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Sales, Swaps, Auction & Approvals/Auction Disc. : Pricing Formulas for listing on SOR auction board

 

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PDougherty999
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04 Mar 2013
10:02:19am
I stated in another thread that I was going to share my weird formulas for how I come up with pricing here on SOR.

The reason I’m starting this thread is that one of the most intimidating things as a seller or a potential seller is trying to figure out what price to start your listing at. I've been there. I have always felt that the Scott catalog is worthless to me when trying to come up with pricing on U.S. stuff due to the variances between what they say a stamp is worth and what I’m seeing for prices on various auction sites. It wasn't until around last August that I finally came up with a set of formulas that made me comfortable and gave me a standard to work with so that my prices were not all over the board.

I would also be interested in how other sellers come up with their pricing as there seems to be a wide range in what individuals think their stuff is worth.

Take it or leave it, this is how I do it. In most cases, it seems to come up with a price that is attractive to buyers here. But I am in no way an expert on SOR auctions. I am merely basing my prices on what I've seen as attractive prices from other SUCCESSFUL sellers. One final WARNING: These formulas have been used on U.S. stuff only so far. I have not delved into the selling of foreign stuff yet, so I have no idea if I would use the same formulas for that kind of material.

First and foremost, I use an Excel sheet to automatically do all of the calculating. Trying to do that math by hand would have chased me away a long time ago.

Second, for the formulas to work, you need a guideline on what current pricing is for the stamps. Since we all know that the Scott catalog really doesn't give you an accurate portrayal of what stuff is selling for, I chose two sites (Mystic Stamp Company and eBay) to use as guidelines. When grabbing a price from eBay, I’ll pick out the lowest priced item (shipping included) that is being offered by a top rated seller (or at least by someone with more than a thousand transactions and 99% positive feedback).

Lastly, I sometimes fudge around with the figures if I think the price is too low or too high. I do give examples of this.

Used stamps are the easiest to work with. If Mystic is selling the stamp or stamps for $0.15 a stamp, then I simply go with the price of $0.05 a stamp. I won’t go under that amount because at anything lower, it’s not worth the time and energy to do all the work for preparing the auction lot. If Mystic is listing the price at a higher rate, then those stamps are most likely a little more rare so then I kick in the following formula: SOR Price = Mystic Price + eBay Price divided by Two then divided again by 5.125. If I can’t find a value for a used stamp on eBay, then I simply use the value from a MNH. Typically, the price difference between used and MNH on eBay is not that much for the slightly rarer items.

Mint Damaged Gum stamps are also very easy. Since they have been devalued by the damage, they are only really worth being used as postage so I will list those at face value. Selling them for less than that I would consider as throwing away money. I have found that there are people out there willing to buy damaged gum stamps so they are worth something in my inventory as well.

I’d like to take a quick side-track for a second. I never could understand why someone would sell postally unused stamps for less than their face value. At the bare minimum, they are still worth that face value for postage. In a way, they are legal tender in a certain situation. So to sell them under that amount is the same as giving a person a ten dollar bill and asking them to make change for you by just giving you a five dollar bill back. Like I said, it doesn't make sense to me. You won’t catch me doing it, but I have gotten some really good deals thanks to others doing it. OK, back to my topic…

Mint Never Hinged and Mint Hinged are treated the same by me. Beauty is in the eye of the buyer and I've seen that the formula works for both of them. The pricing formula does change based on the age of the stamp. Anything from the year 2000 to present day gets treated to one formula while older stuff gets treated to a different formula. I’m not sure where I came up with the idea, but it seems to be working.

Y2K MNH & MH Stamps are treated by their current face value. So forever stamps currently are worth $0.46 cents regardless of the year. The formula I use is Current Face Value multiplied by 1.25. I do watch though as there are some rarer stamps from this era so just for S’s and Giggles, I still process everything with this formula (Mystic Price + eBay Price divided by Two then divided by 5.125) and if there is a major price difference (and for me, that’s $0.40 or more) between this one and my normal price, I’ll most likely go with the higher price or average the two prices out depending on the actual rarity of the item. In some weird cases where the value of the stamp may cause my formula to go below $0.05 a stamp, I will not go any lower than that $0.05. As I stated above, it isn't worth my time then.

The older than Y2K stamps are just simply treated to the tried but true (for me at least) formula of SOR Price = Mystic Price + eBay Price divided by Two then divided again by 5.125. And once again, if there is a weird case of that formula giving a less than $0.05 value, and then I leave it a nickel.

Covers and FDC are something I personally stay away from if I can help it. The pricing on these is so varied based on the buyers’ tastes and there really is no good formula I could come up with the make them worth my time.

The only ones that I’m having trouble with are the New York State Transfer Tax stamps. The last run I tried selling them at $0.20 a piece and still didn't get any interest on them. I’m going to try one more time at a lower value and see what happens. I’m thinking that they just are not something most SOR collectors are interested in. I would be very interested in hearing advice on how to best handle them though.

---Pat
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CapeStampMan
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Mike

04 Mar 2013
12:06:18pm
re: Pricing Formulas for listing on SOR auction board

Patrick,
That is definitely a wierd formula and sounds too complicated, to me anyway.
I think the first item on your pricing formula would have to be what the stamp or stamps cost you in the first place, since you probably don't want to sell any of them for less than what you actually paid for them. To save yourself a lot of time and the hassle of researching prices on the internet, plus a retail dealers site, why not just figure a flat percentage of catalog value and be done with it. I use the 2009 Scott's to value most of my stamps and just assume a lot of the higher values stamps have had an increase in value, so in that way the buyers are getting an extra bonus. Of course the common stamps usually remain at minimum value forever, so they are easy to figure out.

As far as those NY state tax stamps, just put them in your duplicate box or trading stock or even make them part of an "odd lot" at a cheap starting price. I have three containers on my desk that I put my "give away stamps" in. One is for the APS youth philately, one is for the Holocaust group of school kids in Foxboro and the other is for making up "odd lots" for the local club or the SOR auction.

