Buy-back price revealed re: A real life buy-back, two-way market situation - what should I have done

coinguy1 · March 21, 2005 4:46AM

There has been a great deal of discussion on the forums recently about dealers buying back coins from clients, two-way markets, etc.

Coincidentally, I have a current, real life situation that I can share in detail with the forum. Here are the particulars, some of which might be relevant and others which might not be:

I bought coin X in December for $2300 and sold it for $2550 to a client on approximately February 2.

The client called about a week ago and told me that he had found another coin of that type that he wanted for his collection, that he didn't have any need for the one I had sold to him and asked if I'd buy it back.

I made him a buy-back offer which he accepted - there was no negotiation involved.

The "market" for the coin in question had not changed in the approximate six week time period the client owned the coin.

What should I have paid to buy the coin back under the circumstances presented?

If YOU have any questions which I feel I can and SHOULD answer, I will be happy to do so.

I'll wait a couple of days before I disclose the buy-back/purchase price.

PS - if anyone thinks this is spam, it is your right to do so and flame me for it, but I felt that this would be a good topic to discuss, based upon recent threads seen here.

cosmicdebris · March 21, 2005 4:49AM

I ahve my own story about a buy back to add. I bought a coin last summer from a dealer whose regular policy is he will buy back anything he sells guarenteed no less than %80 of what he sold it for. I found a better example recently and bought it. He bought his back at %100.

( I did pay to ship it back to him )

In your case Mark buy it back at what he paid, I know you will sel it for the same price, and have him pay shipping.

TerrapinWill · March 21, 2005 4:51AM

Mark,
My guess is basically what I would do in this situation. Since I would have paid $2300 and sold it for $2550 I would probably offer somewhere in the area of $2400 for it, assuming it's a good customer. But of course I don't have the slightest clue about the market, etc.

Bochiman · March 21, 2005 4:52AM

<< Mark,
My guess is basically what I would do in this situation. Since I would have paid $2300 and sold it for $2550 I would probably offer somewhere in the area of $2400 for it, assuming it's a good customer. But of course I don't have the slightest clue about the market, etc. >>

mgoodm3 · March 21, 2005 4:54AM

I think that you bought it back at full price. You haven't really lost anything by doing that in the short term. By doing that you make the customer happy and they will likely come back to you in the future. That's all assuming that you want to keep this person as a customer.

JrGMan2004 · March 21, 2005 4:54AM

Would really depend a lot on the customer... A frequent client, I would probally buy back at the purchase price. A not-so-frequent client, or a first timer, I would probally buy back $50 back of the purchase price, because of the time and cost to reenter it into my inventory, relist it on my web site and the time to find another buyer for it. And again, it would definately depend a lot on the client, and also the cost, but in this case, that is how I would probally handle it

CardsFan · March 21, 2005 4:55AM

I like the $2400 number also if not lower. Basically, I think he does need to pay for renting coin for six weeks. A large percentage of the coins I buy I get tired of after a couple of months and dump them usually for a loss, so I just consider it my renting fee - in this case I think that applies.

UncleWiggly · March 21, 2005 4:56AM

I would offer to take the coin on consignment at 0% and sell it again for the same price and give him his money back. Whoever has to pay any shipping eats it

Jerry

TahoeDale · March 21, 2005 4:56AM

Mark,

You probably indicated that the 2300 you paid for the coin was your offer to buy the coin back. And you probably gave the client that information.

If the coin was a marketable one, and I assume it was, it will be a fairly easy re-sell. That's what makes buy-backs easy for astute dealers. The coin is good to pq for grade, and it will be desired by more than a few collectors.

Versus: It was a POS that you finally got rid of after 8 months on your site, and you would rather cut off your left one than ever see it again. And this client can go take a jump, because he never buys anything without a fight.

The client is still yours, and won't be searching for new and different sources for his needs.., if you have treated him right wrt this transaction

DeepCoin · March 21, 2005 4:57AM

Buy backs like this are really a customer service issue. The previous post offered what seemed to be reasonable to me. However, if this is a regular customer who buy more than a couple of coins a year at this level, you might refund the full amount and accept the temporary loss of profit as good customer relations.

