@jmlanzaf said:
There are not a lot of areas where you can make a substantial mark up. Certainly almost no U.S. coins other than maybe errors and some exonumia. The internet squeezes margins even more and also allows people to move material without going to a dealer.
Pick any coin with a reasonable mintage and ask yourself how easy it would be to buy it and mark it up 30% or 40%.
That's why it's important to specialize and be selective. Most coins don't sell for that much any more and seem to be on a downward trend. It seems to be important to recognize which coins can be marked up. I've seen large mark ups from a number of national dealers.
Granted, while individual dealers can choose niches with potential high mark ups, it may be difficult for all or a majority of dealers to do in aggregate.
Yes sometimes they will argue the 5-10 pct margin thing (or cheapo counter offer) and it shows me they are ignorant of the business or just flooding me w some lame self serving BS. I just ask them sometimes “do you have one this nice you will sell me at that (that TPG Holder at that grade)?”
@Zoins said:
I think understanding coin dealing is easier you think about where dealers source and sell their coins.
Perhaps. Based on comments I've read on this message board, however, many collectors are of the opinion that dealing in coins is much easier and profitable than it actually is. If there truly was easy money to be made dealing in coins, more and more people would be drawn to it, driving profits down until it wasn't easy any more. I think this applies not just to coins, but almost universally.
Tom Hanks, as Jimmy Dugan: "If it wasn't hard, everyone would do it."
@Zoins said:
I think understanding coin dealing is easier you think about where dealers source and sell their coins.
Perhaps. Based on comments I've read on this message board, however, many collectors are of the opinion that dealing in coins is much easier and profitable than it actually is. If there truly was easy money to be made dealing in coins, more and more people would be drawn to it, driving profits down until it wasn't easy any more. I think this applies not just to coins, but almost universally.
Tom Hanks, as Jimmy Dugan: "If it wasn't hard, everyone would do it."
I certainly don't think it's easy, but there seem to be a few formulas for success.
From the recent Hot Topics threads, sometimes I wonder if success is worthwhile from a health perspective, but then I see EOC's fishing trips and see it can be done a different way.
@jmlanzaf said:
I would also point out on this thread itself, almost everyone on here thinks the 30% BP+SP is EXORBITANT!!! People are arguing that they should be able to trade coins on a 10%ish margin. Therein lies the dealer problem.
Cross selling between venues and auction vs. BIN seems to be like it has the potential to be lucrative.
I've purchased from dealers that do a 100% markup from Heritage to eBay and a 200% markup from eBay auction to eBay BIN. I prefer to avoid this but sometimes I miss the first auction so it happens. So it is possible to have large markups for esoteric items, especially if you find a collector like me
@Zoins said:
I think understanding coin dealing is easier you think about where dealers source and sell their coins.
Perhaps. Based on comments I've read on this message board, however, many collectors are of the opinion that dealing in coins is much easier and profitable than it actually is. If there truly was easy money to be made dealing in coins, more and more people would be drawn to it, driving profits down until it wasn't easy any more. I think this applies not just to coins, but almost universally.
Tom Hanks, as Jimmy Dugan: "If it wasn't hard, everyone would do it."
Being a coin dealer Requires many, many skills. One skill not even mentioned is high-end coin photography which can easily increase margins. Marketing and promotion are important. Honesty is super important. Buying right is essential. Working your ass off makes all the difference.
@Zoins said:
I certainly don't think it's easy, but there seem to be a few formulas for success.
Sure. There's more than one way to skin a cat.
@Zoins said:
I've purchased from dealers that do a 100% markup from Heritage to eBay and a 200% markup from eBay auction to eBay BIN.
I think you have to be careful when utilizing auction results. Are they representative of a discernable trend or are they outliers?
@Zoins said:
That's why it's important to specialize and be selective.
A word of caution here. In that case, be prepared to be labelled a cherrypicker and criticized for only wanting to buy the good stuff out of a collection. Of course, if you do decide to offer on the whole collection an amount that allows you to get the good stuff without overpaying for the rest, you'll be criticized for your lowball offer on the widgets.
@Zoins said:
I've purchased from dealers that do a 100% markup from Heritage to eBay and a 200% markup from eBay auction to eBay BIN.
I think you have to be careful when utilizing auction results. Are they representative of a discernable trend or are they outliers?
Here, there's a specific pattern that I've seen many times from a number of different dealers. There are even higher markups where I declined to buy but were eventually sold.
My idea for an internet coin clearance house would be to sell only gold coins up to 50K
ONLY TrueView.
ONLY Postal money orders.
$100 fee per coin + registered mail shipping one way.
48 hr. inspection time & return at buyer's expense.
Couldn't one or 2 people gut an auction house with that?
@Zoins said:
I think understanding coin dealing is easier you think about where dealers source and sell their coins.
Perhaps. Based on comments I've read on this message board, however, many collectors are of the opinion that dealing in coins is much easier and profitable than it actually is. If there truly was easy money to be made dealing in coins, more and more people would be drawn to it, driving profits down until it wasn't easy any more. I think this applies not just to coins, but almost universally.
Tom Hanks, as Jimmy Dugan: "If it wasn't hard, everyone would do it."
Being a coin dealer Requires many, many skills. One skill not even mentioned is high-end coin photography which can easily increase margins. Marketing and promotion are important. Honesty is super important. Buying right is essential. Working your ass off makes all the difference.
"high-end coin photography" will not make an MS65 1881-S Morgan $ worth much more. It likely won't make anyone pay more than $5 more. It may make them more likely to buy it at full sheet. So, it can make a difference in the margins but, again, most of those margins are pretty slim.