Mike

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Logistical1
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04 Mar 2013
02:31:03pm
re: Pricing Formulas for listing on SOR auction board


My pricing is fairly basic for post 1930 US stamps. For most MNH, face value plus 5 cents or 25% of the Scott value whichever is greater, give or take a penny. Stamps before 1930 MNH, MH or U, I usually use 25% of Scott value unless it is an exceptional specimen then I will add a premium. To me a MH stamp is valued as a used stamp. Of course there is the occasional exception. Why 1930? I don’t know, it just seemed like a good year to draw the line.

I suppose I use the same pricing logic when I buy stamps as well except I prefer to buy used stamps for issues before 1920.

I also use Excel and I embed the image of the stamp I am selling onto the spreadsheet. The nice thing about Excel is I can manipulate the data any way I want. I started an Access database a couple times but never quite finished. Just as well as I am very impressed with Excel 2010.

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PDougherty999
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04 Mar 2013
02:41:42pm
re: Pricing Formulas for listing on SOR auction board

What I like about Excel is that you can then do some creative copying and pasting and very quickly create the .CSV file that works with SOR's Bulk Upload Utility. And it makes the formulas work magically for me. I put the scans of my stuff up on DropBox now and just store the public links in the Excel sheet.

That 25% seems to be the magic number here on SOR.

As for what I paid, in some cases, I went to eBay to buy something and was willing to pay a higher value for it. We all know that here on SOR, people don't like that higher rate. There is no way I'm gonna get what I paid for on some of the items.

---Pat


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tomiseksj
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04 Mar 2013
07:25:10pm
re: Pricing Formulas for listing on SOR auction board

I've just begun to sell my duplicate material on ebay and have tinkered with a formula for determining final value based on my desired profit on each item listed so I applaud your effort to arrive at a reasoned basis for price-setting.

I question, however, your choice of Mystic as a benchmark after having rejected Scott catalog values as being "worthless."

A quick comparison of Mystic prices to Scott CVs shows that, in many cases, the Mystic selling price is higher than the corresponding Scott CV. For example, Mystic wants $13.50 for a mint Scott 300 (the catalog indicates that most 1893-1940 mint stamps as being original gum previously hinged), while the 2011 Scott CV for an OGph 300 was $12. A Mystic mint (OGph) Scott 397 sells for $35 while the 2011 Scott CV for an OGph stamp was $16.50 and a never hinged copy $40. Mystic's Scott 726 mint (OGph) is $1.45 while the corresponding 2011 Scott CV was $.45 (used was $.30 Mystic/$.20 Scott).

With regard to ebay prices, I'd recommend that you draw your valuations from completed listings, rather than from current offerings.

Steve

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lpayette
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05 Mar 2013
12:36:26am
re: Pricing Formulas for listing on SOR auction board

I have an easy pricing formula for starting bid on what I sell.

For mnh 25-30% of vat value.
For used. 10-15 % of cat value.

lee

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Rhinelander
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05 Mar 2013
08:31:20am
re: Pricing Formulas for listing on SOR auction board

I usually use the below formula to determine my auction asking prices:

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You just have to substitute the two parameters d1 and d2 into the first equation, which gives me the optimal asking price as a function primarily of the Scott catalog value and the length of the auction.

N (.) is the cumulative distribution function of the standard normal distribution (needed to estimate the probability of a sale)
T - t is the duration of the auction
S is the Scott catalog price
K is the Buy it Now price of a comparable ebay item
r is the risk free rate (annual rate, expressed in terms of continuous compounding to capture the minimum return on inventory to make it a worthwhile venture)
σ is the volatility of the selling prices (estimated based on the standard deviation of the most recent 5-10 sales of comparable items on ebay).

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CapeStampMan
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Mike

05 Mar 2013
08:53:14am
re: Pricing Formulas for listing on SOR auction board

Arno,
While I am giving serious thought to using your formula for my sales, I think I will continue to use one similar to Lee's formula, for the time being. One thing I did not see in your formula was the probability of a package being shipped from Ohio, (point A) without adding tracking, insurance, confirmation or Priority shipping and arriving in a prompt manner, in California, (Point B) just for example, without rerouting through Tampa, Florida (Point C) and, AND, using the almost, pert near, defunct USPS as the carrier service.

Mike

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Rhinelander
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05 Mar 2013
09:25:51am
re: Pricing Formulas for listing on SOR auction board

Hi Mike,

The probability of the item being shipped etc. is "1" and therefore not part of the equation determining the asking price. I have not included other factors affecting shipping cost you mention, because these are passed on to the buyer "at cost." Pat's formula also ignores cost of shipping. Mathematically, these costs are a constant and could be easily build into the model. The only difference is that you would be estimating the best asking price gross, and not net of shipping. But it is a good suggestion, and I will think about it.

Arno

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BobbyBarnhart
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They who would give up essential Liberty, to purchase a little temporary Safety, deserve neither Liberty nor Safety. -Benjamin Franklin

05 Mar 2013
10:23:12am
re: Pricing Formulas for listing on SOR auction board

Arno

I have not been a member here long enough to know whether you are serious or "pulling my leg," although I suspect the latter.

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Rhinelander
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05 Mar 2013
12:11:21pm
re: Pricing Formulas for listing on SOR auction board

So, Bobby, you think this is funny?

Well, I don't want to make light of Pat's attempt to provide some guidance on how to come up with a good asking price. This problem is more important perhaps in our auction because items quite frequently sell at the opening bid. The reality of course is that figuring out an "optimal" opening bid really is an art, and not a science.

Pat's approach has a lot going for it. The only part I am not getting is a rationale for the "odd" 5.125. "5" could have been good enough for a rule of thumb. Most folks thus far recommend a varying percentage of Scott based on whether it is a MNH or used stamp, an older or newer stamp etc. This is pretty much the standard procedure. Percentages that have been recommended for an opening bid range from 10% to 30% given the type of stamp.

Instead of using a percentage of one catalog value, Pat proposes using about 19.5% (= 1 / 5.125) of the average of two values: Mystic, which likely gives you a price higher than Scott, and the lowest ebay Buy it Now price. Of course, the current Buy it Now prices are deceptive, because these are the unsuccessful offers only, which remain outstanding because nobody accepted them. Therefore, the Buy it Now prices are likely on the high side. Nevertheless, referring not to a catalog value but to other prices at which the stamp could be actually obtained "right now" (from a stamp dealer, Mystic, or in online auction) has some logic to it.

