin leaves much more room for the dealer to cover costs even though it is still 10%.
If you are saying he paid $350 but listed the coin for $1000, I think $500 is a fair offer that won't annoy anyone. On the other hand, if you don't want to pay more than $351, there is no point in offering $500.
I posted in this thread thirteen years ago.... I have long since retired, though I still retain my business acumen. I have never been a seller of coins...though I understand the constraints of the dealers. From the perspective of a buyer, let me add this....I buy coins that I like, but will only pay what I consider a fair price. This is arrived at by understanding the coins value (research, condition, grade, availability and my personal 'want' factor). If the price offered is above my expectation, I may make one lessor offer.... If not accepted, I walk. What I pay or offer, is what I consider fair in my value process. I do not care about the dealers cost or desired profit - that is his concern, and his business. When I am buying, it is my money....and I will determine how much leaves my possession. Cheers, RickO
So, based upon a few member's responses here, consider the following scenario:
I pay $100 for a coin based upon it's current value with a little wriggle room. A couple of weeks later, upon closer examination, it turns out to be a rare variety worth $2,500.
So, I should not sell it for its full value?
Remember, there ain't no Santy Claus in numismatics. Unless, of course you sign up for my New Years Giveaway...
I'll second Ricko and others who have expressed that a dealers cost structure is irrelevant to buyers. A buyer will pay what they think is reasonable for the coin, considering all they know about the coin and the market. As has been mentioned, buyers have a bunch of great sources of info to guage the market. Dealers can add value (or perception of value) by providing additional info/insight, partnering to help find specific coins, providing an outlet to sell coins, etc. In other words, I might pay a little more from my local guy to get the same coin because he helps me out in other ways.
So dealers should be asking how they can add value for customers. Managerial accounting to understand overhead will give them a target, but I assume it takes some creativity to make the margin needed to pay your rent.
Here's a really super basic way to add value... take great pictures of your inventory (or have trueviews) and make them available online for potential customers to see.
In the last couple of years I've only purchased 1 coin from Heritage. It's a coin with a POP of 3. The other 2 are not going anywhere anytime soon. I listed it on ebay for the same price I paid for the 1 in my collection...which was double what I paid for mine. A couple days later I was contacted by someone who said he was the under bidder. He made me an offer which if I had accepted would have netted me less than I paid for the coin(not even a bid increment over what I paid). I simply replied thanks for the offer but I listed it for the same price I paid for the 1 in my collection. This one even has a CAC sticker. I was also prepared to bid quite a bit more to win it if I had to.
This brings up another question. If you bid say $1,000 for a coin and win it for $500. Are you going to sell it for less than $1,000?
@Abuelo said:
As @WCC points out is an uncommon issue that does not sell frequently but it is not particularly expensive. When it sold in auction earlier, sold for a fair/market price (about what the price they constantly sell in auction similar examples) in the 350 or so (as I said it is been listed at nearly 3 times he money). So it is not expensive. But the exercise is not about that coin specifically. It is about fairness. If a coin sells in auction at X, what is a fair offer to the owner. I do not want to piss the dealer, and I am not interested in overpaying either. I am sure the dealer bought the coin knowing that would keep it for a while. The market on these is not that volatile. Better now @Zoins ? What do you think?
Here, I will assume the seller knows the market price. If the piece consistently sells for $350 and he is charging $1050, I would say the seller should not get upset with an offer at 50-100% more than the previous auction price, so $525 - $750. So, if they are asking for 3X and you offer 1.5-2X, you won't upset them. At $525 you are at half their ask but 50% over their acquisition cost. Now they might not accept, but hopefully you won't get blocked. If you don't want to bid 1.5-2X on an ask of 3X, I would typically just wait for the next specimen to appear on the market and try to buy it at auction. You don't mention how frequently this item appears on the market, but that's important to consider as well. I'm assuming this item will appear at least once within your acceptable waiting horizon, say one year, so you're willing to wait.
And again, I really don't like to use the word "fair" because it's making a judgement from one perspective. When a piece sells at an auction, it's a live event that happens at a specific time. You are either present or not present. You either have technical bidding glitches or you don't. When a dealer has a piece in inventory and makes it available for some time, there's some cost for them them to own a piece that's not selling. I appreciate that a dealer is holding the piece in inventory at a higher than auction price because that makes it available to me for a longer period of time. I value and don't mind paying for the dealer's inventory holding costs.
