How do dealers sell graded coins for sooo low? I can't even ship coins to a grading company for less than they sell for, lol. Okay that might be a slight exaggeration but seriously how slim are the profit margins for these dealers and grading companies?? I understand these high volume dealers get much cheaper pricing for submitting thousands of coins, but then how do the grading companies make money? It almost doesn't seem to make sense, mathematically. I sometimes wonder if the grading companies bread and butter is actually the non-major dealers.
Here is an answer I think I saw on this forum in the past. The dealer sends a batch of, lets say, 20 coins. A few of them get a very high grade, dealer sells them for considerable profit. The rest are being offered for whatever, dealer doesn't really care as they are lower grades and the profit is minimal anyhow.
It has to be that. Or something like that, if not that. Some of the dealers start all their auctions at 99 cents. They must be counting on a few of them going for ridiculous prices to make up the lack of profit (or loss) from the other ones. It really makes me wonder how many bidiots are out there for these dealers to take such an approach? I know I don't have as much of a following as the big dogs but it seems like every time I do 99 cent auctions I lose my ass. I find it hard to believe that big sellers take the business approach to leave auctions up to chance like that. I suspect they all shill bid. And eBay totally looks the other way. eBay's rules enforcement is totally worthless. They should really stop pretending like they try at this point.
A lot. I suspect it is a major part of eBay traffic. Like 98% are bidiots. And this is why I don't think they shill bid nor there is a need for it. You check completed auctions for the same exact coin/grade and when you see interest and lots of bids for coins that sell higher than their actual price, you can sell starting at .99, there is no risk, especially when you got high seller rating. It works because its eBay. You won't see starts at .99 on some random www.coinsawesomeblog.com/shop with 50 Google search results (and if you do, now that's when you can be sure there are shill bids).
There are really two ways to make money, a large margin or large volume. If someone is sending you 100k coins a year to grade they can give a much lower price and still make a good amount of money off them as opposed to the person sending in 100 coins a year where they need to do it with large margins. Like mentioned the hits play a big role for making the money, but also they don't grade everything themselves. Some buy coins very cheap when they come into the shop others give more reasonable offers and they buy from other dealers looking to unload things as well as auctions that end to low ect.
LOW? You haven't watched Rick Tomaska's coin show lately! Although he has great condition coins but you have to pay the price for them!
Coin shop owners in my area pay melt for almost everything, I was in a shop one day and a little old lady brings in a bag of barber quarters. The owners didn't even bother to sift through the bag, they just dumped 'em into a counting machine. Paid her like $2 each and as soon as she hit the parking lot they almost knocked each other over to look through them, I heard a hoop and a holler and they high 5'd each other as one of the 1st "finds" they pulled out was a 1901s worth about $4000!!!! THAT my friend is how dealers make there $$$$
It'as not unreasonable to believe that the vast majority of slabbed coins are "subsequent" owners, and who knows what they have into those coins? If you're looking at coins which are new enough to think the seller is the original slabber, refer to Taxidermist's post above.