Likely, the solution is not in the accuracy of a formula, however. As much as I am in love with my own invention (which is gobbledygook adopting the Black-Scholes formula for the price of an American call option), pricing is an art and greatly depends on the condition -- which always is paramount -- as well as the "heat index" for a certain collecting area.

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DRYER
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The past is a foreign country, they do things different there.

06 Mar 2013
04:04:57pm
re: Pricing Formulas for listing on SOR auction board

Bean counters:

Pricing formulae for selling postage stamps seem to be as entertaining as collecting stamps, and I feel as if I'm trapped in a Woody Allen movie.

For all Stamporama sellers who've been seduced by the lure of lucre, permit me to direct you to your bottom line:

The silver is mine, and the gold is mine, saith the Lord (Haggai 2:18)

John Derry (stamp buyer)

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michael78651
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06 Mar 2013
08:48:44pm
re: Pricing Formulas for listing on SOR auction board

When it comes to sales, there is only one formula that matters. Is your item priced so that someone buys your item and not someone else's.

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CapeStampMan
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Mike

06 Mar 2013
10:05:45pm
re: Pricing Formulas for listing on SOR auction board

John,
You added an extra digit in your quotation. It's Haggai 2:8, not 2:18.

And Michael, you are absolutely right. Take your formulas and spend all day figuring them out and still it depends on the right person, seeing the item at the right time, along with an agreeable price. Sometimes name Luck!
Mike

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cdj1122
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07 Mar 2013
04:04:45am
re: Pricing Formulas for listing on SOR auction board

A different perspective.

I do not sell stamps often and recently since I do not get to the stamp club more than twice a year sell even fewer.
But for years I did attend regularly and prepared a group of 5"x8" binders to display a selection of duplicate stamps to sell.

I have been collecting and accumulating stamps for almost fifty years as an adult. I have more than several binders with duplicates, many that are listed in Scotts at the minimum value (M=30¢) but also quite a few that would generate a premium in any standard auction catalog.
At out local stamp club several collectors trade used stamps with others or try to sell them. One member is a professional dealer and he sells common postally used at 20¢ apiece, but always cuts a discount to regular purchasors who buy several dollars worth at a time.
He also has a wooden box with mixed used kiloware, usually still on paper but occasionally already cleaned that several collectors sort through. His sign say 12¢ each or 12 for a dollar and a quarter, but again since I select two or three hundred each time he usually charges me significantly less. It usually works out to about 9 or 10¢ each.
He organizes a series of local bourses and seems to make a living that way. Of course he also handles lots of high premium stamps as well as supplies which are otherwise only available in this rural area from mail order dealers.
So I figure the cleaned and sorted, matched sets should net me close to 20¢ each which is comperable to his matched set price. But again I would often round things down to 10 or 15¢ for the right party.
However, I have an introductory page printed for each sales book that explains the roughly 20¢ and I encourage anyone who wants to pull some items from my book to read it carefully.
I explain my prices but I add that for stamps that I simply cannot bear to sell I may ask twice that or more because I really do not care if anyone buys any thing. It says;

"Stamps that would break my heart to part with are priced according to my whim and may have no relationship to the listings printed in Scotts Catalog."

Starting at 20¢ each, I may add 10 or 20% for very nicely cancelled sets if complete, and a little more for popular topics. I have a soft spot for collectors who prefer postally used and tend to ignore people looking for gum to collect. Those who sit and chat, showing a love for the stamps always walk away happy.
There is one member who sells at every meeting and I have heard him brag about how much he got away with when buying from unsophisticated heirs who see his ad in the local paper He gets no discount and if possible may not even be shown the books if I can avoid a conversation. If he does get to peek he likes to haggle and starts to cherry pick the better items. More than once he has implied that a price seems too high.
For him, I'll look at some beauty that I think might be fair to price at $5.00 that he questions and then erase the price. "You're right, that is wrong," I'll say and then I write in $12.25 or whatever it is that pops into my mind. "Thanks for pointing that out."
He seemed to have gotten the hint about a year or so ago when I was a frequent attendee and walked away mumbling something about me not knowing anything about stamps, to the infinite amusement of some of the other regulars who also know his reputation.
Youngsters get a secret discount as well as some bonus stamps when one attends and shows excitement at the stamps on display and once in a while two sisters in their mid-late teens attend and spend hours selecting used stamps. They get a mini-skirt discount.
Just because.
As my explanation goes, I don't need to sell anything. I don't like to part with stamps, even duplicates. I only did it then to be a part of the social interaction at the club table. If I do sell some I like to get as much pleasure out of the sale as the buyer does.
There are times I'd just as soon give the stamps away to the right party as sell them.
But then that's me.

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Logistical1
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07 Mar 2013
01:08:41pm
re: Pricing Formulas for listing on SOR auction board

Well said Charley. The value and enjoyment is in the sharing of the hobby and your knowledge with those that are interested.

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Rhinelander
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07 Mar 2013
07:28:25pm
re: Pricing Formulas for listing on SOR auction board

I am not sure who of our members responding in this thread have been seduced by the lure of lucre when recommending starting prices of 30% of catalog value at most, and generally much, much lower.

I remember that very recently several members lamented in separate postings the shortage of members selling in our auction. Pat then started this topic to offer advice to novice sellers how to decide on an initial offering price, how to use an excel spread sheet and the auction bulk upload function. I did not know all that and appreciated the information. If you agree with his thoughts or not really is immaterial. He was responding to a demand posed by buyers: we want more offers in our auction.

We certainly would have more offers in our auction if all members, who are buyers only, would once in a while also list a few items in the auction. It always helps to wear someone else’s shoes. If our “buyer-only members” would experience how much time is necessary to scan, catalog, describe, upload, invoice, and ship stamps offered in our auction, there might be a greater appreciation for our sellers. You will find that there is hours of work, but absolutely no financial reward in it. However, I see how some members could enjoy selling for its non-financial rewards: the excitement if an item will sell or not, the interaction with other members, the relief to have finally gotten rid of that one set of stamps that you did not know what to do with it etc. I have long decided that I generally do not enjoy selling enough to make it worthwhile. I rather spend my time working on my collection. The “lure of lucre” certainly did not work its magic on me. The only sound reason for me to put some stamps in our auction once in a while is housekeeping: I checked this glassine envelope; I do not need the stamps; let’s get rid of the bunch to avoid future confusion and build up of clutter.