@Outhaul said:
So, based upon a few member's responses here, consider the following scenario:
I pay $100 for a coin based upon it's current value with a little wriggle room. A couple of weeks later, upon closer examination, it turns out to be a rare variety worth $2,500.
That’s like a pick six in the NFL. I guess it’s your call - stand there dumbfounded or run all out for the score. Assuming your an adult where the elevator goes to the top and your in this for number 1 - enjoy your profit.
Many of your forum co posters here brag about their pickoffs all the time. Then they turn around and bash other players, a sort of 2 faced childlike behavior on the surface / they just working their angle lol. I would keep it to myself....
If I bid for $500 and win it will sell I for $1000 if say that’s MV? You betcha lol. I will sell it for what I want for it / believe it’s worth, can have strong chance get.
Let’s say you win a 19th century world silver coin MS 66 with a pop of just 2 (none lower or higher) for $150. It’s USA counterpart has a wholesale bid of $50k. You feel it’s worth $2500 if not much more and list it for that. So what. Perhaps there is somebody out there who will pay that. There are other hobbies where players paid much more than that for what they wanted and that money was gone for good.
With coins your investment not gone forever but YMMV.
I do not understand how people think a business can survive buying something at $100 and selling for $120.
If one were to go to Bobbie's Baubles to buy a bauble for $100 you can bet your paycheck Bobbie paid no more than $60 for it.
Ernie's eatery keeps his food costs at 33% or less or goes out of business fast.
So if a dealer makes around 3% on bullion and hopes for very high volume he is not covering his utilities never mind employee costs.
So if we expect him to pay 80% or more of retail for our coins, we must expect him to pay for his daughters braces from profits on stamps.
All bets are off when a certain EBay seller buys low end registry coins at auction, asks for 50 percent margin when I know what he has in them and then refuses my reasonable offer with 20 percent margin because he knows they will sell to a willing (maybe not too knowledgeable buyer). And this my friends happens with regularity.
@fiftysevener said:
All bets are off when a certain EBay seller buys low end registry coins at auction, asks for 50 percent margin when I know what he has in them and then refuses my reasonable offer with 20 percent margin because he knows they will sell to a willing (maybe not too knowledgeable buyer). And this my friends happens with regularity.
Sounds like he understands the market for the coins he sells just fine.
@fiftysevener said:
All bets are off when a certain EBay seller buys low end registry coins at auction, asks for 50 percent margin when I know what he has in them and then refuses my reasonable offer with 20 percent margin because he knows they will sell to a willing (maybe not too knowledgeable buyer). And this my friends happens with regularity.
Sounds like he understands the market for the coins he sells just fine.
If that dealer was you, is that activity something you would be proud of ? And would you just turn to another dealer buddy and just grin with satisfaction ?
@fiftysevener said:
If that dealer was you, is that activity something you would be proud of ?
Why not? Why should I give you a 30% discount if others are willing to pay full price? What's wrong with selling something for what people are willing to pay, anyway?
@fiftysevener said:
If that dealer was you, is that activity something you would be proud of ?
Why not? Why should I give you a 30% discount if others are willing to pay full price? What's wrong with selling something for what people are willing to pay, anyway?
@fiftysevener said:
If that dealer was you, is that activity something you would be proud of ?
Why not? Why should I give you a 30% discount if others are willing to pay full price? What's wrong with selling something for what people are willing to pay, anyway?
Because I'm a nice guy
If your boss was a nice guy, would you agree to a 30% pay cut?
@fiftysevener said:
If that dealer was you, is that activity something you would be proud of ?
Why not? Why should I give you a 30% discount if others are willing to pay full price? What's wrong with selling something for what people are willing to pay, anyway?
Because I'm a nice guy
If your boss was a nice guy, would you agree to a 30% pay cut?
My boss is not a purveyor but is a legitimate employer in his field. I therefore work for a fair wage and he has respected my work ethic for over 20 years. There would be no reason to ask for my resignation.
@fiftysevener said:
If that dealer was you, is that activity something you would be proud of ?
Why not? Why should I give you a 30% discount if others are willing to pay full price? What's wrong with selling something for what people are willing to pay, anyway?
@fiftysevener said:
My boss is not a purveyor but is a legitimate employer in his field. I therefore work for a fair wage and he has respected my work ethic for over 20 years. There would be no reason to ask for my resignation.
