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Fair Dealer Consignment %?
Proofmorgan
Posts: 967 ✭✭✭✭✭
I seem to remember years ago 5% seemed to be the standard as there was no real financial risk for the dealer. Lately, I'm seeing 10% with dealers holding more firm to that number.
Obviously, value and liquidity can play a role, but what is a fair % on coins $10k and up?
Collector of Original Early Gold with beginnings in Proof Morgan collecting.
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The reason for the rise is because of the rising cost shows.
10% is what i recall.
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There is a non-zero financial risk to the dealer. There is the possible loss of the coin with resulting hassle/time/expense of an insurance claim.
Personally, I cannot stand the idea of consigning to a dealer. If I know my price, and it's a fair price for all, I'll just sell to the dealer. If I don't know the price or think I have greater potential upside, I'll send it to auction. I don't understand the point of consigning to a dealer at all.
chopmarkedtradedollars.com
I’d ignore whatever the supposed average or standard commission rate is. And I’d take into consideration the approximate value of the coin(s) in question.
If it’s a $10,000 coin, I think 5% is fair. In general, the higher the value, the lower the commission rate should be. Additionally, there’s nothing wrong with agreeing upon a fixed amount, rather than a %.
Be sure to get everything in writing, including a minimum guaranteed net amount that you’re willing to accept.
Mark Feld* of Heritage Auctions*Unless otherwise noted, my posts here represent my personal opinions.
I consign all of my pricier coins to the same dealer I’ve been working with for decades.
We sit down and discuss the fixed amount price that will work for us both, some are adjusted downward a bit from my original pricing to reflect the reality of the current market, others are bumped up… how much more or less the dealer actually sells them for is none of my concern.
I agree with your process of selling directly to the dealer or sending to auction. However, I could see a scenario where no dealer wants to pay your price but thinks someone at a show would buy the coin for that price. So they would take the coin on consignment through the end of the show. That might work out best for both parties (of course both need to work out the details and have an agreement in place to make things smoother).
I think you're correct that the sticker price is an important consideration. I also think the effort expected to produce a sale matters. If a dealer is just supposed to shop it around at a single show and then return it if there are no buyers, that is different than if he's supposed to "exhaust all avenues" to produce a sale. Is he supposed to list it on ebay? Is he supposed to consign it to an auction house? Is he supposed to display it in his shop for months? If I'm supposed to work at it, at the expense of putting the same effort into my coins, then I need a higher return for the greater effort.
Other times, people agree on the sale price ahead of time and the dealer keeps 100% of the price above the sale price. Or, I've even known dealers to agree on the minimum sale price and do a 50/50 or 60/40 split of any profit above that price.
But I insist for all consignments I take - and I haven't taken any in a while - that the revenue split be spelled out exactly, the timeline and effort expectations be spelled out exactly, and liability be spelled out exactly. Not all stolen or lost coins are subject to insurance recovery.
All comments reflect the opinion of the author, even when irrefutably accurate.
I'm not quite as negative as you, but I don't like consignments in most cases. It is too easy to end up with a problem that leads to ill will.
All comments reflect the opinion of the author, even when irrefutably accurate.
You don't actually believe this do you? The cost of going to a show is a fixed cost, adding a coin or three on consignment does not change his table fee, does not increase his travel costs or any costs related to going to a show unless that dealer was not going to that show. In which case he better hope he can sell the coin or do lots of other wholesale/retail business. But show costs have nothing to do with a consignment %, show costs are covered by wholesale buying/selling and bumping up your prices at the show.
My Collection of Old Holders
Never a slave to one plastic brand will I ever be.
I think @U1chicago made a good point; I could see this working out for a one show "selling opportunity" to give it a shot. But yes, I agree, a long drawn out sales process definitely has the potential to lead to misunderstandings, etc.
I have good relationships with every dealer I've done a deal with and great relationships with a few but, if selling a coin, I want it done. The potential to be still dealing with the hassle of a coin I wanted sold X months ago would drive me bonkers.
chopmarkedtradedollars.com
When I was actively doing the show circuit I would happily take consignments from collectors, or even other dealers, as long as the coins were nice and as long as the money wanted from the consignor made sense to me.
