who really pays for slabbing fees?
PTVETTER
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As a dealer these fees run as high as $55,000.00 a year. This year is just about nothing with the down turn of business.
Is it fair to add the fee to the sale price to make a profit or should a dealer just take a loss and maybe close in the not too far distant.
Thought and recommendations !
Pat Vetter,Mercury Dime registry set,1938 Proof set registry,Pat & BJ Coins:724-325-7211
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I personally believe that whoever submits the coins should pay the fee.....dealer or collector and should not be add to the value of the coin when sold.
I would simply say to go by my Sig line. I will say if slabbing fees threaten to put one out of business....... they probably should go out of business. Just my worthless opinion.
Edit, as you know you can charge or try and justify anything. Whether folks buy it is another thing.
I always viewed certification fees as a sunk cost, but with the near-ubiquitous need to have a certain segment of coins certified in order to maintain liquidity these costs have become much less of a factor.
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as an example if someone wants a 1944 mercury dime in MS64FB.
the slabbing fees is more that greysheet, and if one needs one for the registry set how does one get one?
Buy widgets like the coin in the example pre-slabbed. The economics of slabbing low value doesn't justify slabbing this coin.
Latin American Collection
Why does someone deserve the security and added value of a slabbed/graded coin at raw coin prices? For a dealer, slabbing/grading is a legitimate cost just like most other business costs?
I would think a dealer would be savvy enough to know when slab fees would increase the value beyond the fees and when it would not be worth it and try to sell at a profit raw.
In a way the customer does because certification adds value to the coin when it confirms the authenticity and a grade. On the other hand, the slab really benefits the dealer and the customer because the coin becomes more marketable for both. That's why the practice has become so common. It's a win - win so far has I'm concerned.
A dealer can add whatever fees they want. The customer will ultimately determine what the coin sells for.
Whether the dealer, or the customer, ends up paying for it depends on the coin and the market for it at the time the transaction occurs.
If the coin's value, in a slab, is worth more than raw, then there is at least some possibility or recoupment of costs.
However, some of that is dependent if someone wants/needs a cheap slabbed coin (ie....registry or something with some of the modern coins that aren't MS70/PR70)
For instance, take some of the modern dimes/quarters/nickels/cents. If they aren't top pop, or maybe a step below it, then they have almost no value above face, right? (generalizing a bit)
In this case, the dealer likely wanted/expected a higher grade and will NOT be able to recoup the slabbing fees fully.
In the case of a modern that hits a 70, it is very likely that the slabbed 70 will go higher than a raw coin of the same....so the buyer will pay for the slabbing fees, as they will likely be part of the cost now.
I am not a dealer, but when I submit coins, I then add those costs to my cost value of the coin. When I go to sell, I try to recoup my costs. On some coins, a raw coin or a slabbed coin may have the same value, for the grade, and therefore, I would be unlikely to recoup my slabbing costs.
I've been told I tolerate fools poorly...that may explain things if I have a problem with you. Current ebay items - Nothing at the moment
I use it as a right off on tax's so when I spend it to have a coin graded so I can sell it it's taken off the profits I made. It's part of the money I spent to sell that item part of doing business.. But that's just dumb Type2 thinking.
Hoard the keys.
Whether you're selling a product or a service, you need to factor in your costs to make a profit, else why are you in business?
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The grading fee just gets folded into the cost of the coin to the dealer. Whether or not it adds to the value of the piece depends upon the market. In the vast majority of cases, I would say that it does add to the value. Otherwise, dealers would not submit coins for grading.
The most common example of where the grading fee does not add value is with the modern coins that submitted in bulk. I am most familar with the Proofs. If a Proof comes back PR-69 or less, it does not add value, and the grading fee is a loser. If it comes back PR-70, it's a winner. For dealers who play this game, they must get enough PR-70s to make it work.
Grading costs are always the ultimate responsibility of the submitter. If you can write them off God bless ya because the added security provided (and paid for by you) is the cost of doing business. End buyers don't care that you paid that fee, they just pay what they think the coin is worth.
There are surprises both ways in grading results. You have to pray you get more upside surprises than downside surprises or you'll get eaten alive.
There is no assurance that you'll recover the cost of grading fees, but IMO it would be foolish to just automatically eat the fee and not try to recover it. Obviously, it's a point that must be considered when you submit the coin and it grades out as expected.
Pat, if I understand your OP correctly I would say this --- if you can't recoup the 55k in fees you say you have paid on raw coins you have submitted to re-sell, then you are doing something wrong, either over-paying for the raw coins or mis-grading them when you are buying them: thus, the loss.
I suspect you are doing a little of both.
when I buy a slabbed coin,I expect the cost to include an amount to cover slabbing ,shipping etc...... not actual cost but a percentage of it spread throughout the dealers inventory..of course I am not a dealer but merely a lowly collector/hobbyist
Do you consider a slabbed coin to be worth a premium over the exact same coin raw?
When you buy a toaster at Walmart, does the price give a breakdown of their costs, transportation, electric bill, wages, etc. ?
99% of what we buy, we buy at a price, take it or leave it or negotiate. What the seller has in it, for all the various components, is immaterial.
