What is Our Overall Industry Overhead?

Coinosaurus

In the end, collectors pay for everything - the auction houses, the convention hall rentals, the B&M stores, salaries for the bourse dealers, gradng services - none of this exists without collector money.

What % of the average coin dollar is spent on the overhead - 10%? 30%? 50%?

ctf_error_coins

Depends on who the collector buys from. An Internet dealer will have much lower overhead costs then a B&M store.

WTCG

There are unexpected overhead costs in every legitimate industry. Numismatics is no different.

messydesk

The question isn't what percentage of the markup for individual transactions represents overhead, it's what the total overhead of the hobby is. Equally interesting would be a comparison to other collectible categories, as well as to more mainstream industries.

Coin Finder

Expenses most full time traveling dealers will have:


Travel
Postage/ins/supplies
Advertising
Supplies/holders
Grading fees
Cell Phone
Bank Interest on credit line
Business forms/cards
Auction fees
Numismatic price sheets/subscriptions
Coin cases/lights
Coin show fees
Meals
Hotel
Rental car
Computer/internet service
Coin cost
Assay cost (scrap)
Personal car maintenance
Health care
Tax prep cost, if you make a "profit"
Software cost

Employee expenses if you have any, which is a whole nuther list!

Some of these costs can be absorbed through the business if incorporated, but they are still real money and thus expenses.

The dealers I talk to vary, some are on the road all the time, some work from home, some have a shop, some have employees. All expenses very with these scenarios.

roadrunner

A significant percentage of dealers, especially the smaller ones, don't make all that much money. Some might lose money and eventually will go out of business. If anything, coin shops have been closing down the past 3 years.

In the end, not all those costs are passed on to the collector. Dealers themselves are "collectors" in many respects and absorb some of those costs along the way.

AMRC

I do not think the data to calculate this is anywhere.

TwoSides2aCoin

In the end the consumer pays more for everything. That's 100% according to my math.

Flash

100% of every dollar I spend goes toward the total market overhead. It covers the dealer's cost for the item and any profit he/she makes, which allows them to stay in business. For items I've won at auction, my dollar covers the cost of the consigner's inventory as well as the markup charged by the auction house, which in turn goes to cover their cost of doing business. Since the OP states that without collector money there would be no industry, the correct answer is 100%

Coin Finder

Cash flow is the deal for most businesses. Knowing how to manage it is a skill...

CoinJunkie

<< <i>In the end the consumer pays more for everything. That's 100% according to my math. >>


No, it's actually the average markup charged across all coin sales. The dealer cost of coins is
not overhead. By my definition, dealer profit and expenses are the overhead (to the collector).

lostincoins

This is an interesting question but one that would be near impossible to determine 100% as the dealers would have to list all expenses and all buy sell pricing and that will never happen. This hobby/business is like owning a bar, a cash business where amounts traded are not always accurate as um we forget how to count.....

numisma

What % of the average coin dollar is spent on the overhead - 10%? 30%? 50%?

Most B&M dealers that I know make more money on BUYING from non-collectors (heirs for example) versus selling to collectors, so the question is difficult to answer.

MrEureka

First, let's exclude bullion products, because I don't think that's what we're talking about here.

Second, let's exclude TV and telemarketers, and the US Mint.

Now, we can probably agree that the typical retail mark-up on a rare coin, when sold to a knowledgeable buyer, is in the vicinity of 15%. If a dealer with typical mark-ups is operating his business at break-even, his expenses would obviously be in the vicinity of 15%. And if he's making a living, his expenses are probably in the vicinity of 8-10%. So I'm going to estimate that 10% of each dollar spent with retail coin dealers goes to business expenses.

For auction companies, I'd guess the number is closer to 7.5%.

Granted, these are quick and sloppy answers, but I think it gets us close enough.