Of course, different motivations for selling result in different pricing models. If you are a professional dealer with a mortgage and two kids in college who buys and sells stamps for a living, you have to charge different prices. I just talked to a “small” full-time dealer over the weekend. Given a necessary target profit, which I estimate of less than $40,000 income per year, he buys collections at no more than 12% of catalog for a collection from a “good” collector, because many stamps added in the total catalog value of a collection will never sell individually, ten percent of the inventory is stolen or destroyed over time (finger prints on stamps formerly known as MNH), and buyers do not want to pay more than 50-60% catalog on average. “Normal” collections, characterized by a mix of used and mint stamps, whatever is cheaper, with almost all mint being hinged, many stamps with minor faults, and all key values missing or space fillers, will not be bought, or bought only for much less than his 12% break-even number.

If he pays any more than 12% for a collection with actually re-sellable stamps, his business model does not work and he can’t put food on the table. The difference between buying at 12% and selling at 50% catalog must cover all costs plus provide $40,000 (after taxes) at the end of the year. He strips the collection, working what appear to be endless hours, cataloging every single usable stamp, putting them on stock cards, stored in the classic red dealers’ boxes. He then travels to twenty+ weekend stamp shows per year. Now, he is in with the cost of the inventory, insurance, the cost of the stock cards, the gas, the hotel, a $200-300 table fee for an 8-foot table at a regional show (a corner booth at an APS show is $1,500), and three days of crappy sandwiches for meals, because every dollar spend on the road cuts into his “lucre”. He cannot offer ten cent stamps because he cannot have someone occupy two feet of his eight foot table for five consecutive hours to pick out $30 worth of stamps. To sum it up: sounds like a lousy way to make a living, as far as I am concerned.


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CapeStampMan
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Mike

07 Mar 2013
09:39:35pm
re: Pricing Formulas for listing on SOR auction board

Arno,
You didn't tell us if he was a collector or not, but if he is he probably looses a good percentage of "shrinkage" to his own collection. That's why most real dealers, of anything, not just stamps, are not collectors themselves and most collectors are not dealers in the real sense of the word. Personally, I give away a lot more than I sell, just to get rid of them such as your friend, to "to avoid future confusion and build up of clutter".

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lpayette
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07 Mar 2013
09:47:19pm
re: Pricing Formulas for listing on SOR auction board

I certainly do not make a living selling stamps, but I am having a lot of fun,and meeting and talking with lots of nice people.

It also keeps me occupied and and busy and researching stamps thats you can not find in the catalog is for me a lot of fun.

And the fun I have going thru box lots or albums I buy at auctions is like Christmas when I get them. Before you know it, kitchen table is covered with stamps,coffee table covered with SS, envelopes, covers and little boxes full of colorful little pieces of paper, catalogues are stacked on chairs beside table, kitchen counters covered with stamps drying on paper towels after soaking and you hope you do not get any unexpected company as you are having so much fun.

Too busy to cook supper -order a pizza
lee

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Rhinelander
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08 Mar 2013
12:13:11am
re: Pricing Formulas for listing on SOR auction board

@ Mike

I actually don't know the dealer -- his name also was Mike -- very well. He was just a nice friendly guy and I was having a conversation while going through boxes of stamps. I am sure he once was a collector, but now is a dealer. I guess dealing in stamps is a different way to connect with the hobby. Some of the things he said just appeared to be quite interesting to me, hearing from a dealer perspective. I have been reading a lot of complaints about dealers only offering "pennys on the dollar" for stamp collections in the recent issue of the APS journal etc. But when he explained his 12% figure it made perfect sense to me.

At the risk of appearing less charitable than you -- I give away some stuff, but most of my unwanted items I resell. However, I prefer zero-hassle, zero transaction cost, zero time required, low effort sales approaches. Accordingly, most of my selling is in our local club auctions where I don't have to scan, catalog, label, and describe anything. Just a post-it note "Ten stock pages of Costa Rica, $5 minimum" and put it on the sales table. I believe many of us do the same, buy a collection for $50, have fun merging with one's own collection, and sell the rest for whatever it is worth yet to someone else starting at a low price --partial cost recovery to stretch the monthly collecting budget a little bit.

@ Lee

Yes. Ours is the greatest hobby in the world.

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amsd
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11 Mar 2013
09:10:50am
re: Pricing Formulas for listing on SOR auction board

The July APS magazine had a letter to the editor, from a retiring collector who described how he disposed of what he described as a high-level US collection. He noted that all stamps were in sound condition and graded high, as he was always concerned with quality and looks. After loooking at auction sales figures for complete US collections, he figured he might get 17.5% of Scott for his. He offered it to the five dealers he thought most likely to give him that amount: according to him he received only two replies, one for 13% and one for 16.5% These are higher than the quoted 12%, but not by much. Moreover, if this included all the high-value sought-after stamps, that seems appropriate and in line.

What this says to me is that ordinary collections are likely to get well under 10% from dealers, and probably not much more from collectors. That assumes these collections have sound stamps and are relatively complete and very organized. Note that much of what the buyer pays for is the organization (read time and expertise) its previous owner lavished on it.

this is different from buying singles and sets where the buyer is getting ONLY what s/he wants, not extraneous stuff destined to be resold, given away, or filed away in the cigar box.

David

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11 Mar 2013
01:20:22pm
re: Pricing Formulas for listing on SOR auction board

For the past 2 years I have been preparing my collection in such a way that my daughter will be able to sell the items via Ebay (or some other appropriate venue) and generate a part time income for herself. As she does not collect stamps, she will have no ties to the stamps and will be able to part with them without remorse or concerns regarding price realizations. She is smart enough to figure out the basics, as long as I have everything checked for types, watermarks, perfs, etc. This way I can enjoy my collection without concern over selling it ("until death do us part"). Of course I am not ready to go yet! So I keep buying, selling, and trading, but as a collector, not a merchant or investor concerned with the bottom line.

