This may be a difficlut/impossible question, but........ I'm curious to know what kind of margin dealers work on. Is it 25 points, 33 points? I bought and sold sporting arms for 10 years, so I understand both sides of the counter. Also assume that less expensive coins will have a higher margin. Any thoughts?
It depends. If a dealer already has a buyer for a coin or knows he can sell it quickly he may be willing to accept a lower margin than a coin that has little demand and may take a long time to sell.
I will generally pay 80% of bid on normal average coins brought to me to buy, and a bit higher on better dates that I know will not sit around eating up cashflow. When I'm out looking for wantlist coins, I will pay very strong for exceptional coins, and have paid well above ask on some scarcer material. For my personal collection, I have paid 200% of sheet for the super primos, see the eye appeal thread for an example. Sheet price %'s are what a dealer will look at when you bring them material, but most dealers will agree that exceptional material does not present itself that often, you have to hunt it down.
It depends upon a combination of the dealer and/or the coin and/or the circumstances. For openers, I generally mark up my coins by an average of 15% over cost. However, if I have to stretch to buy something, I might mark it up by 10% instead. On the other hand, if I am able to buy a coin at an especially favorable price, I might mark it up 20% to 25%. Lower mark-ups/margins are more likely with certain coins such as bullion related material and more actively traded generic pieces. However, rarer/more esoteric, less actively traded items often carry a larger % mark-up. I give discounts from my listed price on occasion, so while the list price might be 15% over cost, the selling price is often lower. Discounts might go to well established clients and/or larger transactions and/or to dealers with whom I do a lot of business. Lastly, once I have had a coin for "too long" I will discount it in order to move it and replace it with "fresher" inventory. I am under the impression that many dealers work on larger margins than I do (Edited to add: I am a sole proprietor with minimal overhead), though some who operate mostly on a wholesale basis probably work on lower margins. In summary, there is definitely no one/short answer to the question.
It depends on a bunch of factors, like what I am over stocked on at the moment, what I need, what I have immediate willing buyers for, how much I like the seller (i.e. how much business they bring me/we do together), whether there are other factors (do they have a big consignment in house), what type of material it is (I have a 5-6% margin on generic gold, a 12-18% margin on collector coins, a 20%+ marging on modern mint *stuff*, and an even larger margin on esoteric things that will require a lot of time and effort to sell. Bottom line, there is nothing written in stone and lots of factors enter into the price I offer for coins.
I can basically go along with what the others said. Markups do vary, depending on the type of material, the popularity, the present marketplace, etc. Markups for generic gold and silver are often a few percent at most. Markups for high end coins may only be about 10%. Some lower priced material will often have higher margins, but lower profits. For example, buying a coin for $2 and selling it for $4 is a double up in profit, but in the amount of only $2. One may buy a coin for $10,000 and sell it for $11,000 and make only 10% on the coin. However they made $1,000 in profit. The amount of overhead a dealer has and the volum of business they do also play a significant roll into what margins they can sucessfully operate a business on.
I've often wondered how much of it depends on where you live as well. For instance, a dealer in a large metro area might get away with marking their merchandise up a bit because there are more customers, and those that may walk out to look for a cheaper buy won't hurt business much, as there are plenty more. Whereas a dealer in a small community has to price his goods more reasonably or theiy'll soon be out of business. You could say a small town is stuck paying whatever price is asked because there might not be another option, but with the internet, I don't think this is a viable excuse anymore. I know my favorite coin shop used to charge a lot more pre-internet days. But, I've noticed prices really come down over the past 15 years or so. I used to wait to buy in the city, but now the small town shops are beating the city prices by a hefty margin. This has been my experience, anyhow. Guy~
