Remember my WYNTK article on what a dealer actually "pays" for a coin?

[James_OldeTowne]

For some reason, as pointed out by an on-line friend of mine, the corresponding thread across the street recently kicked back into activity.

 

There are a few complaints where some posters are complaining that my claim of a 10% to 20% markup underestimates how dealers actually mark up their coins. Unfortunately, these guys are completely missing the point that was the whole basis of my article.

 

Let's call it a 20% markup for the sake of clarity. The whole point of the article was that the markup is not on just the dealer's buy-price of the coin, but rather the buy-price plus the cost of overhead.

 

Again, showing by example, if a dealer pays $1000 for a coin at a show, the 20% markup IS NOT merely 20% of the $1000! It is 20% of ($1000 plus overhead-costs). So if the apportioned cost of the show, expenses, etc. was $200, then the actual cost of the coin was $1200, and a 20% markup would be $240.

 

And again, this is a highly simplistic example. I just wanted to point out that the cost of a coin is more than just it's price, and the markup applies to the price plus overhead.

[Bruceswar]

I agree 100% James. That is why I rarely question a dealers price. I just either pass on take it.

[DC Dawg]

I just wanted to point out that the cost of a coin is more than just it's price, and the markup applies to the price plus overhead.

I thought this was intuitive, but I guess it does need to be mentioned!

 

Scott

[WinstonWare]

I agree 100% James. That is why I rarely question a dealers price. I just either pass on take it.

 

That’s my approach

[cpm9ball]

I don't understand why this should ever be an issue. The dealer is entitled to make a profit, but it is only natural for someone to want to get a bargain. As Scott mentioned in another thread, if a steak is $5.00 and the butcher accepts an offer of $4.00 because it has a bone in it, that is the butcher's choice. No one is forcing him to accept the lower offer, but that doesn't mean that the buyer is trying to chisel anyone. He is simply looking for the "most bang" for his buck.

 

There is no reason why negotiation can't be part of the deal. It's like any contract. It doesn't exist until there is a "meeting of the minds". It's done every day in used car lots, bank financing, real estate, etc. There may be reasons why a dealer can't lower the price and that's okay, but there may also be reasons why he should. One thing is sure. A satisfied buyer will, quite often, return and the dealer can expand his customer base.

 

Now, if someone really wants to complain about something, why don't they concentrate on the scuzzy eBay sellers who charge $10 for shipping and mail the item for $1. Or what about the jerk who charges sales tax for every state in the Union even though his sales operations have never expanded out of his toilet.

 

Chris

[rrantique]

 

Now, if someone really wants to complain about something, why don't they concentrate on the scuzzy eBay sellers who charge $10 for shipping and mail the item for $1. Or what about the jerk who charges sales tax for every state in the Union even though his sales operations have never expanded out of his toilet.

 

Chris

 

[MarkFeld]

Even being a dealer and knowing a dealer's reality, I can easily understand the disconnect that collectors have between the margin/mark-up for coins and a dealer's show and/or other expenses.

 

A collector, understandably doesn't want to have to subsidize a dealer's expenses, including overhead and travel, particularly if the dealer is other than frugal in that regard. The large majority of collectors I know are perfectly willing to pay a fair price for their coins, regardless of the dealer's mark-up. And, if a dealer, for whatever the reason, can't offer that, the collector should, and usually does shop elsewhere.

[1798CentCollector-migratio]

Even being a dealer and knowing a dealer's reality, I can easily understand the disconnect that collectors have between the margin/mark-up for coins and a dealer's show and/or other expenses.

 

A collector, understandably doesn't want to have to subsidize a dealer's expenses, including overhead and travel, particularly if the dealer is other than frugal in that regard. The large majority of collectors I know are perfectly willing to pay a fair price for their coins, regardless of the dealer's mark-up. And, if a dealer, for whatever the reason, can't offer that, the collector should, and usually does shop elsewhere.

 

I wholeheartedly agree with this.