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PDougherty999

04 Mar 2013
10:02:19am

I stated in another thread that I was going to share my weird formulas for how I come up with pricing here on SOR.

The reason I’m starting this thread is that one of the most intimidating things as a seller or a potential seller is trying to figure out what price to start your listing at. I've been there. I have always felt that the Scott catalog is worthless to me when trying to come up with pricing on U.S. stuff due to the variances between what they say a stamp is worth and what I’m seeing for prices on various auction sites. It wasn't until around last August that I finally came up with a set of formulas that made me comfortable and gave me a standard to work with so that my prices were not all over the board.

I would also be interested in how other sellers come up with their pricing as there seems to be a wide range in what individuals think their stuff is worth.

Take it or leave it, this is how I do it. In most cases, it seems to come up with a price that is attractive to buyers here. But I am in no way an expert on SOR auctions. I am merely basing my prices on what I've seen as attractive prices from other SUCCESSFUL sellers. One final WARNING: These formulas have been used on U.S. stuff only so far. I have not delved into the selling of foreign stuff yet, so I have no idea if I would use the same formulas for that kind of material.

First and foremost, I use an Excel sheet to automatically do all of the calculating. Trying to do that math by hand would have chased me away a long time ago.

Second, for the formulas to work, you need a guideline on what current pricing is for the stamps. Since we all know that the Scott catalog really doesn't give you an accurate portrayal of what stuff is selling for, I chose two sites (Mystic Stamp Company and eBay) to use as guidelines. When grabbing a price from eBay, I’ll pick out the lowest priced item (shipping included) that is being offered by a top rated seller (or at least by someone with more than a thousand transactions and 99% positive feedback).

Lastly, I sometimes fudge around with the figures if I think the price is too low or too high. I do give examples of this.

Used stamps are the easiest to work with. If Mystic is selling the stamp or stamps for $0.15 a stamp, then I simply go with the price of $0.05 a stamp. I won’t go under that amount because at anything lower, it’s not worth the time and energy to do all the work for preparing the auction lot. If Mystic is listing the price at a higher rate, then those stamps are most likely a little more rare so then I kick in the following formula: SOR Price = Mystic Price + eBay Price divided by Two then divided again by 5.125. If I can’t find a value for a used stamp on eBay, then I simply use the value from a MNH. Typically, the price difference between used and MNH on eBay is not that much for the slightly rarer items.

Mint Damaged Gum stamps are also very easy. Since they have been devalued by the damage, they are only really worth being used as postage so I will list those at face value. Selling them for less than that I would consider as throwing away money. I have found that there are people out there willing to buy damaged gum stamps so they are worth something in my inventory as well.

I’d like to take a quick side-track for a second. I never could understand why someone would sell postally unused stamps for less than their face value. At the bare minimum, they are still worth that face value for postage. In a way, they are legal tender in a certain situation. So to sell them under that amount is the same as giving a person a ten dollar bill and asking them to make change for you by just giving you a five dollar bill back. Like I said, it doesn't make sense to me. You won’t catch me doing it, but I have gotten some really good deals thanks to others doing it. OK, back to my topic…

Mint Never Hinged and Mint Hinged are treated the same by me. Beauty is in the eye of the buyer and I've seen that the formula works for both of them. The pricing formula does change based on the age of the stamp. Anything from the year 2000 to present day gets treated to one formula while older stuff gets treated to a different formula. I’m not sure where I came up with the idea, but it seems to be working.

Y2K MNH & MH Stamps are treated by their current face value. So forever stamps currently are worth $0.46 cents regardless of the year. The formula I use is Current Face Value multiplied by 1.25. I do watch though as there are some rarer stamps from this era so just for S’s and Giggles, I still process everything with this formula (Mystic Price + eBay Price divided by Two then divided by 5.125) and if there is a major price difference (and for me, that’s $0.40 or more) between this one and my normal price, I’ll most likely go with the higher price or average the two prices out depending on the actual rarity of the item. In some weird cases where the value of the stamp may cause my formula to go below $0.05 a stamp, I will not go any lower than that $0.05. As I stated above, it isn't worth my time then.

The older than Y2K stamps are just simply treated to the tried but true (for me at least) formula of SOR Price = Mystic Price + eBay Price divided by Two then divided again by 5.125. And once again, if there is a weird case of that formula giving a less than $0.05 value, and then I leave it a nickel.

Covers and FDC are something I personally stay away from if I can help it. The pricing on these is so varied based on the buyers’ tastes and there really is no good formula I could come up with the make them worth my time.

The only ones that I’m having trouble with are the New York State Transfer Tax stamps. The last run I tried selling them at $0.20 a piece and still didn't get any interest on them. I’m going to try one more time at a lower value and see what happens. I’m thinking that they just are not something most SOR collectors are interested in. I would be very interested in hearing advice on how to best handle them though.

---Pat

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CapeStampMan

Mike
04 Mar 2013
12:06:18pm

re: Pricing Formulas for listing on SOR auction board

Patrick,
That is definitely a wierd formula and sounds too complicated, to me anyway.
I think the first item on your pricing formula would have to be what the stamp or stamps cost you in the first place, since you probably don't want to sell any of them for less than what you actually paid for them. To save yourself a lot of time and the hassle of researching prices on the internet, plus a retail dealers site, why not just figure a flat percentage of catalog value and be done with it. I use the 2009 Scott's to value most of my stamps and just assume a lot of the higher values stamps have had an increase in value, so in that way the buyers are getting an extra bonus. Of course the common stamps usually remain at minimum value forever, so they are easy to figure out.

As far as those NY state tax stamps, just put them in your duplicate box or trading stock or even make them part of an "odd lot" at a cheap starting price. I have three containers on my desk that I put my "give away stamps" in. One is for the APS youth philately, one is for the Holocaust group of school kids in Foxboro and the other is for making up "odd lots" for the local club or the SOR auction.