Fair enough. So if you're not willing to work for 30% less, why should the guy you're trying to buy coins from agree to?
@fiftysevener said:
All bets are off when a certain EBay seller buys low end registry coins at auction, asks for 50 percent margin when I know what he has in them and then refuses my reasonable offer with 20 percent margin because he knows they will sell to a willing (maybe not too knowledgeable buyer). And this my friends happens with regularity.
If this happens with regularity and you know what they have in the coin (presumably thus knowing the seller's source), your next move is to patronize the seller's source directly. If you don't wish to pay the markup, you have to put the shoe leather (keystroke leather?) into moving one step up from retail.
@fiftysevener said:
If that dealer was you, is that activity something you would be proud of ?
Why not? Why should I give you a 30% discount if others are willing to pay full price? What's wrong with selling something for what people are willing to pay, anyway?
Because I'm a nice guy
If your boss was a nice guy, would you agree to a 30% pay cut?
@fiftysevener said:
All bets are off when a certain EBay seller buys low end registry coins at auction, asks for 50 percent margin when I know what he has in them and then refuses my reasonable offer with 20 percent margin because he knows they will sell to a willing (maybe not too knowledgeable buyer). And this my friends happens with regularity.
If this happens with regularity and you know what they have in the coin (presumably thus knowing the seller's source), your next move is to patronize the seller's source directly. If you don't wish to pay the markup, you have to put the shoe leather (keystroke leather?) into moving one step up from retail.
The source (which is a well respected auction house) would have little to do with this manipulative game the dealer is playing. The dealer must be aware of his arrogance since he knows many of these auction records are public. So I can see by these responses that this practice is readily accepted by some but likely shunned by many. Buyer beware.
@Moxie15 said:
I do not understand how people think a business can survive buying something at $100 and selling for $120.
If one were to go to Bobbie's Baubles to buy a bauble for $100 you can bet your paycheck Bobbie paid no more than $60 for it.
Ernie's eatery keeps his food costs at 33% or less or goes out of business fast.
So if a dealer makes around 3% on bullion and hopes for very high volume he is not covering his utilities never mind employee costs.
So if we expect him to pay 80% or more of retail for our coins, we must expect him to pay for his daughters braces from profits on stamps.
This is true, but nonetheless the fact for most coin businesses. Margins are horrible. Other retail business people laugh at us.
@fiftysevener said:
All bets are off when a certain EBay seller buys low end registry coins at auction, asks for 50 percent margin when I know what he has in them and then refuses my reasonable offer with 20 percent margin because he knows they will sell to a willing (maybe not too knowledgeable buyer). And this my friends happens with regularity.
Sounds like he understands the market for the coins he sells just fine.
Agree. It's Econ 101. Works both ways.
If I buy a coin for $100 that no one wants to pay more than $50 for, are you going to give me $110 because I paid $100? No. So if I buy a coin for $100 and I know I can sell it for $200, why would I take even $150 from you if the true market value is $200?
@jmlanzaf said:
This is true, but nonetheless the fact for most coin businesses. Margins are horrible. Other retail business people laugh at us.
And your customers call you crooks. It's a wonder more people don't go into the business.
I once had an argument with a (non)customer who offered me 40% back of a coin that was listed at Greysheet bid. I pointed out that bid was $200 and his $120 offer was sub-wholesale. His response was, "why would I ever pay retail?" My response, before I blocked him, was "And I assume you are willing to sell your coins for 50% of retail when it is time to sell."
It is AMAZING to me at times how much economic ignorance exists among collectors of money!
One of my other favorites is the "BST has no fees" mantra. It ain't about the fees, it's about the net receipts.
And you hear it both ways: "I won't buy from X because of the 20% BP". So, are you going to pay the same number on BST or do you want a 20% discount? If you want the 20% discount on BST, what's the incentive for me to sell it there when I can get the same net amount on X without doing any work?
I'm 60 years old, retired, but when I was working, I had always been self-employed as a jewelry appraiser/gemologist and buyer (and seller) of estate pieces and gemstones.
Basically all I can tell you is from my own experience, trying to 'formulate' or quantify rationally a dealer's profit margin (in whatever field it is) is complete hogwash.
I've experienced deals where I've bought and sold an item within an hour making only a 5% margin.