 

I am both a collector and dealer. With my collector's hat on, I have never once been concerned with what a dealer has paid for a coin. If I'm interested in the coin, I determine what its worth to me, what I am willing to pay for it, how much I want it, and if I think it will be money wisely spent. I am willing to pony up for extraordinary coins that help fulfill my collecting objectives, and that I may not have the opportunity to acquire again anytime soon. I may be a bit more price conscious if I know that I could reasonably acquire the coin elsewhere or am certain that another chance to do so would likely arise. I recently purchased a coin that I knew may never become available or be offered to me again. I paid a very hefty premium. I was in the right place at the right time and it was a sound "investment" IMO, and an opportunity satisfy my specific collecting objectives. I paid what the coin was worth to me. The price a seller paid should not be a primary consideration in one's purchase. If the market and coin are reasonalbly well understood, then the price you are willing to pay is the only real consideration.

[TJ'S Coins]

I do not begrudge any dealer the right to make a living or a profit off his coins. As has been suggested above, if the price is too high, I pass. Market forces help even things out.

 

Of course some dealers seem to have wealthier clientèle than others, or maybe less coin knowledgeable investor/collectors who can afford larger premiums or profit margins than others are comfortable supporting.

[Doogy]

Even being a dealer and knowing a dealer's reality, I can easily understand the disconnect that collectors have between the margin/mark-up for coins and a dealer's show and/or other expenses.

 

A collector, understandably doesn't want to have to subsidize a dealer's expenses, including overhead and travel, particularly if the dealer is other than frugal in that regard. The large majority of collectors I know are perfectly willing to pay a fair price for their coins, regardless of the dealer's mark-up. And, if a dealer, for whatever the reason, can't offer that, the collector should, and usually does shop elsewhere.

 

very true Mark! ...any may i add this; i think the traditional 'brick and mortar' dealers are going to start moving more and more towards being specialists only. People that tend to buy Seated Lib coins, for an example, may gravitate toward specific dealers that know the coins, keep a great inventory, and have reasonable prices. they would keep them from fishing around for them on different auction sites. Dealers that have the shotgun approach of offering nearly everything numismatic, as many do, may find that their 'customer base' would rather play this shotgun type collecting on open arenas like eBay where the pricing can certainly be less.

 

In my collecting of Swiss, German and British coins, i'd rather buy from a specialist; even if his prices are higher. the reason for that is he/she is most likely going to keep a strong inventory of problem free pieces for me to choose from. buying these coins from a "shotgun" approach dealer is a crapshoot at best.

[Hoot]

I'll agree with many of the comments made above, including that made by Chris that negotiation is just part of the process. I also think that a buyer should possess enough knowledge to understand what they are willing to pay for a coin and simply be satisfied with their purchase, regardless of how the coin arrived to the table. "The price a seller paid should not be a primary consideration in one's purchase." This is the simple truth. A buyer simply must determine if the coin is priced well enough to make the coin worth collecting, investing in, and selling in either the short- or long-term. If a buyer knows and understands the market, then they'll have a pretty good guess as to whether they are making a good decision or not.

 

I think that naive buyers and sellers believe that the dealer is always trying to rip them off. For some reason, there is more suspicion afforded to people in this business than nearly any other (except bible salesmen). Granted, there are shysters in the business, but I've met countless dealers who are very straightforward and honest people. Recognizing that they are trying to make a living is important to me in my negotiations with them. I simply attempt to change the minds of those people dealing with me by being open and honest in every transaction.

 

Hoot

[World Colonial]

[in my collecting of Swiss, German and British coins, i'd rather buy from a specialist; even if his prices are higher. the reason for that is he/she is most likely going to keep a strong inventory of problem free pieces for me to choose from. buying these coins from a "shotgun" approach dealer is a crapshoot at best.

 

I seek specialists out in my fields but there is one benefit to buying your coins from a generalist, at least if you buy world coins like we do. The market for most countries is not as developed as the US (or Britain) so you can occasionally find a bargain here and there when you can actually find something worth buying.

 

I recently bought three South Africa KGV mint state business trikes at KM catalogue price. These prices have not changed in at least 10 years but the market prices definitely have. Once they certify (and all three are safe I believe), they would cost a lot more. Northeast Numismatics is offering two similar ones at 3.5 to 5.5 times catalogue.

[DC Dawg]

i think the traditional 'brick and mortar' dealers are going to start moving more and more towards being specialists only.