Mike

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Logistical1

04 Mar 2013
02:31:03pm

re: Pricing Formulas for listing on SOR auction board


My pricing is fairly basic for post 1930 US stamps. For most MNH, face value plus 5 cents or 25% of the Scott value whichever is greater, give or take a penny. Stamps before 1930 MNH, MH or U, I usually use 25% of Scott value unless it is an exceptional specimen then I will add a premium. To me a MH stamp is valued as a used stamp. Of course there is the occasional exception. Why 1930? I don’t know, it just seemed like a good year to draw the line.

I suppose I use the same pricing logic when I buy stamps as well except I prefer to buy used stamps for issues before 1920.

I also use Excel and I embed the image of the stamp I am selling onto the spreadsheet. The nice thing about Excel is I can manipulate the data any way I want. I started an Access database a couple times but never quite finished. Just as well as I am very impressed with Excel 2010.

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PDougherty999

04 Mar 2013
02:41:42pm

re: Pricing Formulas for listing on SOR auction board

What I like about Excel is that you can then do some creative copying and pasting and very quickly create the .CSV file that works with SOR's Bulk Upload Utility. And it makes the formulas work magically for me. I put the scans of my stuff up on DropBox now and just store the public links in the Excel sheet.

That 25% seems to be the magic number here on SOR.

As for what I paid, in some cases, I went to eBay to buy something and was willing to pay a higher value for it. We all know that here on SOR, people don't like that higher rate. There is no way I'm gonna get what I paid for on some of the items.

---Pat


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tomiseksj

04 Mar 2013
07:25:10pm

re: Pricing Formulas for listing on SOR auction board

I've just begun to sell my duplicate material on ebay and have tinkered with a formula for determining final value based on my desired profit on each item listed so I applaud your effort to arrive at a reasoned basis for price-setting.

I question, however, your choice of Mystic as a benchmark after having rejected Scott catalog values as being "worthless."

A quick comparison of Mystic prices to Scott CVs shows that, in many cases, the Mystic selling price is higher than the corresponding Scott CV. For example, Mystic wants $13.50 for a mint Scott 300 (the catalog indicates that most 1893-1940 mint stamps as being original gum previously hinged), while the 2011 Scott CV for an OGph 300 was $12. A Mystic mint (OGph) Scott 397 sells for $35 while the 2011 Scott CV for an OGph stamp was $16.50 and a never hinged copy $40. Mystic's Scott 726 mint (OGph) is $1.45 while the corresponding 2011 Scott CV was $.45 (used was $.30 Mystic/$.20 Scott).

With regard to ebay prices, I'd recommend that you draw your valuations from completed listings, rather than from current offerings.

Steve

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lpayette

05 Mar 2013
12:36:26am

re: Pricing Formulas for listing on SOR auction board

I have an easy pricing formula for starting bid on what I sell.

For mnh 25-30% of vat value.
For used. 10-15 % of cat value.

lee

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Rhinelander

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05 Mar 2013
08:31:20am

re: Pricing Formulas for listing on SOR auction board

I usually use the below formula to determine my auction asking prices:

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You just have to substitute the two parameters d1 and d2 into the first equation, which gives me the optimal asking price as a function primarily of the Scott catalog value and the length of the auction.

N (.) is the cumulative distribution function of the standard normal distribution (needed to estimate the probability of a sale)
T - t is the duration of the auction
S is the Scott catalog price
K is the Buy it Now price of a comparable ebay item
r is the risk free rate (annual rate, expressed in terms of continuous compounding to capture the minimum return on inventory to make it a worthwhile venture)
σ is the volatility of the selling prices (estimated based on the standard deviation of the most recent 5-10 sales of comparable items on ebay).

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Mike
05 Mar 2013
08:53:14am

re: Pricing Formulas for listing on SOR auction board

Arno,
While I am giving serious thought to using your formula for my sales, I think I will continue to use one similar to Lee's formula, for the time being. One thing I did not see in your formula was the probability of a package being shipped from Ohio, (point A) without adding tracking, insurance, confirmation or Priority shipping and arriving in a prompt manner, in California, (Point B) just for example, without rerouting through Tampa, Florida (Point C) and, AND, using the almost, pert near, defunct USPS as the carrier service.

Mike

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Rhinelander

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05 Mar 2013
09:25:51am

re: Pricing Formulas for listing on SOR auction board

Hi Mike,

The probability of the item being shipped etc. is "1" and therefore not part of the equation determining the asking price. I have not included other factors affecting shipping cost you mention, because these are passed on to the buyer "at cost." Pat's formula also ignores cost of shipping. Mathematically, these costs are a constant and could be easily build into the model. The only difference is that you would be estimating the best asking price gross, and not net of shipping. But it is a good suggestion, and I will think about it.

Arno

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05 Mar 2013
10:23:12am

re: Pricing Formulas for listing on SOR auction board

Arno

I have not been a member here long enough to know whether you are serious or "pulling my leg," although I suspect the latter.

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Rhinelander

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05 Mar 2013
12:11:21pm

re: Pricing Formulas for listing on SOR auction board

So, Bobby, you think this is funny?

Well, I don't want to make light of Pat's attempt to provide some guidance on how to come up with a good asking price. This problem is more important perhaps in our auction because items quite frequently sell at the opening bid. The reality of course is that figuring out an "optimal" opening bid really is an art, and not a science.

Pat's approach has a lot going for it. The only part I am not getting is a rationale for the "odd" 5.125. "5" could have been good enough for a rule of thumb. Most folks thus far recommend a varying percentage of Scott based on whether it is a MNH or used stamp, an older or newer stamp etc. This is pretty much the standard procedure. Percentages that have been recommended for an opening bid range from 10% to 30% given the type of stamp.

Instead of using a percentage of one catalog value, Pat proposes using about 19.5% (= 1 / 5.125) of the average of two values: Mystic, which likely gives you a price higher than Scott, and the lowest ebay Buy it Now price. Of course, the current Buy it Now prices are deceptive, because these are the unsuccessful offers only, which remain outstanding because nobody accepted them. Therefore, the Buy it Now prices are likely on the high side. Nevertheless, referring not to a catalog value but to other prices at which the stamp could be actually obtained "right now" (from a stamp dealer, Mystic, or in online auction) has some logic to it.