I just bought a 1937 Proof Buffalo in 66 CAC from Stack's. It is GORGEOUS in person. It looked filmy in their photo. So, do I think someone would have paid $100 or $200 more if they saw it in person? Yes. But that extra $100 turns a 10% margin into a 20% margin IF IF IF someone is willing to pay it.
I think you would be less impressed with the value of your photography if you sold more "widgety" items. You are in a niche market where the coins are less of a commodity. You are also in a market where how the error looks is probably the most important thing.
In the end, they are buying the COIN not a picture of a coin.
@ReadyFireAim said:
My idea for an internet coin clearance house would be to sell only gold coins up to 50K
ONLY TrueView.
ONLY Postal money orders.
$100 fee per coin + registered mail shipping one way.
48 hr. inspection time & return at buyer's expense.
Couldn't one or 2 people gut an auction house with that?
Go ahead. Start it. I think you'll be surprised at what does and doesn't happen.
@topstuf said:
Maybe the major houses should pay for consignments.
Help me word a poll.
Thank you.
They DO!
That's why they give 115% of hammer. That's why (sometimes) they give cash advances against a collection. That's why they give free appraisals and fly out to look at collections. There are a lot of costs that people aren't thinking about.
There is a lot of money in this country. If coin auction houses were really raking in piles of cash, don't you think we'd see them popping up all over?
I would also point out that you can call it collusion, but I don't think it's an accident that all the auction houses have the same fee structure. It is quite likely the actual cost of doing business.
The big in-person houses (Stack's/Heritage etc.) have roughly 20+10.
The online houses (GC, eBay) are at roughly 10-15%
I wish @specialist was still around. Maybe she could give you some idea of the COST of simply flying a team of professionals around the country to be at all the major shows. She could give you some idea of the number of people-hours that go into researching, preparing and cataloguing a 200 coin sale much less a 5000 coin sale like Heritage and Stack's were running last week.
@jmlanzaf said:
I would also point out on this thread itself, almost everyone on here thinks the 30% BP+SP is EXORBITANT!!! People are arguing that they should be able to trade coins on a 10%ish margin. Therein lies the dealer problem.
Cross selling between venues and auction vs. BIN seems to be like it has the potential to be lucrative.
I've purchased from dealers that do a 100% markup from Heritage to eBay and a 200% markup from eBay auction to eBay BIN. I prefer to avoid this but sometimes I miss the first auction so it happens. So it is possible to have large markups for esoteric items, especially if you find a collector like me
they call this retail arbitrage. But, again, it works much better for part-timers than full-timers.
Let's say you want to do it full-time and you want to make $100k per year [this has to cover your health insurance, retirement contributions etc.]. Now, if you want to make $100k per year and you are working on a gross 20%/net10% margin, you need to sell $1 million in coins per year and buy $800,000 per year. It is really, really hard to cherry pick your way to that volume. Even if you want a gross 40%/net30% margin, you are still going to need to buy somewhere between $300k-$500k in coins per year.
It is easy to spend $1 million on coins. It is harder to spend $1 million on coins that have a 20% margin and much much harder to buy coins with a 40% margin.
@Zoins said:
I've purchased from dealers that do a 100% markup from Heritage to eBay and a 200% markup from eBay auction to eBay BIN.
I think you have to be careful when utilizing auction results. Are they representative of a discernable trend or are they outliers?
Here, there's a specific pattern that I've seen many times from a number of different dealers. There are even higher markups where I declined to buy but were eventually sold.
Again, this has to be in a niche market. That would never work with 95% of the coin market.
I certainly don't think it's easy, but there seem to be a few formulas for success.
From the recent Hot Topics threads, sometimes I wonder if success is worthwhile from a health perspective, but then I see EOC's fishing trips and see it can be done a different way.
EOC may, in his retirement, be a full-time coin dealer. I don't think you can attribute his fishing trips to a career as a full-time dealer. While EOC has not disclosed his business particulars (not that he should), he has been building inventory and started a thread asking if he should borrow money to fund more inventory. It's not exactly clear that his business is throwing off a lot of cash that he is using to pay for those fishing trips.
But, again, he's in a niche market where he can possibly push margins because of the "uniqueness" of his offerings. The thing about niche markets is that they are, by definition, smaller corners of the broader market. So how many "full-time dealers" could be supported by error coins? How many could be supported by exonumia?
I have an interesting comeback to dealers that want to run that percent BS.
They say they couldn't come down in price because they only make X%.
I say fine, I'll pay your full price and you can sell my duplicate for the same as an identical one in your case...I'll give you 2X%
It never works... Wonder why
Same scam, different pocket...Sort of
Remember who has the money and walk
@jmlanzaf said:
Let's say you want to do it full-time and you want to make $100k per year [this has to cover your health insurance, retirement contributions etc.]. Now, if you want to make $100k per year and you are working on a gross 20%/net10% margin, you need to sell $1 million in coins per year and buy $800,000 per year. It is really, really hard to cherry pick your way to that volume. Even if you want a gross 40%/net30% margin, you are still going to need to buy somewhere between $300k-$500k in coins per year.
It is easy to spend $1 million on coins. It is harder to spend $1 million on coins that have a 20% margin and much much harder to buy coins with a 40% margin.
Every new collector, at some point, wonders if they can make money in the hobby. I feel like it needs to be written out somewhere that cherry picking is not a business model. It's just something you can do along the way. Everyone has a story or two on a good cherry pick they did. They don't have 100 a month. My friends all have stories about how they made a bunch of money gambling...they don't make money gambling.