This makes me think... what is the future of this industry?

 

I do business with two dealers. One is a brick-and-mortar dealer and the other is called a click-and mortar dealer who does business on and off line. My brick-and-mortar friend is telling me that he wants to retire because he feels the Internet is getting in the way. He's losing business to online sellers.

 

The click-and-mortar friend tells me he is generating business from all over the world including a recent sale where he just sent some nice coins to the Middle East. Even with the online costs, the overhead is lower. He's considering closing his shop and just doing business via the Internet and shows only.

 

In my unscientific survey, I have found older dealers not embrace technology and seems to resent those who do. The online world has allowed dealers to reach out beyond their communities and the coin shows to a new world of collectors. Younger dealers seem to have an easier time embracing the Internet.

 

The lower overhead of the online economy makes it easier for the online dealer to sell a coin a few dollars less than Grey Sheet prices because they do not have the same overhead as a brick-and-mortar dealer. That online dealer can spend a few dollars more for a coin because the overhead is lower.

 

While I do not think this is the end for the brick-and-mortar shops, I think it is nearing the end of those dealers who cannot expand to an online presence. I also think we will see more Internet and coin show-only dealers. I also think it will spur more auction business at the shows as prices go up and the auction dealers are doing a better job with marketing.

 

What do you think?

 

Scott

[Zoins]

While I do not think this is the end for the brick-and-mortar shops, I think it is nearing the end of those dealers who cannot expand to an online presence. I also think we will see more Internet and coin show-only dealers. I also think it will spur more auction business at the shows as prices go up and the auction dealers are doing a better job with marketing.

 

What do you think?

I agree. High-end rare coins are better sold to a wider audience which can be reached online and at shows. The other side of the equation is that the Mint and HSN are cleaning up on the modern side. Bricks and mortar shops are left with less profitable parts of the market.

[bsshog40]

This is interesting as to I just found a guy here in town that sells coins at a local flea market. His prices a litle high. I passed them up. Well my wife was driving around this weekend and saw a sign in a yard "Coins". I went there yesterday and it turned out to be the same guy from the flea market. His wife did most of the talking and we started talking about coins on ebay and all. They had quite a bit of selection but all his coins, they graded themselves, a little over-graded by my view, and was asking PCGS value guide prices for the coins. A lot of common date Morgans for $40-$60 that could've probably been got on ebay for $25-$30. They said they couldn't compete with the internet and were thinking of getting out of the business of selling all-together. They don't mess with the internet and seemed to have no interest in it. I would pre-sume, unless you have a personal/friendship relationship with an older dealer, that this may be the future. Just on-line dealers and auctions.

[James_OldeTowne]

I'll agree with many of the comments made above, including that made by Chris that negotiation is just part of the process. I also think that a buyer should possess enough knowledge to understand what they are willing to pay for a coin and simply be satisfied with their purchase, regardless of how the coin arrived to the table. "The price a seller paid should not be a primary consideration in one's purchase." This is the simple truth. A buyer simply must determine if the coin is priced well enough to make the coin worth collecting, investing in, and selling in either the short- or long-term. If a buyer knows and understands the market, then they'll have a pretty good guess as to whether they are making a good decision or not.

 

I think that naive buyers and sellers believe that the dealer is always trying to rip them off. For some reason, there is more suspicion afforded to people in this business than nearly any other (except bible salesmen). Granted, there are shysters in the business, but I've met countless dealers who are very straightforward and honest people. Recognizing that they are trying to make a living is important to me in my negotiations with them. I simply attempt to change the minds of those people dealing with me by being open and honest in every transaction.

 

Hoot

 

I thought this subject was a good one to approach again, partly because of the thread ATS, but there's another reason as well. Mark, you may remember at the EAC show, there was the older gentleman who was looking for a Bust half. When you saw him there, that was actually his third time at my table, and it was because he had been around the room several times, and knew I had about the best coins there. If you recall, he ended up picking out three coins - all very nice (common, but nice) - and laid them out on the case. He then asked me how much they would be if he took all three. If I remember correctly, the total retail I was asking was $720.

 

I recognized these as coins where my asking price markup was pretty much right at 20%, so a little mental math led me to believe I could be happy with $650, which is what I quoted him. He gave me a weird, inquisitive look and said something like "Well, I thought it would be more like $500 if I took all of them".