I've purchased items knowing they would 'sit' awhile as inventory and had to make a large profit margin.
Then there were times when I tried to buy an item as cheap as possible, regardless of the selling price as I was trying to feed a family of four.
Many times I would split my profit 50/50 with a fellow tradesperson who put me in touch with a client (this is how we did it in the diamond business).
Bottom line.....it's really no one's business what a dealer pays for something.
The buyer really of said item only has to focus on what the dealer's selling price is as it's not the buyer's concern if the seller paid $1 or $1000 for the item.
"Gold is money, and nothing else" (JP Morgan, 1912)
"“Those who sacrifice liberty for security/safety deserve neither.“(Benjamin Franklin)
@storm888 said:
"In today’s market, it is reasonable to expect that if a coin dealer makes 10 – 20% profit(1) on each coin he sells, then he will have a viable and sustainable business, provided he has sufficient volume to produce enough cash to purchase new coins, and still support himself financially. "
@jmlanzaf said:
It is AMAZING to me at times how much economic ignorance exists among collectors of money!
The one thing that never ceases to amaze me is the apparent lack of understanding that the same coin can be valued differently depending on when/where/how it's offered for sale. And all those values are "correct".
@jmlanzaf said:
It is AMAZING to me at times how much economic ignorance exists among collectors of money!
The one thing that never ceases to amaze me is the apparent lack of understanding that the same coin can be valued differently depending on when/where/how it's offered for sale. And all those values are "correct".
And who is buying it. The same coin might be worth $50 to me and $100 to you for any number of silly reasons.
@DoubleEagle59 said:
I'm 60 years old, retired, but when I was
Bottom line.....it's really no one's business what a dealer pays for something.
But that is the origin of my question. Nowadays, you can find out how much they paid. Now, I am not, as a customer, interested on deciding the margins of the dealer. I am just trying to figure out a fair offer knowing how much the dealer paid in auction. That was all. Particularly for coins that are not selling all the time but come every other year or less frequently.
@Abuelo said:
I am just trying to figure out a fair offer knowing how much the dealer paid in auction.
What someone actually pays and what they're willing to pay are not necessarily the same thing. And the dealer's pricing is almost certainly going to be based on the latter number, not the former.
@DoubleEagle59 said:
I'm 60 years old, retired, but when I was
Bottom line.....it's really no one's business what a dealer pays for something.
But that is the origin of my question. Nowadays, you can find out how much they paid. Now, I am not, as a customer, interested on deciding the margins of the dealer. I am just trying to figure out a fair offer knowing how much the dealer paid in auction. That was all. Particularly for coins that are not selling all the time but come every other year or less frequently.
and that's my point, it's none of your business in knowing what the dealer paid for the coin.
Your business is to educate yourself on the coin you're interested in and knowing the proper, fair price to pay for it.
Knowing the dealer's cost is the wrong way to approach it.
Here's my example..........
Let's say Coin "A" is one you're willing to pay $500 for it. It's a price you've decided is the price you'd love to buy it at.
Does it really matter (to you) if the dealer paid $5 for it or $495 for it?
I hope your answer was 'NO'.
Because if it was 'yes', then there's no hope.
Regardless of the seller's cost (or tag price), you approach the dealer and say "I'm a definite buyer at $500'. They'll either say 'sold' or 'no thank-you'....and then you move on to the next one.
Keep it stress-free.
Easy peasy, lemon squeezey
"Gold is money, and nothing else" (JP Morgan, 1912)
"“Those who sacrifice liberty for security/safety deserve neither.“(Benjamin Franklin)
Comments
there sure are a lot of banned members that responded to this thread!!
When considering purchase of a coin that appears surprisingly highly priced, consider factors other than the dealer’s cost which may be contributing to the inflated price.
--- instead of "me" considering that "I" need to cover that dealer's costs, perhaps the dealer should decide how to lower his overhead.
The previous cost of the coin and dealer overhead have nothing to do with what a coin will sell for today, except as a tool/story to influence a purchaser to pay what is asked.
With the information available and the multitude of venues to buy/sell, dealers MUST sell coins at market levels. Since the value of each coin varies based on the individual attributes of each coin, there is usually wiggle room to buy and sell. Based on today's markets, margins are much thinner than say, 20 years ago. To say a dealer must be prudent with their expenses in today's market is an understatement. I've always said, whether buying or selling, the individual's cost is totally irrelevant.