@ReadyFireAim said:
My idea for an internet coin clearance house would be to sell only gold coins up to 50K
ONLY TrueView.
ONLY Postal money orders.
$100 fee per coin + registered mail shipping one way.
48 hr. inspection time & return at buyer's expense.
Couldn't one or 2 people gut an auction house with that?
I think there are opportunities like this, but it requires some serious hustle from people that might not make their money back right away.
@jmlanzaf said:
Let's say you want to do it full-time and you want to make $100k per year [this has to cover your health insurance, retirement contributions etc.]. Now, if you want to make $100k per year and you are working on a gross 20%/net10% margin, you need to sell $1 million in coins per year and buy $800,000 per year. It is really, really hard to cherry pick your way to that volume. Even if you want a gross 40%/net30% margin, you are still going to need to buy somewhere between $300k-$500k in coins per year.
It is easy to spend $1 million on coins. It is harder to spend $1 million on coins that have a 20% margin and much much harder to buy coins with a 40% margin.
Every new collector, at some point, wonders if they can make money in the hobby. I feel like it needs to be written out somewhere that cherry picking is not a business model. It's just something you can do along the way. Everyone has a story or two on a good cherry pick they did. They don't have 100 a month. My friends all have stories about how they made a bunch of money gambling...they don't make money gambling.
Well said.
That's why dealers are stuck with a lot of low margin bullion. The margin is low but the volume is high.
As a business, buying a $20 Saint for $15 back of spot to sell it for $25 over spot is lunacy. I mean, take coins out of the equation and how many of you would invest $1500 with me in the hopes of making $40? Same with 90%, scrap gold, etc. But it is very liquid and you can move it quickly if you need to. So you can do $1 million or $2 million in bullion without having $1 million in inventory. It may only be a 2 or 3% gross margin, but 2% of $2 million is $40k and it's a start on paying the bills.
The other thing people completely ignore is the cost of the business. If you are working part-time for fun, $50 profit is a NET $50 profit and if you don't sell anything this month, no big deal. But if you have a B&M or even, to a lesser extent, an internet business there are bills you have to pay every month whether you sell something or not. And those fixed costs will shrink your 40% GROSS margin to nothing if you don't have the total volume to support it.
I'm a part-time dealer who hates his full-time job. LOL. But I would NEVER quit my full-time job to be a full-time coin dealer. I briefly tried about 15 years ago when I was between jobs. I simply could not find the volume of stuff to buy to make it equivalent to my cushy full-time job with BENEFITS!!!
I certainly don't think it's easy, but there seem to be a few formulas for success.
From the recent Hot Topics threads, sometimes I wonder if success is worthwhile from a health perspective, but then I see EOC's fishing trips and see it can be done a different way.
EOC may, in his retirement, be a full-time coin dealer. I don't think you can attribute his fishing trips to a career as a full-time dealer. While EOC has not disclosed his business particulars (not that he should), he has been building inventory and started a thread asking if he should borrow money to fund more inventory. It's not exactly clear that his business is throwing off a lot of cash that he is using to pay for those fishing trips.
Hey, I only went fishing 3 times last week so it is hardly a career
We have been eating fresh Yellowfin Tuna the last three days
The borrow money thread was a serious question that I never needed to act on. Since then I have bought 4 high-end Avet fishing reels and two high-end fishing poles.
@Zoins said:
I think understanding coin dealing is easier you think about where dealers source and sell their coins.
Perhaps. Based on comments I've read on this message board, however, many collectors are of the opinion that dealing in coins is much easier and profitable than it actually is. If there truly was easy money to be made dealing in coins, more and more people would be drawn to it, driving profits down until it wasn't easy any more. I think this applies not just to coins, but almost universally.
Tom Hanks, as Jimmy Dugan: "If it wasn't hard, everyone would do it."
Being a coin dealer Requires many, many skills. One skill not even mentioned is high-end coin photography which can easily increase margins. Marketing and promotion are important. Honesty is super important. Buying right is essential. Working your ass off makes all the difference.
I think you would be less impressed with the value of your photography if you sold more "widgety" items. You are in a niche market where the coins are less of a commodity. You are also in a market where how the error looks is probably the most important thing.
In the end, they are buying the COIN not a picture of a coin.
Why on earth would I want to sell widgets, I choose to do the exact opposite of 95% (your number) of other coin dealers.
If I wanted to sell other items it would probably be super eye appealing toners, super eye appealing Commerataives, or super eye appealing Exonumia. Each coin would need to be unique in an eye-appealing way. I am happy where I am at and will not, for now, go after those other markets.
Why on earth would sell widgets, I choose to do the exact opposite of 95% (your number) of other coin dealers.
If I wanted to sell other items it would probably super eye appealing toners, super eye appealing Commerataives, or super eye appealing Exonumia. Each coin would need to be unique in an eye-appealing way. I am happy where I am at and will not, for now, go after those other markets.
I wasn't trying to change you. LOL. I was just suggesting that your global statement of the value of photographs was less compelling in other market segments. Not that good pictures don't help complete a sale, but I doubt too many widgets increase in value by too much money.
I will say, in support of what you were saying, a picture that accurately represents the beauty of something beautiful will make people notice.
@jmlanzaf said:
Not that good pictures don't help complete a sale, but I doubt too many widgets increase in value by too much money.
I know one dealer that lives by the 1/2 grade he adds to his coins by hocus-focus.
If you check his sight you will find NO coins offered with TrueView.
(unless they have a PQ sticker and a huge premium also)
@jmlanzaf said:
Not that good pictures don't help complete a sale, but I doubt too many widgets increase in value by too much money.