 

$500?? Did this guy really think I had marked the coins up (close to) FIFTY percent? Gee whiz! I promptly told him there was no way since I'd be losing a lot of money at that price. In other words, he was offering me a bit under "bid", because he figured that I - as a "dealer" - must have paid well under bid. Good grief, for nice coins, too!

 

Long story short, he wandered off for awhile, then finally came back a while later after confirming that no sane person in the room would be selling him any bust halves at bid, decent or not. He did buy one of the coins, but I only gave him about a 7% discount off my price.

 

The moral of this story is that this guy simply assumed that since I was a dealer (or at least, I had a table), I must be buying coins way back of bid, and therefore should be selling them at bid (or a bit less). And all this doesn't even take into account the cost of the table, the hours I spent on the auction, the many hours I spent just talking to folks and teaching about coins, the cost of lunch and of course, the cost of Mark's dinner (sorry, had to throw that in).

 

To be honest, I don't think I made more than a couple or three hundred dollars net profit at the EAC show after all's said and done. If I looked at it purely from the standpoint of a salary, I likely made something like $5.50 per hour, and at that rate, I wouldn't even bother to do shows at all! But the key for me is that there is an enjoyment factor that goes far beyond the "finances". I had a tremendous time, and also got to meet a couple of board members, and that alone was worth the price of admission.

[stman]

The key part to all of this for me is...... not that the dealer is making a profit, and not that they include their expenses as part of asking price. But it is that some dealers feel the need to tell you the "STORY" about their expenses etc. and that's why their asking price is what it is. And they tell these stories without being asked. Very cheesy IMO.

 

Again, my SIG line applies. But, many/most dealers just feel a need to tell the stories. Must be in their blood. Heh heh

[ant]

The key part to all of this for me is...... not that the dealer is making a profit, and not that they include their expenses as part of asking price. But it is that some dealers feel the need to tell you the "STORY" about their expenses etc. and that's why their asking price is what it is. And they tell these stories without being asked. Very cheesy IMO.

 

Again, my SIG line applies. But, many/most dealers just feel a need to tell the stories. Must be in their blood. Heh heh

 

i dont even deal with stories, if i hear a story coming on i go to next table/booth. i always say i kan come up with a better story why i kant aford the coin.(i think we all can). there is no need to tell a story as a sales person,sometimes i mention the next guys price but that is just to show them i got the good price. the last time i stood for a story i waited for them to finish (it was a tag team type sale) then i started a rebutle" well my gas cost to drive here,the door charge,my screeming kids in car,angry wife......" after a few minutes of that i was happy to see the frustration on there face,and i then walked away

[Zoins]

i dont even deal with stories, if i hear a story coming on i go to next table/booth.

How often do you hear a story about dealer expenses when buying a coin?

[ant]

arround idaho i here alot of them. i accualy here stories of the ppl that sold the person the coin!

 

just the other day i asked why a coin was priced so high for a common and i was told" the old ladie that sold the coin needed extra cash at the time of her sons death......................."

[JKK]

arround idaho i here alot of them. i accualy here stories of the ppl that sold the person the coin!

 

just the other day i asked why a coin was priced so high for a common and i was told" the old ladie that sold the coin needed extra cash at the time of her sons death......................."

I hope there are more places to buy coins in your part of Idaho than in my part of Washington (Tri-Cities). There used to be two coin dealers here--now just one. Fortunately they show every sign of being stand-up guys.

[cpm9ball]

arround idaho i here alot of them. i accualy here stories of the ppl that sold the person the coin!

 

just the other day i asked why a coin was priced so high for a common and i was told" the old ladie that sold the coin needed extra cash at the time of her sons death......................."

 

Ant, you're probably going to have to accept the fact that many people in Idaho are prone to telling stories because they have very few alternatives for entertainment and diversion.

 

Did it ever occur to you that just maybe they weren't trying to give you a "sob" story, but were hoping someone may engage them in conversation? Sometimes it pays to listen.

 

Chris

[cpm9ball]

i think the traditional 'brick and mortar' dealers are going to start moving more and more towards being specialists only.