Does the price of the item reflect what I am willing to pay it it. If the item is worth $50, and the seller has $2 or $500 into it, that is not the issue. The issue is the item is worth $50. The seller has the option to sell or not sell, and I have the option to buy or not buy.
Is this logical: 2 coins, exact same grade, both slabbed, identical, no difference, perfect clones of each other, in the dealer case. 1 coin is prices at $600, the other for $75. Why the difference? Well, the $75 coin was bought as a walk in at the shop, paid $45 for it. The other one was bought at a show for $45, but it also cost me airline fare, hotel, meals, etc., so I have more "sunk costs" into THAT coin.
Which one are you buying?
Remember the scene from the Lion King (had to watch that movie 5000 times with my kids when they were small) when the lion is complaining about the past, and the ape smacks him in the head. The lion is offended, and asks why ? The ape say it DOES NOT MATTER, THAT IT IS IN THE PAST.
So all the costs of a coin DO NOT MATTER, they are in the past. The only relevant issue is the value of the coin in the present. You either sell it for current value, or you have a museum.
I sell classic Mustang parts. I track what I pay for items, only as an aggregate number to tax calculations, not by the item. I go to the swap meet, I spend $6,320 for parts for resale, enter in Excel. I do NOT have some spread sheet, where each item is tracked by what I paid for it, as it is meaningless. I buy what I consider to be a good deal for resale, and go from there. I sell for what I can sell it for, and enter sales in Excel. The difference is gross profit. It is meaningless what parts I make 500% on, and what parts I lose money on, it is just the final number, gross sales - gross costs (not a discussion on vehicle depreciation, tolls on roads, etc., just the big picture). I do not keep track of how many hours I spend, to try and figure what I am "making" per hour. I know, after taxes and expenses, my business is generating a strong enough cash flow to pay the household bills, vacations, college tuition for the kids, etc. plus I enjoy the snot out of it.
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I would disagree here. How will you know what to sell an item for if you don't know how much you paid for it? If you're making 500% on certain items and others you only break even, wouldn't you like to know that data so you can adjust your buying? Or do you like spending $ on things that don't bring a good return.
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Someone comes in your shop to ask what his coin is worth.
You whip out a submission form, ask him when he needs to know, collect the fees, and everyone is happy.
No? Why not?
If something is done to add value to a coin, the asking price should reflect some portion of that. Now if the dealer paid in excess of value for the raw coin, then this could not apply. There will always be special circumstances and each of those will need to be met as they occur. The raw coin buyer is at risk of a loss of income if they cannot negotiate a fair price for the raw coin, thus allowing for a recuperative markup. This holds true for most sales markets. If you buy a collectible automobile and replace original components due to age, damage or fake and did not take that into consideration when you place an offer, then the seller may not be able to recuperate these costs.
JMO
Jim
When a man who is honestly mistaken hears the truth, he will either quit being mistaken or cease to be honest....Abraham Lincoln
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your pricing should be determined by those who are competing with you.> @mustangmanbob said:
If you are selling individually those parts that you spent $6,320 on then you should be tracking the parts individually in Excel. The advantage is that you can include the expenses associated with each part, such as shipping or ebay/ paypal fees for each item to increase, on your tax forms, your basis (cost) and in turn reduce your profit. Adding each part to your spreadsheet, instead of the lot you purchased as one line item, allows you to keep good expense records especially since the lot is sold off in pieces at different times.
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I add slabbing fees into the cost of goods, since you are no longer selling an 1839-O Capped Bust, you are selling a PCGS 1839-O EF 45.
The person doing the slabbing pays with hopes of recouping that cost when it's time to sell. I've seen examples of people trying for an upgrade on a $100 coin in hopes that it would jump a grade and quadruple in price just to turn around and sell it for $100 when it doesn't upgrade on the 3rd, 4th, nth time.
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This is an important point. Many people consider the exact same coin as possessing a higher value in a slab (top-tier slab). Some don't see it that way. Today's market makes this question very important to the OP and others, professional dealers and the rest of us.
I prefer to buy raw. That is where your grading skill comes into play. I can usually buy a raw ms 65 versus a graded ms65 for less. Graded coins usually sell for more than raw + grading fee. Its all a gamble with raw coins your 65 might end up being a 64 or a 66. The only time I like to buy certified coins is when they are key dates that are known to have been highly counterfeited. I do agree with Pat if someone wants a thirty dollar coin graded they should pay the grading fee. I see a lot of coins in PCGS holders that are not worth the grading fee. I guess one needs to befriend a bulk submitter and tag youir submissions with theirs. Washington quarters are a fine example of what I'm talking about. You can get most of the series raw in ms 63-65 and sometimes higher. Now compare that same set to a certified set. Maybe its because I dont have to have the finest or highest graded. A nice good eye appealing coin is all i want as a collector. At a certain point it is hard to tell one grade from the next and to me that is after 65. So to me the grading service is like an insurance policy to the dealer to make sure they are not cheating their self.
The graded coin takes a lot of the guesswork out of the purchase tho there are plenty of cases where the grade was missed by a/the TPG too.
