The Unbearable Lightness of Price Guides

 

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If you’ve ever tried to sell a collectible
for the value you found in a secondary market price guide,
you’ll have discovered a fundamental truth about collecting
– price guides suck! The fact is that most collectors simply
don’t know how to interpret the information that’s there.
After having my own high hopes dashed on the rocks of reality,
I’ve accepted this necessary evil for what it is, a combination
of expertise, statistics, and guesswork. 

Generally, a price guide will give you the price you
would expect to pay to replace a piece if you were shopping
on Rodeo Drive in Hollywood while your chauffeur kept
the Rolls idling outside. Fine for Mrs. Gates, but most
of us have to contend with a budget and a ’91 Plymouth.

There
are four factors that determine a secondary market price:
condition; rarity; desirability; and availability. These
factors influence each other to determine a value. For
example, a vintage tin-plate car in poor condition may
be very rare. Tin-plate toys are highly desirable to collectors
and have low availability. In spite of its condition,
this item would still have a high value. A guide estimates
the value to be between $300 and $500 for this model.
Considering the four factors, what price should the car
sell for?

I’ve devised a simple chart to determine where the value
of an item falls in a price range. By totaling up the
individual factors, you will get a score of 0 to 14. A
score of 9 – 14 places your value in the top half of a
price range; 0 – 8 lands you in the bottom half.

Example: Tin-plate car in poor condition

 

LOW

MEDIUM

HIGH

 

CONDITION

1*

3

5

1

RARITY

1

3

5*

5

DESIRABILITY

1

3

5*

5

AVAILABILITY

-1*

-2

-3

-1

 

 

 

TOTAL

10

The 10-point total puts our tin-plate car in the top
half of the price range, but just barely. Since the mid-point
of the range – $300 to $500 – is $400, the car should
sell for between $400 and $425. 

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But will it? Not likely. That’s because published price
ranges include the secondary dealer’s mark-up in the price.
A dealer will add 50% – 100% to the price he or she originally
paid for the item in order to make a well-deserved profit. 

After all, many secondary market dealers take a financial
“leap of faith” investing in collectibles that may or
may not increase in value. When you’re selling it on your
own, you’re the dealer, but without a professional
dealer’s investment in a risky inventory. Don’t expect
the same profit margin. 

The rule of thumb that I use with price lists is simple
– divide them in half. That eliminates the dealer’s margin
and gives you a more realistic asking price for the piece.
For our example, the price range for the car is now $150
– $250, with $200 – $215 being the amount the damaged
piece is “worth”. If it fetches more than that, consider
it a bonus!

To print out your own set of blank evaluation forms,
Click here.

RJ Gulliver is the author of “The Net User’s
Guide to Buying, Selling and Trading Collectibles”,
published by Stoddart. For more information, visit www.gulliverscollectibles.com