Dealer markup hypothetical.
coinsomniac
Posts: 215
A recurring theme on this board is that a given dealer is asking too much for a coin, or offering too little. I offer the following theoretical project. I will choose a coin, an 1885-CC Carson City Dollar in a PCGS MS65 holder. The coin is worth about $1000 wholesale, and is fairly plentiful and relatively easy to sell.
Now we will set up a hypothetical retail store (I'll call it Forum Coins). I will let the collectors decide what a fair buy price and sell price is for this coin. Should the spread be $50 between the two or a hundred Dollars or maybe $500 or more? You guys decide.
Now we will set up a hypothetical retail store (I'll call it Forum Coins). I will let the collectors decide what a fair buy price and sell price is for this coin. Should the spread be $50 between the two or a hundred Dollars or maybe $500 or more? You guys decide.
0
Comments
I would average that to $906.33, and say buy at $750 and sell at $950. I am not a dealer, so this is my guess what a dealer would buy/sell the coin for.
Will’sProoflikes
<< <i>The last 3 ebay sales of an ms65 pcgs graded 1885 cc morgan are $810, $999 and $910.
I would average that to $906.33, and say buy at $750 and sell at $950. I am not a dealer, so this is my guess what a dealer would buy/sell the coin for. >>
Interesting side note. I looked for the $810 Morgan on Ebay, as that seemed to be a particulary low price. I found it, but when I clicked on it, it revealed that the coin actually sold for $968. Strange.
<< <i>
<< <i>The last 3 ebay sales of an ms65 pcgs graded 1885 cc morgan are $810, $999 and $910.
I would average that to $906.33, and say buy at $750 and sell at $950. I am not a dealer, so this is my guess what a dealer would buy/sell the coin for. >>
Interesting side note. I looked for the $810 Morgan on Ebay, as that seemed to be a particulary low price. I found it, but when I clicked on it, it revealed that the coin actually sold for $968. Strange. >>
Ebay's been doing that lately...if you see prices on completed auctions, you NEED to actually look at that auction itself to see the final price in many cases.
I think this is part of what is causing people to think prices are really low on a few certain items.
Too many people don't take that extra step of verification these days.....
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
Considering the current Morgan $ market and that 85-cc $ are fairly somewhat readily available, and that my only venue is going to be on-line sales as no one(collector) locally is going to buy that coin in 65 Id Buy at:
750.00 and sell at 875-925.00
Greysheet is 925.00 and my buying price offer will put me ahead of my other two local competitors buying price avg by about 5%
<< <i>
I say buy at $750 and sell at $950. I am not a dealer, so this is my guess what a dealer would buy/sell the coin for. >>
So WHOLESALE is $1000, but you would try to buy for $750 and sell RETAIL for $950? Sounds like you will have inventory of zero and backorders of infinity.
A bid like that won't win a decent piece on ebay. It won't win at a major auction, and you can't buy it from a dealer.
So aside from ripping off widows, down and outers and newbies how does one aquire such coins at a price like that?
A better question: how did the guy that sold it to you buy it for $650?
A more realistic scenario is buy @ dealers wholesale greysheet bid of $925-$950 and sell at greysheet ask or $1025-$1050.
Most dealers would be happy to sell common coins like this for 10% markup.
An 1885CC that one could buy on a steady basis for much less than bid would be of a quality too difficult to sell honestly. Dave W
David J Weygant Rare Coins website: www.djwcoin.com
In business, there is no set markup for one man operation coin stores.
"“Those who sacrifice liberty for security/safety deserve neither.“(Benjamin Franklin)
"I only golf on days that end in 'Y'" (DE59)
jim
that if I have a customer who is looking for this coin, then i would expect to pay (amount closer to or around sheet+-5% ) and add a small mark up to the customerr, but its not a coin I would stock here, therefore if I am buying it, I am buying it a good price. The other dealers in town will not touch any coin for more than 25-30% behind sheet.
Also, I dont care if some of the dealers want to stick there head in the sand and pretend everyhing is okay with this market, but it isnt as pretty as folks make it sound and its going to get worse for everyday stuff!! (there is a ton of junk just sitting around in cases with no where to go at current levels) There are several national dealers quietly ridding themselves of this type material and only chasing the better coins because they know that this is where you need to be today.
I love reading all these comments about how (my firm would pay this and that and you guys are ripping off widows, etc and buying low:
Some of them are these same folks setting up at shows that offer extremely low buying prices or show no intrest at all when your selling something to them. Not only that they find everything an anything negative about the coin your offering to try and get the price down, but when they had it, it was the best thing since sliced bread! (I see it day in an day out at shows all the time, matter a fact I saw it done to a few in Charlotte friday.
Note: this was not directed any a particular dealer in this thread, just generally!
<< <i>What's the optimal gross margin to maximize profit over the long run?
This is directly related to gross sales. If your operating overhead is say $100,000 then you need to do 1 million in sales at 10% just to break even. You can double your sales to 2 million without an appreciable increase in overhead thus changing your position to $100,000 net profit per year.
Even if you can make 100% profit on a $10,000 coin and that's the only coin you sell all year, under the above scenario you will have a loss of $80,000 for the year.
If you've realized 10% profit on 200 such coins in a year you have done well.
That of course is a perfect scenario which is unlikely to happen just that way but hopefully it illustrates the math involved.