I know one dealer that lives by the 1/2 grade he adds to his coins by hocus-focus.
If you check his sight you will find NO coins offered with TrueView.
(unless they have a PQ sticker and a huge premium also)
Well, doctored photos showing rainbow toning are guaranteed to increase bidding as well as increase returns!
All kidding aside, photos help, but I'm not convinced they matter in many of the widget parts of the market.
@jmlanzaf said:
Well, doctored photos showing rainbow toning are guaranteed to increase bidding as well as increase returns!
So far as I know, he does not do that.
His return policy is very good also.
He is all over E-Bay & likes to talk up OGH, doilies, black slab NGC & other stuff without TV.
I lost my mind seeing a couple of his pics & couldn't hit the buy button fast enough.
Later, I returned them.
This happened twice.
Now I skip over all his listings.
Poison well...But I have never seen anyone better at his "craft".
@jmlanzaf said:
I don't believe that collectors should think that there is ANY investment value in coins. It's a hobby, not an investment.
So at what point does the average collector realize it's no longer just a hobby? When he/she buys a $50 coin, $100 coin, a $500 coin, a $1000 coin...? When the annual purchases start adding up, it becomes an investment.
@jmlanzaf said:
I don't believe that collectors should think that there is ANY investment value in coins. It's a hobby, not an investment.
So at what point does the average collector realize it's no longer just a hobby? When he/she buys a $50 coin, $100 coin, a $500 coin, a $1000 coin...? When the annual purchases start adding up, it becomes an investment.
When we say investment, we imply there will be some kind of financial return on that investment. The distinction shouldn't necessarily depend on the dollar value.
@jmlanzaf said:
I don't believe that collectors should think that there is ANY investment value in coins. It's a hobby, not an investment.
So at what point does the average collector realize it's no longer just a hobby? When he/she buys a $50 coin, $100 coin, a $500 coin, a $1000 coin...? When the annual purchases start adding up, it becomes an investment.
When we say investment, we imply there will be some kind of financial return on that investment. The distinction shouldn't necessarily depend on the dollar value.
hobby vs. investment should be independent of dollar amount. Obviously, that becomes harder to do if you are spending a significant portion of your income on the hobby. But it should be discretionary dollars (hobby dollars) not retirement contributions. Always. Any other expectation is almost guaranteed to disappoint and sucks the joy from the hobby.
Look at the PCGS 3000 in 1989 vs. today. If you "invested" in coins in 1989, you are NOT retiring any time soon. Your return is NEGATIVE 70% and that's without inflation and opportunity costs. Even if you remove the bubble years, the index has gone from 40,000 in 1984 to 60,000 today. That is NOT investment return. 2% average inflation means 40,000 in 1984 would have the buying power of 80,000 today so you lost 25% of your buying power. And the opportunity costs even relative to a silly Treasury bond is nuts. A 40,000 Treasury bond in 1984 would be worth over 200,000 today.
You don't want to know what an S&P 500 fund in 1984 would be worth today....
It's sort of like stock prices. Single digit prices are considered "bad" even though it's the same as a high price, you are still buying 0.XXXXXX% of the entire company. In theory, it shouldn't matter, but there is a perception factor. Same with auction buyer's fees.
@winesteven said:
I buy often via auction. I do my pricing research, determine how much I am willing to pay, taking into account the eye appeal of this specific coin, and then adjust my maximum hammer bid to take into account the buyer’s premium I have to pay. My sense is that no buyers fee would not significantly increase participation, but would only increase the hammer price. Six of one, half dozen of the other!
The problem with this is that most bidders do NOT do this and you won't win many lots using this strategy.
@winesteven said:
I buy often via auction. I do my pricing research, determine how much I am willing to pay, taking into account the eye appeal of this specific coin, and then adjust my maximum hammer bid to take into account the buyer’s premium I have to pay. My sense is that no buyers fee would not significantly increase participation, but would only increase the hammer price. Six of one, half dozen of the other!
The problem with this is that most bidders do NOT do this and you won't win many lots using this strategy.
I do this. I win a lot of lots.
But, more to the point, if someone wants it more, so be it. But if someone wants it more, they will still outbid you. The BP doesn't change the maximum they want to pay. Heritage and Stack's both show you the bid with BP when you are bidding live.
If you can't figure out how to bid because of the 20% BP, you should probably quit the hobby.
I'm not smart enough to know how the buyers fee is impacting business. I place bids on the Heritage auctions, using a calculator backing out the premium. I determine my max bid including the premium, input the number into the system and use Heritage to double check my math. The higher fees would concern me far more as a seller than a buyer.
@winesteven said:
I buy often via auction. I do my pricing research, determine how much I am willing to pay, taking into account the eye appeal of this specific coin, and then adjust my maximum hammer bid to take into account the buyer’s premium I have to pay. My sense is that no buyers fee would not significantly increase participation, but would only increase the hammer price. Six of one, half dozen of the other!
The problem with this is that most bidders do NOT do this and you won't win many lots using this strategy.
I do this. I win a lot of lots.
But, more to the point, if someone wants it more, so be it. But if someone wants it more, they will still outbid you. The BP doesn't change the maximum they want to pay. Heritage and Stack's both show you the bid with BP when you are bidding live.
If you can't figure out how to bid because of the 20% BP, you should probably quit the hobby.
Again you are misunderstanding me. All I am saying is that if you limit your bid to 80% of it's value to account for the buyers fee you probably won't win the auction because other bidders will bid the full value and then pay the extra 20%.
If you can't figure out how to bid because of the 20% BP, you should probably quit the hobby.