In my case I typically did not have a percentage written down with the consignor, but instead would sit down with them and record what they needed for each coin. Once in a while they wanted too much on a particular coin and it might have been so much that I had to in good faith decline that coin. Other times they wanted too little and in those cases I typically sold the coin for what I thought was fair and then gave them far more than they expected. In general I thought a 5-7% markup on consigned coins was fair if I was going to image them and place them on my website with a written description and pay for shipping to my clients and if I was also going to take them to shows and show them around. Of course, I was also liable for all loss and insurance costs and issues.
One thing that many collectors forget is that other collector's budgets are usually not limitless and if I take a consignment from a collector then their coins are effectively "competing" with coins I purchased out of pocket in my inventory for my client purchases. It's a nice problem to have, but it can also mean my already owned inventory could possibly sit and get stale while I moved someone else's coins.
Something that I don't know how many other dealers might have done is that I would occasionally lose money on a consigned coin simply to sell it. As an example, there are multiple members of this forum who consigned multiple coins to me in the past and some of their coins I thought were priced a bit too aggressively on their part, but not so much that i wasn't willing to take the deal or the coins. Then, while at shows or in getting email feedback from clients, I might have found that those coins really were priced too high. In those cases I would sell for example a coin a client wanted to net $750 for to another dealer at maybe $695 and eat the loss without telling the client I did so. My thought process was that by doing this once in a while I would retain the consignor and would then offset that loss by the profit of other consigned coins from that consignor.
I did that for multiple folks on these boards, as mentioned, and never told the consignors about it. In some cases I think the strategy worked to enhance a longer term business relationship while in others I appeared to be a one-off dealer for them for whatever reason.
In honor of the memory of Cpl. Michael E. Thompson
There is no standard rate. I would charge somewhere from 1% to 20%, depending on the deal. And FWIW, 1% on a six figure bullion deal would be way more interesting than 20% on a cigar box containing $100 worth of loose foreign coins.
Doggedly collecting coins of the Central American Republic.
Visit the Society of US Pattern Collectors at USPatterns.com.
FWIW, I would completely ignore the cost of attending the shows. If I’m already going to the show, there’s no additional cost in carrying some more coins to the show. And along the same lines, I’d also ignore my expenses (and my cost) when pricing my own inventory. Win, lose or draw, I’ll price the coins based on what I think I can get for them. Nothing else matters.
Doggedly collecting coins of the Central American Republic.
Visit the Society of US Pattern Collectors at USPatterns.com.
I don’t think too many dealers would be interested in 5-10% for a $200 coin. If I were a dealer I wouldn’t be thrilled about 10% on a $1000 coin unless it was part of a large collection.
There’s a very prominent dealer who won’t take consignments on one or two coins but he will outright buy the coins and we’re talking mid four figure plus coins.
I consider 10% to 15% to be fair.
That said, the way I handle consignments is figure out how much the seller wants, and sell the coin for that amount plus whatever above that is reasonable to both the market and myself. Sometimes that is 1% (on an expensive coin) and sometimes it is 50% (say on bags of dateless buffalo nickels or whatever).
Official PCGS account of:
www.TallahasseeCoinClub.com
But are your considering the increased cost of show purchased chili dogs?
A local shop had a dealer come in who goes to shows and offered to see what he could get for the coins; some 3c copper nickels in higher Unc. grades, silver 3c nickels in Unc., a civil war proof H10c in MS64. The problem becomes one of trust as most dealers hold their cards close to their chest maximizing the profits not disclosing what they sold it for.
A lot of coins have 10% or smaller margins, and higher risk, if the dealer owns them outright.
All comments reflect the opinion of the author, even when irrefutably accurate.
Depends on what is being consigned and what the expectations are in terms of the value and sales price. Further, it will depend on the dealer and the business relationship.
Experience the World through Numismatics...it's more than you can imagine.
When you give a coin to a dealer on consignment, you tell the dealer how much you want for the coin. You're doing this because you want more than a dealer will pay you, and you need that dealer to be the bridge to customers that you don't have access to.
If the dealer is able to sell it and gives you the amount you asked for, you should be happy you got what you asked for, and it should be irrelevant to you how much they made from it.
5pct does not cut it in the coin business. As far as 10 pct fee on consignment that beats a number of auc house juice. One guy charges 15 pct.
I don’t take consignments - just buy or sell coins and Paper Money.
With the higher show costs one has to manage accordingly. That show has chili dogs - that’s fantastic. Will take 2 then may take a shot of bourbon.
The prices on show dogs has spiked there is no denying it.
My Collection of Old Holders
Never a slave to one plastic brand will I ever be.
Well I try not to lose sleep over what I can’t control.