This makes me think... what is the future of this industry?

 

I do business with two dealers. One is a brick-and-mortar dealer and the other is called a click-and mortar dealer who does business on and off line. My brick-and-mortar friend is telling me that he wants to retire because he feels the Internet is getting in the way. He's losing business to online sellers.

 

The click-and-mortar friend tells me he is generating business from all over the world including a recent sale where he just sent some nice coins to the Middle East. Even with the online costs, the overhead is lower. He's considering closing his shop and just doing business via the Internet and shows only.

 

In my unscientific survey, I have found older dealers not embrace technology and seems to resent those who do. The online world has allowed dealers to reach out beyond their communities and the coin shows to a new world of collectors. Younger dealers seem to have an easier time embracing the Internet.

 

The lower overhead of the online economy makes it easier for the online dealer to sell a coin a few dollars less than Grey Sheet prices because they do not have the same overhead as a brick-and-mortar dealer. That online dealer can spend a few dollars more for a coin because the overhead is lower.

 

While I do not think this is the end for the brick-and-mortar shops, I think it is nearing the end of those dealers who cannot expand to an online presence. I also think we will see more Internet and coin show-only dealers. I also think it will spur more auction business at the shows as prices go up and the auction dealers are doing a better job with marketing.

 

What do you think?

 

Scott

 

In a way, I think it is sad to see so much of the past disappear without so much as even a footnote. Some of you may remember the days of the old drugstores and "five and dime's" that had soda fountains where people gathered to meet. Gone! The proprietors who ran the "Mom and Pop" shops and knew everyone by name have been driven out by the WalMarts. I can understand how the oldtime coin dealer feels. He no longer has the opportunities to see his customers face-to-face (this includes you, ant!) to share stories with one another and just talk about coins. Today, everyone is just a blank face with an eBay user ID. Yes, progress has its price, but for some of the old school business folks, it means the loss of their identity. They can't handle that and it is no longer enjoyable.

 

Chris

[Bruceswar]

I will add this. Brick and Morter shops that buy coins competively will be around for along time. My local dealer always has something of interest for me. Rarely do I question his prices. Can I save 5 or 10 bux sometimes by buying the same coin online? YES, but to me who cares. I like to hold my coins in hand before I purchase them. At either rate you ask my local dealer for something and he usally has at least a few. Except for Washingtons I cleaned him out. . Remember not everybody likes to deal online.

[DirtyGoldMan]

James, you are a class act!

 

The moral of this story is that this guy simply assumed that since I was a dealer (or at least, I had a table), I must be buying coins way back of bid, and therefore should be selling them at bid (or a bit less). And all this doesn't even take into account the cost of the table, the hours I spent on the auction, the many hours I spent just talking to folks and teaching about coins, the cost of lunch and of course, the cost of Mark's dinner (sorry, had to throw that in).

 

Thank goodness, I was not available for dinner with James treating. The poor SOB probably would have had to pay more for the bust half.

 

I agree with most of the sentiments above. The better you know your niche, the better you are able to determine what is a fair price and what is unfair. And once you know what is fair, it really does not matter what the dealer's mark-up is.

[Hoot]

the cost of lunch and of course, the cost of Mark's dinner (sorry, had to throw that in).[/i]

 

Thank goodness, I was not available for dinner with James treating. The poor SOB probably would have had to pay more for the bust half.

 

I'm now wishing that I hadn't gone to dinner with James.

 

Hoot

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

[Houston Investor]

As a dealer I do not discuss my costs, markup, pricing policy with customers say at shows. As a financial analyst I know that every business has to have a budget, pricing model, profit plan, and desired markup strategy in order to stay afloat. This has nothing to do with greed and everything to do with survival. A previous poster mentioned online sellers selling below greysheet. Greysheet is wholesale so if you are selling at wholesale or below, you are in a liquidation mode and will sooner or later will not be a player in the rare coins business. While I will occasionally wholesale to other dealers at shows at a slight commission for cash flow reasons, I am strictly retail. I have a diversified inventory (like a college football team has a roster loaded with talent) and somewhere in there is a back or receiver who will get away for a score. If I had to face the coin business from the perspective that wholesale is how I have to go, then all I would do is bullion. Numismatic material - if you buy and sell at wholesale as a dealer, you lose.