Small businesses live and die with their reputation, so if it was me I would buy it back for almost what he paid, perhaps $2,500. I will be interested to learn what you did. It would not surprise me if you gave him a full buyback for future goodwill. Every situation is unique depending upon the buyer, the seller and their past, current and future relationship.

coinguy1 · March 21, 2005 4:58AM

With respect to comments/points about the type of client - I think he has purchased two coins ( this being one of the two) from me in the past 8 months. The other was of lesser value than this one.

FC57Coins · March 21, 2005 5:01AM

Well - had the purchase and return been within a reasonable time frame, say a two week period - I would've given the client his full amount in consideration of the fact that he was a client in good standing yada yada yada. Since it's been over a month, I would treat the coin as a new purchase and let the market determine the cost based on what you would typically pay for the coin, vis-a-vie the grey sheet price and so forth. I say this with the idea of what if the coin had gone up in value or gone down in value to some significance - wouldn't he expect an increase in resale value or wouldn't you expect to pay something less than the coin was worth originally? So, my position would be, buy it back the way you would normally do with an explanation.

Fairlaneman · March 21, 2005 5:01AM

<< Mark,
My guess is basically what I would do in this situation. Since I would have paid $2300 and sold it for $2550 I would probably offer somewhere in the area of $2400 for it, assuming it's a good customer. But of course I don't have the slightest clue about the market, etc. >>

I think Mark is in the coin business to make money and not to just rent coins out for a couple of months. At $2400 this hardly pays for his time to find the coin and market the coin. Being that he is a good guy I think he bought it back for the $2300 that was originally paid for the coin. Even at this amount he still has not made a whole bunch of money for his efforts. If it was me I think the buy back would be somewhere between $2100 and the $2300.

Ken

TerrapinWill · March 21, 2005 5:03AM

I picked $2400 because it's almost splitting the difference between what you paid for it and what he paid for it. Seems to me you have to expect to take a small loss if you are selling the coin back after six weeks. I'm thinking that a dealer cant be expected to rent the coin for free.

greghansen · March 21, 2005 5:04AM

$2,300 seems reasonable to me. It is right at 10% below the sales price; and also happens to be your original purchase price.

relayer · March 21, 2005 5:05AM

$2425

markglicker · March 21, 2005 5:06AM

Mark $2300 sounds like a fair price.

VicPortland · March 21, 2005 5:13AM

This should be a no-brainer. You bought the coin for $2300. A customer purchased it from you at some price more than you paid for it (dealer mark-up). Now the customer wants to sell it to you. You say the market has not changed so your price should be $2300 (again).

mirabela · March 21, 2005 5:15AM

I think the price you first bought it for or anything higher would be fair, as your markup was only about 10% in the first place. I won't be surprised if you were better to him than that, as the grapevine seems to say that sort of thing about you. But I also wouldn't hold it against you if you weren't.

BigE · March 21, 2005 5:19AM

80% of the 2550 sale price would be fair, anything over that is gravy for him---------------------BigE

kryptonitecomics · March 21, 2005 5:19AM

$2400...though I wouldn't blame you if you did purchase it back for $2300...I still think that's a fair offer.

Fairlaneman · March 21, 2005 5:28AM

<< 80% of the 2550 sale price would be fair, anything over that is gravy for him---------------------BigE >>

Wrong and I will tell you why. Mark gets his Flights to and from shows, his lodging and all food for Free. He has No Overhead so he can afford to give back almost the whole purchase price.

One thing about Oregonians is that we are sensible.

Ken

08HALA20 · March 21, 2005 5:35AM

I have never been in this kind of a position.

But I would think a policy as follows might be interesting.

Selling price or current market price.
Return up to a week 100%

1 week to 3 weeks 90%

3 weeks to 6 weeks 80%

any return over 6 weeks is not guaranteed.

I kinda think 6 weeks out is a long time.

Just thinking out loud.

