Thoughts on price transparency?

Here's a random idea I've contemplated and wanted to see what others thought.
Would you be in favor of price transparency when you see coins for sale?

For example,
I list coin XYZ for $100.
Then I break it out for you:
Coin acquisition: $75 (from auction company abc)
Shipping cost: $3.50 (first class mail)
Supplies: $0.50 (envelope & tape)
Labor: $7 (estimate of time spent photographing, listing, packing, driving to post office)
----------
Total: $86
Profit: $14

If a seller provided that information, would it impact your decision at all? Would you appreciate the openness? Would you question the motives? Would it put a seller at an advantage, a disadvantage, or not impact them at all compared to other sellers? Would it make it harder to have a larger profit margin?
Please share your thoughts.

 

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No, I don't think it's necessary.

And, I'd bet *every* *single* dealer you'd ask would be *strongly* against this idea.

First - it doesn't matter. The dealer prices a coin, the buyer decides if the coin is worth it or not. The buyer can do his (or her) own research and figure out what the coin has sold for recently. If they can find that particular example in auction records, even better. If the dealer is asking more than the buyer wants to pay, they can haggle a bit and agree on a price.

For some reason, some (many?) collectors think that dealers are there to serve them hand-and-foot and the idea of profit is repulsive. Why are dealers making a profit on coins? Why are they trying to rip me off?

So, Second - disclosing exactly how much profit a dealer is making on a coin opens them up to considerable scrutiny. If the coin is traceable to a recent auction (for example, I often see coins on Ebay that recently sold on Heritage), then the dealer mark-up is just begging to be ripped into. The dealer needs to make a profit to stay in business! If you wanted the coin so bad, do the work yourself and go to the estate sales, go to the auctions, open a shop, and buy your own coins at wholesale!

Third - dealers buy coins at wholesale prices. They buy coins at dealer-to-dealer lower prices because dealers understand they need to make a profit.

Fourth - it's none of your dang business. If it was your business, you'd be a dealer! If the dealer got a great deal on a coin and then sells it to you for retail, it's just business. If you wanted the coin for the great deal, you should have been out there pounding the pavement. But if the dealer disclosed how much he paid (and he got a great deal!) then the buyer could feel entitled to pay much less because hey, the dealer got a great deal... so why shouldn't I?

So.... I like that you're questioning. But, I think it's a terrible idea.

And I'm not even a dealer!

 

I think you're grossly undervaluing your time.

 

Generic photographs: 5 minutes.
Listing: for an experienced person, 5 minutes.
Packaging: for a slow person, 5 minutes. Faster with label makers.
Driving to post office: that's for nerds. The post office comes to me.

So, labor $7 for maybe 15 minutes.... Round that out to $30 an hour.

I'll bet many people would be quite happy if they made $30 an hour

 

It was just a sample number, but I don't think it's unreasonable. The median hourly wage is around $20. I figure the labor involved for one coin could be accomplished in 20 minutes (1/3 of an hours). That would be roughly $7 (rounded up to the nearest dollar).

 

Everyone should understand that all commerce transactions take place at "cost plus". If you don't know and accept that you should not buy stuff. You are going to pay more than what the product cost the seller.

 

15*4= 60 minutes or 1 hour
So 7 x 4 = 28 an hour not 50

That’s beside the point, my answer to your original question is it’s none of anyone’s business what I or anyone else makes (or loses) on a sale of a coin, or any item/product for that matter.

 

Here is something that speaks about the same idea (just not for coins);
"When a brand faces a much higher-quality competitor, it usually benefits from being transparent about its costs. However, when the perceived quality differences are large, such as between a mass-market and a luxury retailer, both firms are better off keeping costs hidden because different firms can use different selling prices to segment the market. When the quality differences are small — between two mass-market or two luxury brands — both companies should opt for openness. That’s because transparency gives enough of a competitive edge that either company risks the loss of market share and lower profit margins if it keeps costs hidden.

Another important factor is how much consumers value transparency, and it comes into play when the perceived quality differences are neither very great nor very small."
https://www.anderson.ucla.edu/faculty-and-research/anderson-review/cost-transparency

 

Only for a salaried employee. For someone who's self-employed and only gets paid when they're actually doing work (which is what we're talking about here), $50 per hour is really low. Which is why the plumbers and electricians who visit my house routinely start around $125.

 

it's bad practice to tell your customer your costs. no matter what business youre in

 

Think of it as a supplemental income, part-time work, or a second job. And again it was just a sample number. Someone selling multiple coins a day could do a more accurate calculation of the time it takes and then set a rate for what they believe is worthwhile.

 

Why? There is research that suggests otherwise (see link in my post above).

 

@ddddd
Have you ever owned a business?
Have you ever held a managerial role in a company analyzing ROI, CBA, COGS to name a few metrics?

 

Interesting concept, but I think it only works for commodity items. I'm with @physics-fan3.14 on this one.

Z

 

What does return on investment or cost of goods sold have to do with the question?
A cost-benefit analysis is prudent though. What are the costs of transparent pricing? Giving up private information? Scaring off potential buyers? What are the benefits? Adding more information for the buyer? Building trust? Differentiating your business from similar competitors?
If research suggests that it can work, why automatically dismiss it? Simply saying it's a bad business practice doesn't tell us anything.

 

So would it be more plausible with generic Morgans, proof sets, bullion, etc?
I do see there being more of an issue with something like a uniquely toned coin, but then some sellers could get creative and add a uniqueness factor to their transparent price (although that could defeat the purpose).

 

I see absolutely no point.

Consider three listings for, oh, I don't know, some silly PF70 modern gold thing.

Listing 1: "I bought this coin from the Mint for $850, and paid $50 for slabbing. I'm asking $1200."

Listing 2: "I bought this coin at auction for $1300, but now I need the money more than I need the coin. I'm asking $1200."

Listing 3: "I got this in a storage locker sale, I figure I've got maybe $50 in it. I'm asking $1150."

Which one are you going to buy?

 

The biggest application of the idea is if the prices are all the same for the same type of item or close for similar items. That is what the linked study details. How would you pick if all three were priced the same and all the buyers had the same feedback but one had transparent pricing while the other two did not?

 

If they were all identical, I'd pick the one with the lowest price, or quickest shipping, or whatever.

What the seller paid is completely irrelevant to the buyer's side of the transaction. That's entirely a matter for the seller. If he can consistently get stuff at a lower price than others, he can sell it lower and do more volume, or he can sell it at the same price and make more profit.

But, sure, plenty of buyers aren't rational, and will be swayed by the right story about "dealer costs". Ask any car salesman.

 

This assumes there is no negotiation. If you know the guy only has $50 into the coin it gives the buyer more information to gain an advantage on an offer or counteroffer.