If a coin is worth approximately $5000 in the marketplace to either buy or sell, it doesn't matter if the owner paid $50 or $10,000. It's worth what it's worth, period.
I agree with profit, and only people that made a profit stay in business.
I disagree with what should be considered as overhead.
Meals: OUt of town, home, dumpster diving, you eat. So what you spend is your choice. Toss it out of the equation.
Travel, hotel, bus boy, in room entertainment, etc. Big Fat Zero. Where on the PCGS slab is a value apportioned for that kind of expense. Taking it downtown, the fewer coins a dealer buys, the more costs ascribe to each coin, so the more $$ it is "worth" when sold. Really? That sounds like recipe for extinction.
Non Value Added Junk: Almost everything mentioned in the article. How did the coin become more valuable with airplane ticket, meals, hotel, admission, etc. All it did was move from point A seller to Point B seller. Costs increased but Value did not. Buyers purchase value not your costs.
(Camera zooms in on coin dealer and customer looking at 5 PCGS MS65 Morgan Dollars, same date mint mark, eye appeal, variety, font, generational slab, whatever)
Customer: How much is Coin A?
$215
I dropped the slab, and it cost me $65 to get it reslabbed.
$295
When I bought it, I thought it would go MS66, so I cracked it and sent it in, and it came back MS65, so I gotta cover the regrading cost, and the extra I paid for the coin over it's MS65 value.
$1650
When I bought this and another coin, on the way back to the shop, I lost my wallet and it had $3000 in cash, so I had to add $1500 to each coin to cover the expenses.
Dealer: $150
Customer: How much is Coin B?
Dealer: $195
C: Why is it higher?
Dealer: Paid more for it 6 years ago when the market was higher, and I am not losing money.
C: How much is Coin C?
C: Why is it higher?
Customer: How much is Coin D?
C: Why is it higher?
Customer: How much is Coin D?
C: Wow, why so much?
Customer: So if you sent all 5 coins to XXXXXX to be auctioned off, will they bring higher prices because of all of this?
Dealer: Nope, all will be the same. None of what I said means anything to anyone, but I gotta make a profit on each one. The value of each coin is the same, but my costs are different, so I gotta sell at different prices.
Owner of the DoDo bird Coin Shop.
With a offer, you never know what the seller is going to accept, though knowing the cost certainly helps for the offers I’ve made. It helps me get aligned with the seller more on recouping costs.
@Zoins , and what is a fair offer?
Need more information. Is it a $20 coin, a $100 coin or a $10,000 coin? Has the market for the coin changed at all (up OR down) since it sold last year? Was the price last year in-line or out-of-line with the market last year and this year?
Agree, it’s very different for those ranges which I’ve had experience with making successful offers.
I will say I try not to be too low on the low end as one time the seller packaged it badly and the item fell out and was lost. I’m guessing insurance would pay more than me!
I'm with others here who don't care what someone paid. (I've been on the other end as a collector seller too.)
If it's a non-US coin as I suspect, I see a lot of that. There is a coin up for auction this month that I want for my collection. I won't identify it but the dealer had it listed on their website for more than twice what it sold for in a foreign auction in 2018. It's been on their website for over a year. I was the under bidder in the prior sale.
The reserve is about half the dealer "retail price" but given what I paid for about the closest comparable coin in 2019 (same mint, different date and denomination, but similar TPG grade), it's probably still above "market" at the reserve. I don't actually know, as I don't believe the coin has ever sold at auction or if it did, too long ago to matter.
My guess is that if it doesn't sell (and I don't think it will unless I buy it), the dealer will put it back on their website at a similar price. That's what they did with a second coin where I was also one of the under bidders. This second coin didn't sell in the live (second) auction, received an offer after the sale which was rejected, and is also now back on the dealer website near the original price.
My guess is that if I or someone else were to make an offer directly to the dealer close to what I think is a more realistic price, the offer would be rejected. If the dealer is well capitalized as I believe, they may prefer to hold out for top price on two coins that aren't available elsewhere. Near zero interest rates probably encourages this thinking.
If I really want an item, it’s not really about being fair but what price will work to get a deal done. This comes down to what the seller is willing to let something go at and what I’m willing to pay, which includes how much I’m willing to risk it going to another buyer.
