Poll: At What Point Is A Dealer Taking Advantage

Hey Gang,

I have seen several threads lately that have inspired my poll. I want to know at what percentage of profit does the coin dealer go from making an honest living to "taking advantage of people" when buying coins from the public. You should vote for what percentage you feel a dealer should make on the coins he purchased from you.

 

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Just don't act like Pawn Stars.

 

Thats a tough one but I think it depends on the coin he is selling really. The scarcity of type and the grade would dictate a higher percentage in my opinion. Would be nice to hear from some dealers on this subject.

 

Too many variables to make a definitive statement.

- Dollar value of total purchase. Percentage would be different for $1000 cat value of Wheaties vs. $1000 cat value of Morgans vs. $1000 cat value of ASE's.
- Dollar value of individual items. The greater the value the lower the percentage.
- How fast can the dealer flip the item(s). The faster the turnaround the lower the percentage.

Dealers have to put numbers on:
- the cost of doing business (selling)
- the cost of living
Look at their inventory to determine expected profit.
Look at potential purchases in light of the above.

Selling one MS-65 1893-S Morgan for a 5% profit can keep you going for quite a while.
Selling one common date Wheatie for a 200% profit isn't going help much.

A dealer with $10,000 in inventory needs a higher profit margin than one with $100,000 in inventory.

And I bet there's whole bunches of factors that I didn't mention or am even aware of.

 

I didn't vote because there are other factors which aren't taken into consideration for this poll.

What kind of dealer? B&M? Ebay? Website? National advertiser? Or a combination of any or all of these? Also, a B&M in, say Memphis wouldn't have the same overhead as one located in NYC.

Chris

 

I agree. But for the sake of the poll lets assume that they are buying your entire accumulation or collection in a B&M setting... the good, bad, common, and uncommon. Just a percentage off the entire transaction is more the response I'm after. When selling coins people don't take into effect where the store is located in their price... Your not going to take less from one person just because of the town they are located in.

People just don't walk in every day with 1893 S's in MS65

 

I voted 10%-15% but I can only look through my little box as a collector. Maybe that means the dealer would have to move alot of merchandise to make a profit or stick to the higher end market but I am just guessing.

 

Sorry, but it is still too vague. Besides, your original question did not focus on what amount a seller would consider.

Chris

 

The %'age depends on how quick the inventory could be moved.

Key dates should be a lower %'age.

Junk?
Higher, esp if he/she has to sit on the stuff.

 

The percentage is what matters. What percentage would you be happy that the dealer makes? What percentage would you be unhappy with? That's the question... I'm asking you to consider your collection. That is how I would like you to determine the amount... by your collection. Every collection is different, I understand that. But every collection that comes into a shop is different as well.

 

I wish there had simply option of "as much as it takes to stay in business and do well." As long as a dealer does not defraud a seller, I don't care how much they make. With any transaction there are two parties involved and both have free will. To me the profit(or loss) is irrelevant. A dealer can make an offer and a seller can take it or leave it. So what if the dealer makes 50%? The person who sold it to him/her might have made 200% on the transaction. I don't understand this attitude that there is a moral obligation to limit one's profits. As long as exchanges are done with mutual agreement, who cares?

 

If I walk into a B&M with my collection to sell, I'm looking for 100% of greysheet BID.
So the question is can a dealer make a business and personal living buying at that level.
And we're back to "it depends".

If the dealer can buy at greysheet BID and sell at Coin Values then it's simply a matter of getting enough sellers.
I believe the difference between the two averages about 20-30%.
That would be my answer.

 

I said 15-20%, looking at it from the collector's point of view.

But I agree, there are too many factors to arbitrarily assign a number that fits all situations. How much overhead does the dealer have? Does he work out of a shop, or sell exclusively from home? Does he have to pay employees?

He probably makes more percentage wise on lower end items, but if he's making 50% on a $10 sale, that isn't a whole lot to hang your hat on.

Personalities and individual's levels of education in the hobby are involved as well. If some guy off the street comes in, a dealer may not give him the same deal he would a regular customer who spends a lot of money in the shop.

So if I were a dealer, I would think the average profit I would need to stay in business and feed my family would probably be closer to 30-40%.

 

I've always figured 25-30% on normal everyday transactions. Key date coins probably 15-20%. So- called newbie coins I could see 50%.(everyday junk that piles up)...

 

What is the whole point of the Greysheet anyway? Its obvious hardly anyone follows it anymore.

 

Why do you think that? It's more about how fast you can turn around your inventory and what your fixed costs are then that. Imagine if the guy with 100k had a loan out to pay for that inventory? What do you say then?

 

That can and does happen if it's a strong market and it's key dates that are properly graded sometimes.

 

It depends upon how long the coin might be in your inventory. If you are confident that it will sell quickly (within the month), then perhaps 10% to 15%. If it will sell within a couple months, then 15% to 25%. If it is going to be more difficult to sell, (but will sell) then 25% to 50%. Here is a link where some CoinTalkers gave their opinions on the buy/sell margin.
http://www.cointalk.com/t63017/

Very best regards,
collect89

P.S. The opinions stated above are for dealers that do their business through ecommerce & shows.

 

I voted 40 - 50%.
ALthough I kind of regret it and wish I had've voted 35 - 40.
I pay 60% for common date collectibles, but if the coin is a key, or an expensive coin then I take that into consideration. I bought a 1948 Canadian silver dollar the other day for only 5% back. So it really depends on the coin.