Rookie Joe

BigE · March 21, 2005 5:37AM

Then, after giving him the 80%, I would look up the person just behind him on the Registry and sell it for 2500

---------------BigE

Agflyer · March 21, 2005 5:42AM

You've got to be able to make a little money on the deal. I like the suggestion about the $2400 offer. It's fair for both you and the customer. Just because you're good at selling coins doesn't mean that you don't still have to eat. Besides, he got to enjoy the coin for a little while before he changed his mind. It's just the cost of enjoying the hobby.

clevegreg · March 21, 2005 5:50AM

Since the buyer stated that he found another coin that he preferred, the maximum I would pay to buy the coin back would be my original purchase price. It might even be less given the situation.

Greg

Prethen · March 21, 2005 5:50AM

<< Mark gets his Flights to and from shows, his lodging and all food for Free. He has No Overhead so he can afford to give back almost the whole purchase price.
Ken >>

Really?

coinguy1 · March 21, 2005 5:53AM

<>

Really?

No!

MrEureka · March 21, 2005 5:56AM

Mark -

Two questions:

Did you buy the coin on behalf of the client or because it was on the client's want list?

If you had to sell the coin wholesale, at what price would you sell it?

coinguy1 · March 21, 2005 6:02AM

<< Mark -

Two questions:

Did you buy the coin on behalf of the client or because it was on the client's want list?

If you had to sell the coin wholesale, at what price would you sell it? >>

Andy, in reply to your two (or three) very good questions:

1) I had not bought the coin on behalf of the client and it was not on his want list.

2) I'm not sure exactly how to define "had to sell" but, I probably would have offered it at $2400 wholesale at the time I first owned it.

Longacre · March 21, 2005 6:03AM

It totally depends on the relationship. You indicated that this was the 2nd coin that he bought and this coin was higher in price than the first coin he bought from you. In that case, assuming that he is a collector that you think you will do repeat business with, you should probably buy it back for very close to the price that you sold it (maybe buy it back for $2500 or $2450). Your business is not a charity, so you have to make something (Mark, are the margins really that tight on coins??), but you also don't want to scare away a potential client that may bring a lot of business to you. Also the fact that he bought another of the same coin might show that he is an active collector and more likely to come to you for other purchases. Or it can show that he is not very experienced and always feels he can un-do his transactions if "something better comes along." I would give the benefit of the doubt and buy it back for $2450 or $2500. If he will take a credit rather than cash, all the better.

dwsblue · March 21, 2005 6:04AM

$2425

Prethen · March 21, 2005 6:04AM

I didn't think so. But it's kinda funny just the same that someone would say that. I only wish I had no overhead and I'm just a small-timer.

I love this thread so far. The answers range from about $2000 for $2500. Personally, I would think $2300 is reasonable considering the "rental" factor.

<< <>

Really?

No!

>>

MrEureka · March 21, 2005 6:06AM

In that case, if I was in your shoes, I would have offered the client his choice of $2300 or a $2550 trade credit against future purchases.

tradedollarnut · March 21, 2005 6:17AM

The logical thing to do is to ask the client what he thinks is fair. This will accomplish several things:

1) if your numbers match, it shows there's a good possibility of a long term relationship. Conversely, if he expects every penny back then he may not have a sufficient understanding of business in order for you to make a fair long term profit.

2) this day and age, people are slamming other people at the drop of a hat. Do you really want to hear all about your 'ripping him off' on the chatroom because your offer was $50 too low in his mind?

100proof1957 · March 21, 2005 6:22AM

I agree with Andy,full credit in trade and he pays the shipping both ways,your cost in cash and he pays the shipping for a refund.

If he wants to upgrade the coin with you,he gets full credit,pays the diff and you all split the shipping.

TerrapinWill · March 21, 2005 6:23AM

The more I read the more I feel comfortable offering $2400.....I'm sure he'll find that to be fair, since he probably paid less for the replacement coin.