 

Frankly, a lot of B&M shops make their money buying from walkin traffic taking the stuff at 50-65% of CDN Bid and then when the guy sets up at a show and sells at Bid it makes him look like a hero. If you know your numismatic area of expertise you know what is a good price for buying or selling your material. Go with the series you enjoy, know, and has a realistic chance of completetion. Over the years I have put together Texas Commem sets just for fun. I currently have about a dozen in 65 and 66 buried in my bank box. Lately CDN bid on these has been rushing into the stratosphere. These coins with their super design and low mintages are a win - win deal. I may even try to put together another set before prices advance more. Yup I am a collector at heart and a wannabe dealer I suppose.

 

There is a lot of BS in here and on the bourse. Money talks and BS walks. I had a guy look at some graded currency I have at a show. He then leaned back from my table and said "you know, I like to buy at Greensheet." I laughed and said "well at least you don't overpay." I then asked him if he had anything he would like to sell me at greensheet - he then walked off (BS walks).

[MarkFeld]

Greysheet is wholesale so if you are selling at wholesale or below, you are in a liquidation mode and will sooner or later will not be a player in the rare coins business

That might be true in a lot of cases, but certainly, there are numerous exceptions. As is the case with any price guide, the CDN is often inaccurate, and frequently on the high side. That results in situations where the prices should/would be considered "retail" as opposed to "wholesale".

[Houston Investor]

Greysheet is wholesale so if you are selling at wholesale or below, you are in a liquidation mode and will sooner or later will not be a player in the rare coins business

That might be true in a lot of cases, but certainly, there are numerous exceptions. As is the case with any price guide, the CDN is often inaccurate, and frequently on the high side. That results in situations where the prices should/would be considered "retail" as opposed to "wholesale".

 

Oh really now? Well if you have some nice Liberty Seated or Barber material at those "high side" prices (CDN Bid) I would be a buyer and even be tempted to go to the bank to borrow the money for even more. I agree with your point there may be market areas needing a correction but have some doubt about your statement the CDN is "frequently on the high side." Unfortunately for a lot of my searches the only thing lately I have seen the CDN on the high side for is some items in dealers cases or in certain posters online inventory - big ticket coins that appear overgraded bc the guy or gal submitted them over and over.

 

However, you do have some really nice coins which are very attractively priced in relation to the CDN which appear to be very nice for the grade. Your 1892 Barber Dime is really attractively priced but would I pay MS 65 money for it with the reverse thumbprint? Frankly no.

[MarkFeld]

Greysheet is wholesale so if you are selling at wholesale or below, you are in a liquidation mode and will sooner or later will not be a player in the rare coins business

That might be true in a lot of cases, but certainly, there are numerous exceptions. As is the case with any price guide, the CDN is often inaccurate, and frequently on the high side. That results in situations where the prices should/would be considered "retail" as opposed to "wholesale".

 

Oh really now? Well if you have some nice Liberty Seated or Barber material at those "high side" prices (CDN Bid) I would be a buyer and even be tempted to go to the bank to borrow the money for even more. I agree with your point there may be market areas needing a correction but have some doubt about your statement the CDN is "frequently on the high side." Unfortunately for a lot of my searches the only thing lately I have seen the CDN on the high side for is some items in dealers cases or in certain posters online inventory - big ticket coins that appear overgraded bc the guy or gal submitted them over and over.

 

However, you do have some really nice coins which are very attractively priced in relation to the CDN which appear to be very nice for the grade. Your 1892 Barber Dime is really attractively priced but would I pay MS 65 money for it with the reverse thumbprint? Frankly no.

You are perfectly free to dispute what I said, whether with apparent sarcasm and/or incredulity, or not. But I've seen numerous inaccuracies on the high side for years, and that applies to more modern and/or common coins, as well as items such as better date gold.

 

By the way, with respect to the specific areas you mentioned - I've frequently passed on better/rare date MS65 Barber material for years, as it can be quite illiquid at CDN levels. Also, the undesirable and/or over-graded offerings (a good number of them at or below CDN levels) constitute a pretty darn large % of the available population of coins at any given time.