Likely, the solution is not in the accuracy of a formula, however. As much as I am in love with my own invention (which is gobbledygook adopting the Black-Scholes formula for the price of an American call option), pricing is an art and greatly depends on the condition -- which always is paramount -- as well as the "heat index" for a certain collecting area.

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06 Mar 2013
04:04:57pm

re: Pricing Formulas for listing on SOR auction board

Bean counters:

Pricing formulae for selling postage stamps seem to be as entertaining as collecting stamps, and I feel as if I'm trapped in a Woody Allen movie.

For all Stamporama sellers who've been seduced by the lure of lucre, permit me to direct you to your bottom line:

The silver is mine, and the gold is mine, saith the Lord (Haggai 2:18)

John Derry (stamp buyer)

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michael78651

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06 Mar 2013
08:48:44pm

re: Pricing Formulas for listing on SOR auction board

When it comes to sales, there is only one formula that matters. Is your item priced so that someone buys your item and not someone else's.

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CapeStampMan

Mike
06 Mar 2013
10:05:45pm

re: Pricing Formulas for listing on SOR auction board

John,
You added an extra digit in your quotation. It's Haggai 2:8, not 2:18.

And Michael, you are absolutely right. Take your formulas and spend all day figuring them out and still it depends on the right person, seeing the item at the right time, along with an agreeable price. Sometimes name Luck!
Mike

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07 Mar 2013
04:04:45am

re: Pricing Formulas for listing on SOR auction board

A different perspective.

I do not sell stamps often and recently since I do not get to the stamp club more than twice a year sell even fewer.
But for years I did attend regularly and prepared a group of 5"x8" binders to display a selection of duplicate stamps to sell.

I have been collecting and accumulating stamps for almost fifty years as an adult. I have more than several binders with duplicates, many that are listed in Scotts at the minimum value (M=30¢) but also quite a few that would generate a premium in any standard auction catalog.
At out local stamp club several collectors trade used stamps with others or try to sell them. One member is a professional dealer and he sells common postally used at 20¢ apiece, but always cuts a discount to regular purchasors who buy several dollars worth at a time.
He also has a wooden box with mixed used kiloware, usually still on paper but occasionally already cleaned that several collectors sort through. His sign say 12¢ each or 12 for a dollar and a quarter, but again since I select two or three hundred each time he usually charges me significantly less. It usually works out to about 9 or 10¢ each.
He organizes a series of local bourses and seems to make a living that way. Of course he also handles lots of high premium stamps as well as supplies which are otherwise only available in this rural area from mail order dealers.
So I figure the cleaned and sorted, matched sets should net me close to 20¢ each which is comperable to his matched set price. But again I would often round things down to 10 or 15¢ for the right party.
However, I have an introductory page printed for each sales book that explains the roughly 20¢ and I encourage anyone who wants to pull some items from my book to read it carefully.
I explain my prices but I add that for stamps that I simply cannot bear to sell I may ask twice that or more because I really do not care if anyone buys any thing. It says;

"Stamps that would break my heart to part with are priced according to my whim and may have no relationship to the listings printed in Scotts Catalog."

Starting at 20¢ each, I may add 10 or 20% for very nicely cancelled sets if complete, and a little more for popular topics. I have a soft spot for collectors who prefer postally used and tend to ignore people looking for gum to collect. Those who sit and chat, showing a love for the stamps always walk away happy.
There is one member who sells at every meeting and I have heard him brag about how much he got away with when buying from unsophisticated heirs who see his ad in the local paper He gets no discount and if possible may not even be shown the books if I can avoid a conversation. If he does get to peek he likes to haggle and starts to cherry pick the better items. More than once he has implied that a price seems too high.
For him, I'll look at some beauty that I think might be fair to price at $5.00 that he questions and then erase the price. "You're right, that is wrong," I'll say and then I write in $12.25 or whatever it is that pops into my mind. "Thanks for pointing that out."
He seemed to have gotten the hint about a year or so ago when I was a frequent attendee and walked away mumbling something about me not knowing anything about stamps, to the infinite amusement of some of the other regulars who also know his reputation.
Youngsters get a secret discount as well as some bonus stamps when one attends and shows excitement at the stamps on display and once in a while two sisters in their mid-late teens attend and spend hours selecting used stamps. They get a mini-skirt discount.
Just because.
As my explanation goes, I don't need to sell anything. I don't like to part with stamps, even duplicates. I only did it then to be a part of the social interaction at the club table. If I do sell some I like to get as much pleasure out of the sale as the buyer does.
There are times I'd just as soon give the stamps away to the right party as sell them.
But then that's me.

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Logistical1

07 Mar 2013
01:08:41pm

re: Pricing Formulas for listing on SOR auction board

Well said Charley. The value and enjoyment is in the sharing of the hobby and your knowledge with those that are interested.

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Rhinelander

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07 Mar 2013
07:28:25pm

re: Pricing Formulas for listing on SOR auction board

I am not sure who of our members responding in this thread have been seduced by the lure of lucre when recommending starting prices of 30% of catalog value at most, and generally much, much lower.

I remember that very recently several members lamented in separate postings the shortage of members selling in our auction. Pat then started this topic to offer advice to novice sellers how to decide on an initial offering price, how to use an excel spread sheet and the auction bulk upload function. I did not know all that and appreciated the information. If you agree with his thoughts or not really is immaterial. He was responding to a demand posed by buyers: we want more offers in our auction.

We certainly would have more offers in our auction if all members, who are buyers only, would once in a while also list a few items in the auction. It always helps to wear someone else’s shoes. If our “buyer-only members” would experience how much time is necessary to scan, catalog, describe, upload, invoice, and ship stamps offered in our auction, there might be a greater appreciation for our sellers. You will find that there is hours of work, but absolutely no financial reward in it. However, I see how some members could enjoy selling for its non-financial rewards: the excitement if an item will sell or not, the interaction with other members, the relief to have finally gotten rid of that one set of stamps that you did not know what to do with it etc. I have long decided that I generally do not enjoy selling enough to make it worthwhile. I rather spend my time working on my collection. The “lure of lucre” certainly did not work its magic on me. The only sound reason for me to put some stamps in our auction once in a while is housekeeping: I checked this glassine envelope; I do not need the stamps; let’s get rid of the bunch to avoid future confusion and build up of clutter.