There would have to be a substantial increase in sales in lesser valued coins which would have an effect on the overhead required to accomplish the necessary volume to meet the same ends. Dave W
David J Weygant Rare Coins website: www.djwcoin.com
<< <i>I might add:
that if I have a customer who is looking for this coin, then i would expect to pay (amount closer to or around sheet+-5% ) and add a small mark up to the customerr, but its not a coin I would stock here, therefore if I am buying it, I am buying it a good price. The other dealers in town will not touch any coin for more than 25-30% behind sheet.
We may be discussing this at cross purposes. There seems to be a remarkable difference between buying and selling with brick and mortar dealers and what transpires on the bourse at major shows.
There is very little in the way of properly graded coins selling or being bought for much less than grey sheet bid.
Even the "roadrunners" who don't set up with a table are not selling for the kind of prices you suggest here.
I sell to other dealers on a regular basis for somewhere between bid and ask. I also buy from them on the same basis.
Some dealers at any particular show are not interested in buying, period.
Most dealers come to the floor wanting to buy properly graded coins and are willing to pay the prices I described.
I have never had a dealer denigrate any of my coins hoping to get the price down. They simply buy or pass. If they do try to negotiate it is solely on the basis of price and quality is just not debated.
From what I've read on this forum trashing a seller's coins but still wanting to buy them seems to be sop for many b&m dealers.
I rarely get a chance to buy from the public as I am seldom offered coins of the quality I prefer.
When I do get a chance to buy quality coins I either pay the price wanted, negotiate it down if possible or pass.
If asked for an offer and the coin is really desirable and I believe I can sell it at a premium I will always
offer at least grey sheet bid. That's at least a good starting point.
I'm sure your experiences are just as valid as mine but probably just in a different venue. Dave W
David J Weygant Rare Coins website: www.djwcoin.com
I agree, there does seem to be a difference in the way business is conducted based on the venue you conduct business in. Such as national level show vs regional shows vs local B&M transactions. At a national level especially on a larger bourse floor you can be selective in purchasing the coins that appeal to you or your customers and pay stronger /more marketable prices for them and then politely pass on the stuff thats not appealing or make a reduced offer.
However down on a smaller level & local, you have to take in so much junk to make it , becuase great coins just dont come through but very very seldom. The nicer pieces I offer, I usually have to go in search of at shows, other dealers, etc . rarely does it walk in the front door, but on occasion it will. And if you continually pass on buying the marginal stuff too much, the word gets out and those same folks that came in with a handful of junk wont bring back the goodies they are holding back and take them elsewhere. I had had several folks come in with a handful of some stuff, (sort of like a test) then come back a week later with a whole bunch more better material.
Jim d
On the other hand, I believe that he could reasonably expect to sell the same coin in the $1100 range at his B & M. It may take a month or two, but this is a pretty liquid coin for a decent store. In that case, he could probably afford to pay $900 for the same coin. (he could always sell it on Ebay if he needed to get rid of it). In that case $750 would seem to be a lowside offer. On the other hand, a $700 offer might be reasonable on a much rarer, tough to sell issue of the same approximate value (such as a $2.5 Gold).
But go up the road 90 miles to Greensboro, NC where a freind of mine runs a shop and much better material comes in and goes out, they do much better selling 1k and up items than I can OTC. Say a town like Charlotte 3 hours from here, even better than that.
Jim d
Would say industry average markup around 40 pct. Based on coin industry Study project for my acctg students couple yr ago.
Bologna to an average markup anywhere near that high. And what possessed you to reply to a thread where the last post was 18 years ago?
Mark Feld* of Heritage Auctions*Unless otherwise noted, my posts here represent my personal opinions.
Everybody knows 10c on the dollar does not cut it in the coin business lol.
Depends on the turnover, both 25 years ago and today. Everyone on this thread 25 years ago was in the 10-20% range. The same is true today. If you're the outlier, you might consider the reasons...
All comments reflect the opinion of the author, even when irrefutably accurate.
That depends on the individual businesses and turnover rates. But either way, I’m going to let you in on a secret…
There’s considerable room between your two figures of “Would say industry average markup around 40 pct.” and “10c on the dollar does not cut it in the coin business lol.”
Mark Feld* of Heritage Auctions*Unless otherwise noted, my posts here represent my personal opinions.
I would say buy at $800 sell at $925
Does introspection really strike you as Cougar's strong suit? HE might consider the reasons?
chopmarkedtradedollars.com
Don't you mean "try to sell at $925"?
Worry is the interest you pay on a debt you may not owe.
"Paper money eventually returns to its intrinsic value---zero."----Voltaire
"Everything you say should be true, but not everything true should be said."----Voltaire
Sobering.
At $800 and $925?
I run the Ebay calculator a bunch of different ways.
Top Rated seller in a Premium Store garners you almost $20
Even with those two bumps, one still just clears $18.87
BST: KindaNewish (3/21/21), WQuarterFreddie (3/30/21), Meltdown (4/6/21), DBSTrader2 (5/5/21) AKA- unclemonkey on Blow Out
In the real world they don’t. It wb a 25 pct markup (over CDN bid) item imo. Maybe more in this bull market.
For an $800 cost item I would say a 30 pct markup. Especially if it’s low pop. In that regard your in the drivers seat especially if it’s the only one in the bourse room.
Keystone markup, common with many retail businesses (100 pct) but more attainable on currency vs coins.
I would want get it around bid or below then sell around CPG parameters. Your sell at $950 seems right on the money (per your buy price). Pricing is easy but buying it right is the real work.
I would get the lowest store subscription and get the discounted final value rate, then you'd clear ~$41