Again you are misunderstanding me. All I am saying is that if you limit your bid to 80% of it's value to account for the buyers fee you probably won't win the auction because other bidders will bid the full value and then pay the extra 20%.
Oh, maybe. Some people do. I doubt many do, or at least not for long. At some point, if you haven't figured out that hammer+20 is more than you can buy it for on eBay, YOU SHOULD QUIT THE HOBBY!!!
And it does depend on what you buy. I have bought coins for 20+% back of bid on Heritage and Stacks after accounting for BP AND SHIPPING!
@winesteven said:
I buy often via auction. I do my pricing research, determine how much I am willing to pay, taking into account the eye appeal of this specific coin, and then adjust my maximum hammer bid to take into account the buyer’s premium I have to pay. My sense is that no buyers fee would not significantly increase participation, but would only increase the hammer price. Six of one, half dozen of the other!
The problem with this is that most bidders do NOT do this and you won't win many lots using this strategy.
I do this. I win a lot of lots.
But, more to the point, if someone wants it more, so be it. But if someone wants it more, they will still outbid you. The BP doesn't change the maximum they want to pay. Heritage and Stack's both show you the bid with BP when you are bidding live.
If you can't figure out how to bid because of the 20% BP, you should probably quit the hobby.
Again you are misunderstanding me. All I am saying is that if you limit your bid to 80% of it's value to account for the buyers fee you probably won't win the auction because other bidders will bid the full value and then pay the extra 20%.
I have spent as much time over the last 15 years observing and bidding on online auctions as anyone. I have seen the occasional head scratcher, but over 95% of the sales (including premiums) fall into the expected range.
I t takes two bidders to disregard the 20% buyer fee to drive the coin higher and that happens rarely.
@winesteven said:
I buy often via auction. I do my pricing research, determine how much I am willing to pay, taking into account the eye appeal of this specific coin, and then adjust my maximum hammer bid to take into account the buyer’s premium I have to pay. My sense is that no buyers fee would not significantly increase participation, but would only increase the hammer price. Six of one, half dozen of the other!
The problem with this is that most bidders do NOT do this and you won't win many lots using this strategy.
I do this. I win a lot of lots.
But, more to the point, if someone wants it more, so be it. But if someone wants it more, they will still outbid you. The BP doesn't change the maximum they want to pay. Heritage and Stack's both show you the bid with BP when you are bidding live.
If you can't figure out how to bid because of the 20% BP, you should probably quit the hobby.
Again you are misunderstanding me. All I am saying is that if you limit your bid to 80% of it's value to account for the buyers fee you probably won't win the auction because other bidders will bid the full value and then pay the extra 20%.
IMO: If a buyer is willing to ignore the 20% vig then he wants the coin. If there is no vig he/she will still be high bidder. The only thing that will change is the hammer price which goes to the seller.
@winesteven said:
I buy often via auction. I do my pricing research, determine how much I am willing to pay, taking into account the eye appeal of this specific coin, and then adjust my maximum hammer bid to take into account the buyer’s premium I have to pay. My sense is that no buyers fee would not significantly increase participation, but would only increase the hammer price. Six of one, half dozen of the other!
The problem with this is that most bidders do NOT do this and you won't win many lots using this strategy.
I do this. I win a lot of lots.
But, more to the point, if someone wants it more, so be it. But if someone wants it more, they will still outbid you. The BP doesn't change the maximum they want to pay. Heritage and Stack's both show you the bid with BP when you are bidding live.
If you can't figure out how to bid because of the 20% BP, you should probably quit the hobby.
Again you are misunderstanding me. All I am saying is that if you limit your bid to 80% of it's value to account for the buyers fee you probably won't win the auction because other bidders will bid the full value and then pay the extra 20%.
I have spent as much time over the last 15 years observing and bidding on online auctions as anyone. I have seen the occasional head scratcher, but over 95% of the sales (including premiums) fall into the expected range.
I t takes two bidders to disregard the 20% buyer fee to drive the coin higher and that happens rarely.
All I know is that if you stop bidding at 80% on a coin I want and/or need.......you will lose EVERY time!
@winesteven said:
I buy often via auction. I do my pricing research, determine how much I am willing to pay, taking into account the eye appeal of this specific coin, and then adjust my maximum hammer bid to take into account the buyer’s premium I have to pay. My sense is that no buyers fee would not significantly increase participation, but would only increase the hammer price. Six of one, half dozen of the other!
The problem with this is that most bidders do NOT do this and you won't win many lots using this strategy.
I do this. I win a lot of lots.
But, more to the point, if someone wants it more, so be it. But if someone wants it more, they will still outbid you. The BP doesn't change the maximum they want to pay. Heritage and Stack's both show you the bid with BP when you are bidding live.
If you can't figure out how to bid because of the 20% BP, you should probably quit the hobby.
Again you are misunderstanding me. All I am saying is that if you limit your bid to 80% of it's value to account for the buyers fee you probably won't win the auction because other bidders will bid the full value and then pay the extra 20%.
I have spent as much time over the last 15 years observing and bidding on online auctions as anyone. I have seen the occasional head scratcher, but over 95% of the sales (including premiums) fall into the expected range.
I t takes two bidders to disregard the 20% buyer fee to drive the coin higher and that happens rarely.
Again you are misunderstanding me. All I am saying is that if you limit your bid to 80% of it's value to account for the buyers fee you probably won't win the auction because other bidders will bid the full value and then pay the extra 20%.
I have spent as much time over the last 15 years observing and bidding on online auctions as anyone. I have seen the occasional head scratcher, but over 95% of the sales (including premiums) fall into the expected range.