This is the US forum but I'm guessing he's talking about a non-US coin, a scarce or rare one which hardly sells at all (if ever) based upon what I have seen him post. That's why I provided the response I did in my last post.
For the coins I buy, I have little if anything to use compared to what most here do. I'm basically guessing and offer or bid the maximum I'm willing to pay. There is no CDN, electronic market or anything else for the type of coins I buy.
This may (and probably will) work to my detriment if and when I eventually sell. But that's one of the primary reasons I actually have to like what I buy a lot or else I wouldn't buy it. It's also a primary reason why most other collectors don't and won't collect what I do either.
This, along with how long I might have to wait for a second opportunity.
As @WCC points out is an uncommon issue that does not sell frequently but it is not particularly expensive. When it sold in auction earlier, sold for a fair/market price (about what the price they constantly sell in auction similar examples) in the 350 or so (as I said it is been listed at nearly 3 times he money). So it is not expensive. But the exercise is not about that coin specifically. It is about fairness. If a coin sells in auction at X, what is a fair offer to the owner. I do not want to piss the dealer, and I am not interested in overpaying either. I am sure the dealer bought the coin knowing that would keep it for a while. The market on these is not that volatile. Better now @Zoins ? What do you think?
I don’t lose sleep on what some dealers markup is or desire deny him the reward for his hard work.
I go for the deal and buy accordingly.
When I hear a crackout artist doubled his money good for him! Glad to hear treasure to be found may go prospecting.
Considering overhead, It takes about cost plus an avg of 40 pct make it in the coin biz, not easy in this market. Some items one might sell at cost plus 5 pct or keystone markup cost plus 100 pct to get there.
Here, I will assume the seller knows the market price. If the piece consistently sells for $350 and he is charging $1050, I would say the seller should not get upset with an offer at 50-100% more than the previous auction price, so $525 - $750. So, if they are asking for 3X and you offer 1.5-2X, you won't upset them. At $525 you are at half their ask but 50% over their acquisition cost. Now they might not accept, but hopefully you won't get blocked. If you don't want to bid 1.5-2X on an ask of 3X, I would typically just wait for the next specimen to appear on the market and try to buy it at auction. You don't mention how frequently this item appears on the market, but that's important to consider as well. I'm assuming this item will appear at least once within your acceptable waiting horizon, say one year, so you're willing to wait.
And again, I really don't like to use the word "fair" because it's making a judgement from one perspective. When a piece sells at an auction, it's a live event that happens at a specific time. You are either present or not present. You either have technical bidding glitches or you don't. When a dealer has a piece in inventory and makes it available for some time, there's some cost for them them to own a piece that's not selling. I appreciate that a dealer is holding the piece in inventory at a higher than auction price because that makes it available to me for a longer period of time. I value and don't mind paying for the dealer's inventory holding costs.
My point is that "X" matters.
If I spend $20 on a coin and list it at $40, you can argue that I doubled the price, but it's only $20. If it's $10k and I list it at $15k, it is less than double but it is a large $5k profit. So, if I'm looking for a "fair" offer on the 1st coin, you could argue that $22 is a 10% profit, but it's only $2 to cover my costs, the risk of shipping and profit while a $11k offer on the second coin leaves much more room for the dealer to cover costs even though it is still 10%.
If you are saying he paid $350 but listed the coin for $1000, I think $500 is a fair offer that won't annoy anyone. On the other hand, if you don't want to pay more than $351, there is no point in offering $500.
I posted in this thread thirteen years ago.... I have long since retired, though I still retain my business acumen. I have never been a seller of coins...though I understand the constraints of the dealers. From the perspective of a buyer, let me add this....I buy coins that I like, but will only pay what I consider a fair price. This is arrived at by understanding the coins value (research, condition, grade, availability and my personal 'want' factor). If the price offered is above my expectation, I may make one lessor offer.... If not accepted, I walk. What I pay or offer, is what I consider fair in my value process. I do not care about the dealers cost or desired profit - that is his concern, and his business. When I am buying, it is my money....and I will determine how much leaves my possession. Cheers, RickO
So, based upon a few member's responses here, consider the following scenario:
I pay $100 for a coin based upon it's current value with a little wriggle room. A couple of weeks later, upon closer examination, it turns out to be a rare variety worth $2,500.
So, I should not sell it for its full value?
Remember, there ain't no Santy Claus in numismatics. Unless, of course you sign up for my New Years Giveaway...
