How do dealers make any money?

Discussion in 'Ancient Coins' started by GregH, Nov 22, 2017.

  1. maddurfee

    maddurfee Boy Wonder

    How about buying gold or silver in ozs. and divide it into quarters and tenths and charge a premium. Easily double your investment. The larger the investment, the larger the profits.
     
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  3. GregH

    GregH Well-Known Member

    Having observed the circulation of stock from auction to vcoins, I can see many dealers try to buy low and sell higher. Sometimes the markup isn’t much (eg, from $600 to $800) so I wonder how much profit they have leftover once they’ve paid their fees and vcoins rent.
    I also see some coins on vcoins with extraordinary markups - I’ve seen from $1500 to $5500. I wonder if these coins sell at all.
     
  4. zumbly

    zumbly Ha'ina 'ia mai ana ka puana

    To me, it seems like a tough business for the average dealer, and much closer to an art than a science.

    A 400% markup on a coin may actually bring a bargain the dealer scored to just a slightly over-priced offering (to allow for customers to bargain him down a little). A $800 price tag on coin that cost a dealer $600 may simply indicate a realisation that he had overpaid for the coin.

    I recently bought three coins from a dealer that cost me $140 each on average. They all came from a large group lot that cost him $55 per coin. So, he made a nice profit on some coins that I felt I paid a fair price on. On the other hand, many from that lot he may come closer to just breaking even on when he eventually sells them, and perhaps he may even lose a little on some after accounting for costs. In the meantime, it's coming to a year since he bought them, and two-thirds of the coins from that lot he has yet to sell. It sure doesn't sound like the type of business I'd like to be counting on to pay the bills!
     
    Gavin Richardson, Mikey Zee and GregH like this.
  5. Kasia

    Kasia Got my learning hat on

    For a short time I was selling varying things on ebay, whatever I could find that I thought might sell. And to either buy very low, or sometimes not so low but with the expectation that I could possibly still make a profit, and if so, maybe a large one. What I found, in general, is that if of the things you place for sale you sell and make about four times the amount you paid (in aggregate) for the items you sold and you sell 3/4 of the items you bought to sell, having to sometimes getting rid of non-sellers (note: I sold all sorts of items so I am not just talking coins) by giving them to goodwill or the trash, depending on the item, you can at least make some money. Now you then have to have quite a bit of inventory and the place to keep it and have it ready to pack and ship, and store mailing materials. Not too bad for a small operation.

    But seriously, I would have a run of luck and sell a bit, and ship them out but unless I was constantly looking for new inventory, I found I only had my non-sellers or those that would sell slowly. I think in some respects coins are like this. You have to constantly be looking to get new material to sell, and focus on getting the ones that sell well and either easily or well for a smaller defined market but one where they are actively looking for certain things. You can't allow yourself to get stale because you then have to regroup and act a lot like you are starting from scratch. You also have to be mentally making notes about what you are having successes on and focus on that type and stay away from the things you find are bad sellers.

    I think if I ever start again looking for coins to buy sell or even other items, it would help to have a checklist for each item to try to ensure I was not just speculating wildly, and have that checklist include a place to figure max price to pay as well as a place that once checked is a place that tells me no matter what happens in the bidding, I have already placed my last bid, even if it was not my max. That way I could later track my successes and failures against different criteria and even on the amount I paid relative to what I figured the max bid would be.
     
    Theodosius likes this.
  6. AncientJoe

    AncientJoe Well-Known Member

  7. Kasia

    Kasia Got my learning hat on

    Volume works when you have items that sell. Volume does not work if you have items that don't.
     
  8. GregH

    GregH Well-Known Member

    It’s a great idea to make money from what you love. But what I’m hearing is that it’s very hard. I’ve always had a fantasy about being a dealer, but i’d want to be selling amazing coins like Eid Mar denarii and Romulus Augustus solidi, but the reality is i’d be mostly selling Constantius II and Gordian III with a small (if any) margin. That would bore me.
     
  9. dougsmit

    dougsmit Member

    Early on in life we all have to make a decision. Will we follow a career path that leads to secure money or are we looking for the kind of job that they will have to force us to retire from when we are 90? I always prefer to go to a doctors, dentists, preachers, auto mechanics or whatever who actually get enjoyment out of doing what they do well and do not measure success in terms of gross income. Ancient coin dealers are like that, too. There might be other jobs that pay better but some can not see themselves doing anything else. They may or may not make enough to raise a family but that is not what is important. They are doing what they are driven to do. I worked 35 years for people (some of whom I despised - you voted for them) doing things (some of which I am not particularly proud) that provided excellent retirement benefits. When I find dealers (not 'hobbyists) who have spent their lives learning about coins, living out of suitcases and eating cold pizza for lunch and overpriced bar food for supper, I don't mind so much when they want me to pay $20 for a coin that cost them $15.
     