I t takes two bidders to disregard the 20% buyer fee to drive the coin higher and that happens rarely.
All I know is that if you stop bidding at 80% on a coin I want and/or need.......you will lose EVERY time!
But that's not because of the BP.
He didn't stop biding at "80%". He stopped bidding when 80+20="fair value".
Again you are misunderstanding me. All I am saying is that if you limit your bid to 80% of it's value to account for the buyers fee you probably won't win the auction because other bidders will bid the full value and then pay the extra 20%.
I have spent as much time over the last 15 years observing and bidding on online auctions as anyone. I have seen the occasional head scratcher, but over 95% of the sales (including premiums) fall into the expected range.
I t takes two bidders to disregard the 20% buyer fee to drive the coin higher and that happens rarely.
All I know is that if you stop bidding at 80% on a coin I want and/or need.......you will lose EVERY time!
But that's not because of the BP.
He didn't stop biding at "80%". He stopped bidding when 80+20="fair value".
First - here is how it only takes 1 bidder. Say there are 10 of us bidding on a $1200 coin. You and the other 8 bid it up to $1000 and will go no higher because the 1000+200=1200. I bid $1005 and win!
Second - If everyone went by the 80+20="fair value" rule.........sellers would always just get 80% for their coins because the auction company will get their 20%.
Third - There will ALWAYS be someone or more that will go over the 80% rule....unless it is an item with not much interest or demand.
All I am saying is that if you limit your bid to 80% of it's value to account for the buyers fee you probably won't win the auction because other bidders will bid the full value and then pay the extra 20%.
If you're regularly getting outbid, perhaps you need to reconsider how you are arriving at the value of the coins you're bidding on.
All I am saying is that if you limit your bid to 80% of it's value to account for the buyers fee you probably won't win the auction because other bidders will bid the full value and then pay the extra 20%.
If you're regularly getting outbid, perhaps you need to reconsider how you are arriving at the value of the coins you're bidding on.
I bid full value + on coins not counting the juice which means I am bidding 120+% of list and still loosing. You will never win a coin bidding only 80% of value unless it is something that NOBODY wants.
Comments
That's why it's important to specialize and be selective. Most coins don't sell for that much any more and seem to be on a downward trend. It seems to be important to recognize which coins can be marked up. I've seen large mark ups from a number of national dealers.
Granted, while individual dealers can choose niches with potential high mark ups, it may be difficult for all or a majority of dealers to do in aggregate.
Yes sometimes they will argue the 5-10 pct margin thing (or cheapo counter offer) and it shows me they are ignorant of the business or just flooding me w some lame self serving BS. I just ask them sometimes “do you have one this nice you will sell me at that (that TPG Holder at that grade)?”
Perhaps. Based on comments I've read on this message board, however, many collectors are of the opinion that dealing in coins is much easier and profitable than it actually is. If there truly was easy money to be made dealing in coins, more and more people would be drawn to it, driving profits down until it wasn't easy any more. I think this applies not just to coins, but almost universally.
Tom Hanks, as Jimmy Dugan: "If it wasn't hard, everyone would do it."
I certainly don't think it's easy, but there seem to be a few formulas for success.
From the recent Hot Topics threads, sometimes I wonder if success is worthwhile from a health perspective, but then I see EOC's fishing trips and see it can be done a different way.
Cross selling between venues and auction vs. BIN seems to be like it has the potential to be lucrative.
I've purchased from dealers that do a 100% markup from Heritage to eBay and a 200% markup from eBay auction to eBay BIN. I prefer to avoid this but sometimes I miss the first auction so it happens. So it is possible to have large markups for esoteric items, especially if you find a collector like me
Being a coin dealer Requires many, many skills. One skill not even mentioned is high-end coin photography which can easily increase margins. Marketing and promotion are important. Honesty is super important. Buying right is essential. Working your ass off makes all the difference.
Sure. There's more than one way to skin a cat.
I think you have to be careful when utilizing auction results. Are they representative of a discernable trend or are they outliers?
A word of caution here. In that case, be prepared to be labelled a cherrypicker and criticized for only wanting to buy the good stuff out of a collection. Of course, if you do decide to offer on the whole collection an amount that allows you to get the good stuff without overpaying for the rest, you'll be criticized for your lowball offer on the widgets.
Here, there's a specific pattern that I've seen many times from a number of different dealers. There are even higher markups where I declined to buy but were eventually sold.
I was wondering why my ass is missing.
``https://ebay.us/m/KxolR5
Maybe the major houses should pay for consignments.
Help me word a poll.
Thank you.
My idea for an internet coin clearance house would be to sell only gold coins up to 50K
ONLY TrueView.
ONLY Postal money orders.
$100 fee per coin + registered mail shipping one way.
48 hr. inspection time & return at buyer's expense.
Couldn't one or 2 people gut an auction house with that?
My Saint Set
"high-end coin photography" will not make an MS65 1881-S Morgan $ worth much more. It likely won't make anyone pay more than $5 more. It may make them more likely to buy it at full sheet. So, it can make a difference in the margins but, again, most of those margins are pretty slim.
I just bought a 1937 Proof Buffalo in 66 CAC from Stack's. It is GORGEOUS in person. It looked filmy in their photo. So, do I think someone would have paid $100 or $200 more if they saw it in person? Yes. But that extra $100 turns a 10% margin into a 20% margin IF IF IF someone is willing to pay it.
I think you would be less impressed with the value of your photography if you sold more "widgety" items. You are in a niche market where the coins are less of a commodity. You are also in a market where how the error looks is probably the most important thing.
In the end, they are buying the COIN not a picture of a coin.