Cheers
Bob
I'll second Ricko and others who have expressed that a dealers cost structure is irrelevant to buyers. A buyer will pay what they think is reasonable for the coin, considering all they know about the coin and the market. As has been mentioned, buyers have a bunch of great sources of info to guage the market. Dealers can add value (or perception of value) by providing additional info/insight, partnering to help find specific coins, providing an outlet to sell coins, etc. In other words, I might pay a little more from my local guy to get the same coin because he helps me out in other ways.
So dealers should be asking how they can add value for customers. Managerial accounting to understand overhead will give them a target, but I assume it takes some creativity to make the margin needed to pay your rent.
Here's a really super basic way to add value... take great pictures of your inventory (or have trueviews) and make them available online for potential customers to see.
Instagram
In the last couple of years I've only purchased 1 coin from Heritage.
It's a coin with a POP of 3. The other 2 are not going anywhere anytime soon. I listed it on ebay for the same price I paid for the 1 in my collection...which was double what I paid for mine. A couple days later I was contacted by someone who said he was the under bidder. He made me an offer which if I had accepted would have netted me less than I paid for the coin(not even a bid increment over what I paid). I simply replied thanks for the offer but I listed it for the same price I paid for the 1 in my collection. This one even has a CAC sticker. I was also prepared to bid quite a bit more to win it if I had to.
This brings up another question. If you bid say $1,000 for a coin and win it for $500. Are you going to sell it for less than $1,000?
Thank you all.
That’s like a pick six in the NFL. I guess it’s your call - stand there dumbfounded or run all out for the score. Assuming your an adult where the elevator goes to the top and your in this for number 1 - enjoy your profit.
Many of your forum co posters here brag about their pickoffs all the time. Then they turn around and bash other players, a sort of 2 faced childlike behavior on the surface / they just working their angle lol. I would keep it to myself....
If I bid for $500 and win it will sell I for $1000 if say that’s MV? You betcha lol. I will sell it for what I want for it / believe it’s worth, can have strong chance get.
Let’s say you win a 19th century world silver coin MS 66 with a pop of just 2 (none lower or higher) for $150. It’s USA counterpart has a wholesale bid of $50k. You feel it’s worth $2500 if not much more and list it for that. So what. Perhaps there is somebody out there who will pay that. There are other hobbies where players paid much more than that for what they wanted and that money was gone for good.
With coins your investment not gone forever but YMMV.
I do not understand how people think a business can survive buying something at $100 and selling for $120.
If one were to go to Bobbie's Baubles to buy a bauble for $100 you can bet your paycheck Bobbie paid no more than $60 for it.
Ernie's eatery keeps his food costs at 33% or less or goes out of business fast.
So if a dealer makes around 3% on bullion and hopes for very high volume he is not covering his utilities never mind employee costs.
So if we expect him to pay 80% or more of retail for our coins, we must expect him to pay for his daughters braces from profits on stamps.
All bets are off when a certain EBay seller buys low end registry coins at auction, asks for 50 percent margin when I know what he has in them and then refuses my reasonable offer with 20 percent margin because he knows they will sell to a willing (maybe not too knowledgeable buyer). And this my friends happens with regularity.
Sounds like he understands the market for the coins he sells just fine.
If that dealer was you, is that activity something you would be proud of ? And would you just turn to another dealer buddy and just grin with satisfaction ?
Why not? Why should I give you a 30% discount if others are willing to pay full price? What's wrong with selling something for what people are willing to pay, anyway?
Because I'm a nice guy
If your boss was a nice guy, would you agree to a 30% pay cut?
Old thread alert
"Inspiration exists, but it has to find you working" Pablo Picasso
My business acumen dictated that I get the H out of any sort of damn business at all.
What a relief to lock the doors and go home.
My boss is not a purveyor but is a legitimate employer in his field. I therefore work for a fair wage and he has respected my work ethic for over 20 years. There would be no reason to ask for my resignation.
The high buyers all go to the BST anyway.
Fair enough. So if you're not willing to work for 30% less, why should the guy you're trying to buy coins from agree to?
If this happens with regularity and you know what they have in the coin (presumably thus knowing the seller's source), your next move is to patronize the seller's source directly. If you don't wish to pay the markup, you have to put the shoe leather (keystroke leather?) into moving one step up from retail.