  10. TypeCoin971793

    TypeCoin971793 Just a random guy on the internet

    These two things. I do buy and sell a bit on eBay and Facebook. I don't make enough to live on, but it pays for school and what I add to my collection. What I usually try to buy is quality material (key dates, VF-UNC US type coins, nice Chinese coins on the cheap), and these usually sell within a couple weeks of purchase. (One I sold and had the money in the bank before the check I wrote cleared.) This semester, I made the mistake of trying to get a wider inventory instead of just a nicer inventory, and many of the coins I bought I just barely broke even on, and some I lost money on. Some (about $200 worth) still have not sold. But I have made a net profit of $2000 this semester on the ones that did sell, so my mistakes are covered.

    If I had a larger inventory instead of just the stuff I can afford (I had an avereage of 30 coins for sale at any given time, only one of which cost more than $200), or had more time to devote to finding things to buy, I would probably increase my profit significantly.
     
  11. ziggy9

    ziggy9 *NEC SPERNO NEC TIMEO*

    Is it your intent to insult as many people as possible or just a side effect of your personality?
     
  12. TypeCoin971793

    TypeCoin971793 Just a random guy on the internet

    I don't know... I've met some dealers who fall squarely within those categories.
     
    Nicholas Molinari likes this.
  13. ziggy9

    ziggy9 *NEC SPERNO NEC TIMEO*

    But considering the number of decent dealers on this site that generalization is insulting
     
  14. TypeCoin971793

    TypeCoin971793 Just a random guy on the internet

    I agree. Dealers who only exist to screw people over are definitely in the minority.
     
  15. Packrat

    Packrat Well-Known Member

    It's a killer in Tennessee because we are in a state that requires we collect the 9.75 percent sales tax on coins and currency in addition to the selling price, unless you are a flea market dealer who does not collect the tax because he knows no one in state government wants to work on the weekend and therefore he does not get checked. Besides, the sales tax law for flea markets says "If the dealer does not collect the tax, it is the responsibility of the purchaser to pay it." Good luck with that.
     
  16. IdesOfMarch01

    IdesOfMarch01 Well-Known Member

    For the major auction sites (Heritage, CNG, NAC, etc.) that also have a retail dealer operation, this is clearly the answer. Most of these auction-sites-cum-retail-dealers have reached the critical mass necessary to attract significant coins to their auctions and operate profitably from the buyers' fees.

    But I've always wondered about the non-auction dealers, those listed on VCoins. Do they really have sufficient turnover to make a decent living, selling coins at (nominally) a 10% - 100% markup over their costs? How many are also collectors themselves, with other employment to support their ancient coin interests and obsessions?

    It would be interesting to hear, in general terms, from a true ancient coin dealer who makes his/her living solely from retail buying/selling of coins.
     
    Nicholas Molinari likes this.
  17. SilverWilliesCoinsdotcom

    SilverWilliesCoinsdotcom Well-Known Member

    So, you are suggesting that without volume there is no volume?
     
  18. Brian Bucklan

    Brian Bucklan Well-Known Member

    Just want to add that I know quite a few ancients dealers and the typical answer I get when I ask them how they did at the large coin shows is "Not so good" or "I made my table". I've only heard "this was a great show" a couple of times in the last 20 years. But they do show up year after year and the main reason is they buy pieces from the public and/or transactions between dealers.
     
  19. ancient coin hunter

    ancient coin hunter 3rd Century Usurper

    Not sure...I have kind of a fantasy that I might be a dealer one day, but I suppose it's mostly a labor of love.
     
  20. SilverWilliesCoinsdotcom

    SilverWilliesCoinsdotcom Well-Known Member

    A key factor in any low margin business is minimizing the time you hold inventory. If you buy a coin for $1500 and hold it for a year and sell it for $2000, you might think you made $500 bucks, and you did, but if I can move 100 coins a month I buy for $15 apiece for $17 bucks each, $200 bucks a month over that year is $1200 in profit.

    If you look at it like your gross profit divided by the time you held the item is an hourly wage, it hits home better for some folks. I don't make money either, but my hobby does pay for itself. Sometimes.

    I do find though that when I buy a low cost item these days, unless it's just something I REALLY want, I take into account how popular an item it is, as that's going to affect how quickly I can flip it. More often, when I DO make money, I buy 5, keep one, save on shipping and get rid of the other four as quickly as possible.

    In THAT case, I make a little money, which is sort of a fun game, but the real reason I made anything at all is that I maximized the weight of what you can ship for $2.77, or whatever USPS weight break.

    My bottom line for myself though is that I know I'm not a real dealer, but I do get to play one on the Internet, and I'm doing that for the fun of it. And if I'm not having fun, I do something else.
     
  21. Kasia

    Kasia Got my learning hat on

    .
    ???

    No. Think if you have new iPads to sell, you will probably sell a lot. Having volume in an item that will sell because there is demand for it works. You can handle volume because lots of people will want it. You could sell all of them at a profit, easily, and run out, therefore not having an issue with them taking up space in your not selling inventory. Conversely, if you buy 100,000 pet rocks to sell now, volume probably will work against you, since it is not a fad and not too many people will compete to buy your pet rocks.

    Volume works better than no volume in one case and is a huge detriment in another.
     
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