Go ahead. Start it. I think you'll be surprised at what does and doesn't happen.
They DO!
That's why they give 115% of hammer. That's why (sometimes) they give cash advances against a collection. That's why they give free appraisals and fly out to look at collections. There are a lot of costs that people aren't thinking about.
There is a lot of money in this country. If coin auction houses were really raking in piles of cash, don't you think we'd see them popping up all over?
I would also point out that you can call it collusion, but I don't think it's an accident that all the auction houses have the same fee structure. It is quite likely the actual cost of doing business.
The big in-person houses (Stack's/Heritage etc.) have roughly 20+10.
The online houses (GC, eBay) are at roughly 10-15%
I wish @specialist was still around. Maybe she could give you some idea of the COST of simply flying a team of professionals around the country to be at all the major shows. She could give you some idea of the number of people-hours that go into researching, preparing and cataloguing a 200 coin sale much less a 5000 coin sale like Heritage and Stack's were running last week.
they call this retail arbitrage. But, again, it works much better for part-timers than full-timers.
Let's say you want to do it full-time and you want to make $100k per year [this has to cover your health insurance, retirement contributions etc.]. Now, if you want to make $100k per year and you are working on a gross 20%/net10% margin, you need to sell $1 million in coins per year and buy $800,000 per year. It is really, really hard to cherry pick your way to that volume. Even if you want a gross 40%/net30% margin, you are still going to need to buy somewhere between $300k-$500k in coins per year.
It is easy to spend $1 million on coins. It is harder to spend $1 million on coins that have a 20% margin and much much harder to buy coins with a 40% margin.
Again, this has to be in a niche market. That would never work with 95% of the coin market.
EOC may, in his retirement, be a full-time coin dealer. I don't think you can attribute his fishing trips to a career as a full-time dealer. While EOC has not disclosed his business particulars (not that he should), he has been building inventory and started a thread asking if he should borrow money to fund more inventory. It's not exactly clear that his business is throwing off a lot of cash that he is using to pay for those fishing trips.
But, again, he's in a niche market where he can possibly push margins because of the "uniqueness" of his offerings. The thing about niche markets is that they are, by definition, smaller corners of the broader market. So how many "full-time dealers" could be supported by error coins? How many could be supported by exonumia?
I have an interesting comeback to dealers that want to run that percent BS.
They say they couldn't come down in price because they only make X%.
I say fine, I'll pay your full price and you can sell my duplicate for the same as an identical one in your case...I'll give you 2X%
It never works... Wonder why
Same scam, different pocket...Sort of
Remember who has the money and walk
My Saint Set
Every new collector, at some point, wonders if they can make money in the hobby. I feel like it needs to be written out somewhere that cherry picking is not a business model. It's just something you can do along the way. Everyone has a story or two on a good cherry pick they did. They don't have 100 a month. My friends all have stories about how they made a bunch of money gambling...they don't make money gambling.
IG: DeCourcyCoinsEbay: neilrobertson
"Numismatic categorizations, if left unconstrained, will increase spontaneously over time." -me
I think there are opportunities like this, but it requires some serious hustle from people that might not make their money back right away.
IG: DeCourcyCoinsEbay: neilrobertson
"Numismatic categorizations, if left unconstrained, will increase spontaneously over time." -me
Well said.
That's why dealers are stuck with a lot of low margin bullion. The margin is low but the volume is high.
As a business, buying a $20 Saint for $15 back of spot to sell it for $25 over spot is lunacy. I mean, take coins out of the equation and how many of you would invest $1500 with me in the hopes of making $40? Same with 90%, scrap gold, etc. But it is very liquid and you can move it quickly if you need to. So you can do $1 million or $2 million in bullion without having $1 million in inventory. It may only be a 2 or 3% gross margin, but 2% of $2 million is $40k and it's a start on paying the bills.
The other thing people completely ignore is the cost of the business. If you are working part-time for fun, $50 profit is a NET $50 profit and if you don't sell anything this month, no big deal. But if you have a B&M or even, to a lesser extent, an internet business there are bills you have to pay every month whether you sell something or not. And those fixed costs will shrink your 40% GROSS margin to nothing if you don't have the total volume to support it.
I'm a part-time dealer who hates his full-time job. LOL. But I would NEVER quit my full-time job to be a full-time coin dealer. I briefly tried about 15 years ago when I was between jobs. I simply could not find the volume of stuff to buy to make it equivalent to my cushy full-time job with BENEFITS!!!
Hey, I only went fishing 3 times last week so it is hardly a career
We have been eating fresh Yellowfin Tuna the last three days
The borrow money thread was a serious question that I never needed to act on. Since then I have bought 4 high-end Avet fishing reels and two high-end fishing poles.
Why on earth would I want to sell widgets, I choose to do the exact opposite of 95% (your number) of other coin dealers.
If I wanted to sell other items it would probably be super eye appealing toners, super eye appealing Commerataives, or super eye appealing Exonumia. Each coin would need to be unique in an eye-appealing way. I am happy where I am at and will not, for now, go after those other markets.
I wasn't trying to change you. LOL. I was just suggesting that your global statement of the value of photographs was less compelling in other market segments. Not that good pictures don't help complete a sale, but I doubt too many widgets increase in value by too much money.
I will say, in support of what you were saying, a picture that accurately represents the beauty of something beautiful will make people notice.
I know one dealer that lives by the 1/2 grade he adds to his coins by hocus-focus.
If you check his sight you will find NO coins offered with TrueView.
(unless they have a PQ sticker and a huge premium also)
My Saint Set
Well, doctored photos showing rainbow toning are guaranteed to increase bidding as well as increase returns!