My boss is n
The source (which is a well respected auction house) would have little to do with this manipulative game the dealer is playing. The dealer must be aware of his arrogance since he knows many of these auction records are public. So I can see by these responses that this practice is readily accepted by some but likely shunned by many. Buyer beware.
What's manipulative about buying something in an auction and reselling it for a different price?
This is true, but nonetheless the fact for most coin businesses. Margins are horrible. Other retail business people laugh at us.
And your customers call you crooks. It's a wonder more people don't go into the business.
Agree. It's Econ 101. Works both ways.
If I buy a coin for $100 that no one wants to pay more than $50 for, are you going to give me $110 because I paid $100? No. So if I buy a coin for $100 and I know I can sell it for $200, why would I take even $150 from you if the true market value is $200?
I once had an argument with a (non)customer who offered me 40% back of a coin that was listed at Greysheet bid. I pointed out that bid was $200 and his $120 offer was sub-wholesale. His response was, "why would I ever pay retail?" My response, before I blocked him, was "And I assume you are willing to sell your coins for 50% of retail when it is time to sell."
It is AMAZING to me at times how much economic ignorance exists among collectors of money!
One of my other favorites is the "BST has no fees" mantra. It ain't about the fees, it's about the net receipts.
And you hear it both ways: "I won't buy from X because of the 20% BP". So, are you going to pay the same number on BST or do you want a 20% discount? If you want the 20% discount on BST, what's the incentive for me to sell it there when I can get the same net amount on X without doing any work?
I'm 60 years old, retired, but when I was working, I had always been self-employed as a jewelry appraiser/gemologist and buyer (and seller) of estate pieces and gemstones.
Basically all I can tell you is from my own experience, trying to 'formulate' or quantify rationally a dealer's profit margin (in whatever field it is) is complete hogwash.
I've experienced deals where I've bought and sold an item within an hour making only a 5% margin.
I've purchased items knowing they would 'sit' awhile as inventory and had to make a large profit margin.
Then there were times when I tried to buy an item as cheap as possible, regardless of the selling price as I was trying to feed a family of four.
Many times I would split my profit 50/50 with a fellow tradesperson who put me in touch with a client (this is how we did it in the diamond business).
Bottom line.....it's really no one's business what a dealer pays for something.
The buyer really of said item only has to focus on what the dealer's selling price is as it's not the buyer's concern if the seller paid $1 or $1000 for the item.
"“Those who sacrifice liberty for security/safety deserve neither.“(Benjamin Franklin)
"I only golf on days that end in 'Y'" (DE59)
I agree.
I can't help but think these responses come from individuals who have never ran a business on their own.
"“Those who sacrifice liberty for security/safety deserve neither.“(Benjamin Franklin)
"I only golf on days that end in 'Y'" (DE59)
The one thing that never ceases to amaze me is the apparent lack of understanding that the same coin can be valued differently depending on when/where/how it's offered for sale. And all those values are "correct".
Geeeeeez ..........
LMAO
And who is buying it. The same coin might be worth $50 to me and $100 to you for any number of silly reasons.
But that is the origin of my question. Nowadays, you can find out how much they paid. Now, I am not, as a customer, interested on deciding the margins of the dealer. I am just trying to figure out a fair offer knowing how much the dealer paid in auction. That was all. Particularly for coins that are not selling all the time but come every other year or less frequently.
What someone actually pays and what they're willing to pay are not necessarily the same thing. And the dealer's pricing is almost certainly going to be based on the latter number, not the former.
and that's my point, it's none of your business in knowing what the dealer paid for the coin.
Your business is to educate yourself on the coin you're interested in and knowing the proper, fair price to pay for it.
Knowing the dealer's cost is the wrong way to approach it.
Here's my example..........
Let's say Coin "A" is one you're willing to pay $500 for it. It's a price you've decided is the price you'd love to buy it at.
Does it really matter (to you) if the dealer paid $5 for it or $495 for it?
I hope your answer was 'NO'.
Because if it was 'yes', then there's no hope.
Regardless of the seller's cost (or tag price), you approach the dealer and say "I'm a definite buyer at $500'. They'll either say 'sold' or 'no thank-you'....and then you move on to the next one.
Keep it stress-free.
Easy peasy, lemon squeezey
"“Those who sacrifice liberty for security/safety deserve neither.“(Benjamin Franklin)
"I only golf on days that end in 'Y'" (DE59)