Then again how many times have you seen it said here when a raw coin is up for sale or action? Why isn't it graded? There MUST be something wrong with it if it isn't graded.
If you play you pay. If you get a high grade do you give a discount? I'm guess not, just need to be picky on what you send out for grading and they will pay for them selves. If sent in by bulk you get a good discount but just because it's bulk does not mean you should send in every thing and anything it needs to be worth it.. Even if I get a coin for free it will need to be a $60 coin for me to even think about grade it. A $20 coin will always be a $20 coin graded or not, there is no need to grade it or you will never get your grading fees back out of it.
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How much?
This is certainly true. To the OP's point I have to believe he's primarily referring to sub-$200 pieces where grading fees can be difficult to recoup. On a $100 coin how important is a slab? How important should it be? Everybody has a different answer but the market as a whole seems to value slabs on coins over $50 and there's the rub.
To be blunt, if you can't recoup the cost of grading when you sell the coin/coins, then you pay the fee. Frankly, if I was a dealer I couldn't imagine not wanting to recover the fee/my costs.
It does not matter what I paid for it, only what it is worth to sell. My memory is good enough still to know "about" what an item costs and what I sell it for, so I try not buy losers a second time.
If you are selling individually those parts that you spent $6,320 on then you should be tracking the parts individually in Excel. The advantage is that you can include the expenses associated with each part, such as shipping or ebay/ paypal fees for each item to increase, on your tax forms, your basis (cost) and in turn reduce your profit. Adding each part to your spreadsheet, instead of the lot you purchased as one line item, allows you to keep good expense records especially since the lot is sold off in pieces at different times.
I understand, but the point is, that is does not matter HOW MUCH cost, expense, shipping, ebay fees, each item "has" on it.
All that is mind destroying time destruction for bean counters. The IRS does not care if I have a spread sheet with 32,000 lines, cost per item, expenses, fees, twenty seven eight-by-ten colour glossy photographs with circles And arrows and a paragraph on the back of each one explaining what each One is,
All they car about is
Σ
What were my costs (cost of goods, expenses, etc. summed up) and what was my revenue. On the tax form, yes, I need a numbers for shipping (postage), fees, rent, utilities, etc. but they don't care WHAT item it is associated with, just the sum.
So I keep the records for the deductible items, receipts, etc. but they are not prorated, ascribed, etc. to a specific item.
For the line item folks, an example.
I buy 12 identical brackets, cast iron, dirty and rusty. I pay $20 for 1, $15 each for 4 of them, $10 each for 3 of them, and the other 4 come in batch purchases with a lot of other items, for anywhere from $50 to $600 for the lot. They are sent out, stripped and plated, and now look exactly the same, in a 900 pound tote of parts for $350. I have no way of knowing which one was which, and the are totally interchangeable. I sell them for $75 to $85 each, and sell 9 of them in a year.
I ran this type of scenario past a Tax CPA friend, and asked how should I keep the records.
This was the basic response:
Keep a record of purchases (receipts), total it up
Keep a record of expenses by tax form line item, total it up
Keep a record of revenue, total it up.
Keep a record of Delta YE inventory.
C + D - A - B = Net income, file and pay taxes on this.
_
On higher $$$$ coins the % of slabbing fees is small and buy adding as little as $1.00 is good enough.
Now on the other hand lower $ coins that are needed for things as registry sets and so on the % is quite high and bring the price way over the sheet. I have little problem selling them to those that understand and those that don't just keep waving their holey greysheet and demand a lower price, to a point that they are rude.
I guess it cuts both ways. Like when those dealers start waving their blue and grey sheets when looking to purchase a nice coin, then come on here and say there are no nice coins out there to buy. When folks pass on their most generous offer. Not talking about the OP here but just in reality out there.
It is a matter of supply and demand. Today many coins must be slabbed by a major service in order to sell at a "wholesale" or "retail" level. The cost of slabbing has become an integral part of the cost of the coin.
+1 So True.
I guess that I am missing something in the original post. Why wouldn't you sell each coin at the highest price that you think that you can get? I can't imagine selling something for $20 less than I could get because I didn't have to pay $20 to get it slabbed. In the end, the buyer pays for the slab, and it is part of the purchase price. If the sellers cost of the coin, plus the cost of grading exceeds the sale price of the coin, then the seller takes a loss. Whether the loss is due to overpaying for the coin or the slabbing doesn't make a difference.
I do NOT have some spread sheet, where each item is tracked by what I paid for it, as it is meaningless. I buy what I consider to be a good deal for resale, and go from there. I sell for what I can sell it for, and enter sales in Excel. The difference is gross profit. It is meaningless what parts I make 500% on, and what parts I lose money on, it is just the final number
Bob, that might be a workable approach for what you're doing with car parts but if a dealer did that I bet they'd get "killed" and be out of business and broke in short order. the easiest solution is just to code the purchase price on the coin prior to resale
I accept the cost of grading fees as a part of my purchase price of the coin. I am not going to bump the price just because I decided to get it slabbed.
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NGC registry V-Nickel proof #6!!!!
working on proof shield nickels # 8 with a bullet!!!!
RIP "BEAR"