100proof1957 · March 21, 2005 6:24AM

Mark,

Just for giggles,lets see if the forum can figure your mark-up (pun intended) on that coin from 2300.00 to 2550.00 !

Proof

michael · March 21, 2005 6:25AM

2300

BigE · March 21, 2005 6:26AM

Mark, better ask Laura, we are all wannabees

----------------------------BigE

airplanenut · March 21, 2005 6:29AM

$5... more work for me

TommyType · March 21, 2005 6:31AM

I'll agree with the majority....the proper thing to do is to buy it back somewhere between the sale price, and what you could easily sell it for. (Betting Mark did better than that).

To change the question a little, what would be an example of a NON two-way market in this situation?

My answer is:

1) If he refused to buy it back at all, hands down.
2) If he bought it back as less "nice" than he sold it as....i.e. sold it as a premium to retail, but bought it back as average or worse wholesale.

Barry · March 21, 2005 6:32AM

<< this day and age, people are slamming other people at the drop of a hat. Do you really want to hear all about your 'ripping him off' on the chatroom because your offer was $50 too low in his mind? >>

One gets slammed at the drop of a hat when they come across as obnoxious and self-serving. 40 responses and not a single slam - res ipsa loquitur!

P.S. I'd say $2300 is fair.

coinguy1 · March 21, 2005 6:38AM

<< this day and age, people are slamming other people at the drop of a hat. Do you really want to hear all about your 'ripping him off' on the chatroom because your offer was $50 too low in his mind? >>

<< One gets slammed at the drop of a hat when they come across as obnoxious and self-serving. 40 responses and not a single slam - res ipsa loquitur! >>

True, Barry, but I haven't yet disclosed what I bought it back at

- that's a promo for my upcoming post of tomorrow morning, in which I will reveal my thinking on the subject, as well as my buy-back price...

michael · March 21, 2005 6:40AM

2300.00

tradedollarnut · March 21, 2005 6:41AM

Mark - you suck because although you said hi to me at Long Beach, you didn't hand deliver me a Gold Marguerita.

41 one responses and 1 slam!

WACoinGuy · March 21, 2005 6:51AM

As I see it, you should either refund the purchase price or buy it back for $2300 (the amount you were originally willing to pay). As a collector, I wouldn't expect that the dealer would offer me the full price I had paid for a coin, and that offer would seem very generous. If you told me you had paid $2300 before and were now offering me a value between $2300 and $2550, I'd probably start to wonder "he's willing to buy back this coin at a value based on what I paid, why isn't he just offering me the full amount back?" Offering $2300 makes it very clear that you are buying it back as a separate transaction, not based on what the original sales price was.

Mark, I haven't dealt with you personally, but based on your reputation I'm going to guess that you offered the full amount back. That makes you not out anything (other than essentially having the coin in inventory an extra 6 weeks), and continues your positive reputation not only for this collector but among the collecting community as a whole.

nankraut · March 21, 2005 6:53AM

Mark: Is the coin in question, by chance, a 1936 PCGS PR65RD lincoln, which is on my want list with you? I'll give you $2600 for it! (heh heh), and promise never to try to sell it back to you.

MrEureka · March 21, 2005 7:10AM

Conversely, if he expects every penny back then he may not have a sufficient understanding of business in order for you to make a fair long term profit.

TDN - You of all people should certainly understand that some of the most profitable long term business relationships are with people that lack a sufficient understanding of business!

Not that I'm pointing my finger at anyone in particular.

MacCrimmon · March 21, 2005 7:22AM

<< In that case, if I was in your shoes, I would have offered the client his choice of $2300 or a $2550 trade credit against future purchases. >>

What the fluffy dawg said.

This puts the onus on the buyer. Is he serious about securing a long term relationship with you (take the credit), or did he buy the coin and then "shop" for a better deal or really something he liked better.

mozin · March 21, 2005 7:59AM

I think since the 6 week time period is not especially long you gave back the full $2,550 purchase price.

Whatever you did I believe you should have bought back the coin for at least $2,300.

Buy-back price revealed re: A real life buy-back, two-way market situation - what should I have done

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