All kidding aside, photos help, but I'm not convinced they matter in many of the widget parts of the market.
So far as I know, he does not do that.
His return policy is very good also.
He is all over E-Bay & likes to talk up OGH, doilies, black slab NGC & other stuff without TV.
I lost my mind seeing a couple of his pics & couldn't hit the buy button fast enough.
Later, I returned them.
This happened twice.
Now I skip over all his listings.
Poison well...But I have never seen anyone better at his "craft".
My Saint Set
"... almost everyone on here thinks the 30% BP+SP is EXORBITANT!!! "
But actually it's 40% Buyer Premium plus Seller Premium.
Who is EOC?
Error on Coins
Are you sure? 20 + 20 is common at many places in most categories, but coins? The only time I paid a SP (Heritage) it was 10%. That was a 4 years ago.
The Generic Heritage agreement says 15% not 20%. I can't find a coin specific rate. But, at most, it's 20 + 25.
@MFeld ?
So at what point does the average collector realize it's no longer just a hobby? When he/she buys a $50 coin, $100 coin, a $500 coin, a $1000 coin...? When the annual purchases start adding up, it becomes an investment.
When we say investment, we imply there will be some kind of financial return on that investment. The distinction shouldn't necessarily depend on the dollar value.
IG: DeCourcyCoinsEbay: neilrobertson
"Numismatic categorizations, if left unconstrained, will increase spontaneously over time." -me
I agree with @neildrobertson
hobby vs. investment should be independent of dollar amount. Obviously, that becomes harder to do if you are spending a significant portion of your income on the hobby. But it should be discretionary dollars (hobby dollars) not retirement contributions. Always. Any other expectation is almost guaranteed to disappoint and sucks the joy from the hobby.
Look at the PCGS 3000 in 1989 vs. today. If you "invested" in coins in 1989, you are NOT retiring any time soon. Your return is NEGATIVE 70% and that's without inflation and opportunity costs. Even if you remove the bubble years, the index has gone from 40,000 in 1984 to 60,000 today. That is NOT investment return. 2% average inflation means 40,000 in 1984 would have the buying power of 80,000 today so you lost 25% of your buying power. And the opportunity costs even relative to a silly Treasury bond is nuts. A 40,000 Treasury bond in 1984 would be worth over 200,000 today.
You don't want to know what an S&P 500 fund in 1984 would be worth today....
It's sort of like stock prices. Single digit prices are considered "bad" even though it's the same as a high price, you are still buying 0.XXXXXX% of the entire company. In theory, it shouldn't matter, but there is a perception factor. Same with auction buyer's fees.
The problem with this is that most bidders do NOT do this and you won't win many lots using this strategy.
I do this. I win a lot of lots.
But, more to the point, if someone wants it more, so be it. But if someone wants it more, they will still outbid you. The BP doesn't change the maximum they want to pay. Heritage and Stack's both show you the bid with BP when you are bidding live.
If you can't figure out how to bid because of the 20% BP, you should probably quit the hobby.
I'm not smart enough to know how the buyers fee is impacting business. I place bids on the Heritage auctions, using a calculator backing out the premium. I determine my max bid including the premium, input the number into the system and use Heritage to double check my math. The higher fees would concern me far more as a seller than a buyer.
Again you are misunderstanding me. All I am saying is that if you limit your bid to 80% of it's value to account for the buyers fee you probably won't win the auction because other bidders will bid the full value and then pay the extra 20%.
Oh, maybe. Some people do. I doubt many do, or at least not for long. At some point, if you haven't figured out that hammer+20 is more than you can buy it for on eBay, YOU SHOULD QUIT THE HOBBY!!!
And it does depend on what you buy. I have bought coins for 20+% back of bid on Heritage and Stacks after accounting for BP AND SHIPPING!
I have spent as much time over the last 15 years observing and bidding on online auctions as anyone. I have seen the occasional head scratcher, but over 95% of the sales (including premiums) fall into the expected range.
I t takes two bidders to disregard the 20% buyer fee to drive the coin higher and that happens rarely.
IMO: If a buyer is willing to ignore the 20% vig then he wants the coin. If there is no vig he/she will still be high bidder. The only thing that will change is the hammer price which goes to the seller.
All I know is that if you stop bidding at 80% on a coin I want and/or need.......you will lose EVERY time!
I disagree....it only takes 1.
tions as anyone. I have seen the occasional head scratcher, but over 95% of the sales (including premiums) fall into the expected range.
?????
Could you explain? Who is bidding them up?
Or are you just assuming that anytime someone outbids you by $5 that they would have been willing to outbid you by 20%?
But that's not because of the BP.
He didn't stop biding at "80%". He stopped bidding when 80+20="fair value".
First - here is how it only takes 1 bidder. Say there are 10 of us bidding on a $1200 coin. You and the other 8 bid it up to $1000 and will go no higher because the 1000+200=1200. I bid $1005 and win!
Second - If everyone went by the 80+20="fair value" rule.........sellers would always just get 80% for their coins because the auction company will get their 20%.
Third - There will ALWAYS be someone or more that will go over the 80% rule....unless it is an item with not much interest or demand.
If you're regularly getting outbid, perhaps you need to reconsider how you are arriving at the value of the coins you're bidding on.
I bid full value + on coins not counting the juice which means I am bidding 120+% of list and still loosing. You will never win a coin bidding only 80% of value unless it is something that NOBODY wants.
A coin's value in any particular auction is what a buyer is willing to pay. "List" is worthless, if coins are regularly selling for higher prices.