Of course, different motivations for selling result in different pricing models. If you are a professional dealer with a mortgage and two kids in college who buys and sells stamps for a living, you have to charge different prices. I just talked to a “small” full-time dealer over the weekend. Given a necessary target profit, which I estimate of less than $40,000 income per year, he buys collections at no more than 12% of catalog for a collection from a “good” collector, because many stamps added in the total catalog value of a collection will never sell individually, ten percent of the inventory is stolen or destroyed over time (finger prints on stamps formerly known as MNH), and buyers do not want to pay more than 50-60% catalog on average. “Normal” collections, characterized by a mix of used and mint stamps, whatever is cheaper, with almost all mint being hinged, many stamps with minor faults, and all key values missing or space fillers, will not be bought, or bought only for much less than his 12% break-even number.

If he pays any more than 12% for a collection with actually re-sellable stamps, his business model does not work and he can’t put food on the table. The difference between buying at 12% and selling at 50% catalog must cover all costs plus provide $40,000 (after taxes) at the end of the year. He strips the collection, working what appear to be endless hours, cataloging every single usable stamp, putting them on stock cards, stored in the classic red dealers’ boxes. He then travels to twenty+ weekend stamp shows per year. Now, he is in with the cost of the inventory, insurance, the cost of the stock cards, the gas, the hotel, a $200-300 table fee for an 8-foot table at a regional show (a corner booth at an APS show is $1,500), and three days of crappy sandwiches for meals, because every dollar spend on the road cuts into his “lucre”. He cannot offer ten cent stamps because he cannot have someone occupy two feet of his eight foot table for five consecutive hours to pick out $30 worth of stamps. To sum it up: sounds like a lousy way to make a living, as far as I am concerned.


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CapeStampMan

Mike
07 Mar 2013
09:39:35pm

re: Pricing Formulas for listing on SOR auction board

Arno,
You didn't tell us if he was a collector or not, but if he is he probably looses a good percentage of "shrinkage" to his own collection. That's why most real dealers, of anything, not just stamps, are not collectors themselves and most collectors are not dealers in the real sense of the word. Personally, I give away a lot more than I sell, just to get rid of them such as your friend, to "to avoid future confusion and build up of clutter".

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lpayette

07 Mar 2013
09:47:19pm

re: Pricing Formulas for listing on SOR auction board

I certainly do not make a living selling stamps, but I am having a lot of fun,and meeting and talking with lots of nice people.

It also keeps me occupied and and busy and researching stamps thats you can not find in the catalog is for me a lot of fun.

And the fun I have going thru box lots or albums I buy at auctions is like Christmas when I get them. Before you know it, kitchen table is covered with stamps,coffee table covered with SS, envelopes, covers and little boxes full of colorful little pieces of paper, catalogues are stacked on chairs beside table, kitchen counters covered with stamps drying on paper towels after soaking and you hope you do not get any unexpected company as you are having so much fun.

Too busy to cook supper -order a pizza
lee

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Rhinelander

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08 Mar 2013
12:13:11am

re: Pricing Formulas for listing on SOR auction board

@ Mike

I actually don't know the dealer -- his name also was Mike -- very well. He was just a nice friendly guy and I was having a conversation while going through boxes of stamps. I am sure he once was a collector, but now is a dealer. I guess dealing in stamps is a different way to connect with the hobby. Some of the things he said just appeared to be quite interesting to me, hearing from a dealer perspective. I have been reading a lot of complaints about dealers only offering "pennys on the dollar" for stamp collections in the recent issue of the APS journal etc. But when he explained his 12% figure it made perfect sense to me.

At the risk of appearing less charitable than you -- I give away some stuff, but most of my unwanted items I resell. However, I prefer zero-hassle, zero transaction cost, zero time required, low effort sales approaches. Accordingly, most of my selling is in our local club auctions where I don't have to scan, catalog, label, and describe anything. Just a post-it note "Ten stock pages of Costa Rica, $5 minimum" and put it on the sales table. I believe many of us do the same, buy a collection for $50, have fun merging with one's own collection, and sell the rest for whatever it is worth yet to someone else starting at a low price --partial cost recovery to stretch the monthly collecting budget a little bit.

@ Lee

Yes. Ours is the greatest hobby in the world.

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amsd

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11 Mar 2013
09:10:50am

re: Pricing Formulas for listing on SOR auction board

The July APS magazine had a letter to the editor, from a retiring collector who described how he disposed of what he described as a high-level US collection. He noted that all stamps were in sound condition and graded high, as he was always concerned with quality and looks. After loooking at auction sales figures for complete US collections, he figured he might get 17.5% of Scott for his. He offered it to the five dealers he thought most likely to give him that amount: according to him he received only two replies, one for 13% and one for 16.5% These are higher than the quoted 12%, but not by much. Moreover, if this included all the high-value sought-after stamps, that seems appropriate and in line.

What this says to me is that ordinary collections are likely to get well under 10% from dealers, and probably not much more from collectors. That assumes these collections have sound stamps and are relatively complete and very organized. Note that much of what the buyer pays for is the organization (read time and expertise) its previous owner lavished on it.

this is different from buying singles and sets where the buyer is getting ONLY what s/he wants, not extraneous stuff destined to be resold, given away, or filed away in the cigar box.

David

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11 Mar 2013
01:20:22pm

re: Pricing Formulas for listing on SOR auction board

For the past 2 years I have been preparing my collection in such a way that my daughter will be able to sell the items via Ebay (or some other appropriate venue) and generate a part time income for herself. As she does not collect stamps, she will have no ties to the stamps and will be able to part with them without remorse or concerns regarding price realizations. She is smart enough to figure out the basics, as long as I have everything checked for types, watermarks, perfs, etc. This way I can enjoy my collection without concern over selling it ("until death do us part"). Of course I am not ready to go yet! So I keep buying, selling, and trading, but as a collector, not a merchant or investor concerned with the bottom line.

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