Collectible Stocks and Bonds from North American Railroads     by Terry Cox

A guidebook and catalog of prices
(I do NOT buy or sell certificates on this website)

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High-price vs. low-price dealers

A word about high-price versus low-cost versus dealers. I discuss pricing in depth in a special page titled Pricing. I dedicate his page to to discussing dealer pricing.

This hobby depends to a very large degree on relationships - NOT PRICES. I want to stress this in the strongest possible way. I urge you to form relationships with dealers, preferably several dealers. Find dealers who will help you in this hobby. Find dealers who you feel comfortable working with.

Try different dealers. You will find dealers offering similar certificates at widely different prices. This is completely normal. I constantly hear from collectors who often complain about one dealer or another. I understand collector concerns, but I always suggest that they just try different dealers.

Dealers develop their own pricing strategies based on hard-won experiences. Don't try to change them. That would be like trying to convince Wal-Mart to become more like Nieman-Marcus. Or vice-versa. That is just plain silly.

Instead, find dealers who fit your style and wallet.

Please, let me make a gentle observation. Dealers specialize in different parts of the price spectrum because price is the easiest way to attract the types of collectors dealers like to deal with. One of the toughest lessons for dealers to learn is to identify their core group of collectors and focus on that group to the near exclusion of the rest.

No dealer can be all things to all collectors.

Low-price dealers will tend to focus on certificates they can sell quickly. They will tend toward common certificates, especially certificates they can find in volume. It should seem obvious that low-price dealers try to make small profits on large numbers of certificates.

While low-price dealers tend to concentrate on common certificates, they will occasionally offer rarities. Problematically, their customer base may not jump on rarities immediately. Since low-price dealers do not specialize in rarities, their prices may appear too high. Or too low. Their method of operation is to "turn" their invested dollars quickly, so they may not be able to sell high-rarity items quickly enough.

High-price dealers tend to focus on the other end of the spectrum. As a rule, high-price dealers focus on highly-desirable certificates, even though such certificates may not sell quickly. Their inventory often represents one-of-a-kind items. To many collectors, high-price dealers' prices may not appear high at all.

High-price dealers will generally offer a few common certificates. Unfortunately, their customer base may not buy common certificates quickly, if at all. The problem with high-ticket dealers selling low-priced items is that the dealers may not have the proper types of collectors in their mailing lists. High-ticket dealers also need to "turn" their invested dollars quickly. But, because their markup may be higher, they may not need to sell quite as many items.

So, it really comes down to how collectors like to buy and collect. Remember, every type of dealer must make a profit or go out of business. And every type of collector must buy what he or she finds desirable, or get out of the hobby.

Try many dealers. It will not take long for you to gravitate to the types of dealers - the types of people - you like. And, this, after all, is the goal. You want to form a relationship with someone you like. Someone you can trust. Someone who will help you achieve what you want in this hobby.

I hear many complaints. "How can he expect to sell those for that much?" "How can he sell them for so little?" "I know another dealer is selling the same certificate for half that much!" "Oh, he just sells junk!"

Collectors who make these complaints are grappling with a difficult subject.

Pricing operates in a relative vacuum. By that I mean that dealers are often so busy with their own businesses that they have little information about competitive pricing. And their normal customers may be equally uninformed.

As I discuss in Pricing, the subject takes a long time to understand. Pricing is dynamic. But, to get a start on the subject, remember that certificates are not commodities. Every one is different. Secondly, remember that list prices are strictly "ask" prices. Customers always have the option of asking for better prices.

Many factors go into pricing, and they vary radically from dealer to dealer. How many similar certificates does a dealer have in stock? How long have the certificates been in inventory? How much did the dealer invest? Is the condition of the certificate above or below average? Has rarity changed because of new discoveries? Are outside influences affecting prices? What are the dealer's typical customers like?

In conclusion, I ask you to look a little deeper. Try not to dismiss dealers at either pricing extreme just because you don't agree. Rather, try to understand that all dealers have different motivations, different perspectives, different experiences, and most of all, different customers. I suggest that dealers at both extremes have something valid to offer.


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(Last updated Jan 8, 2012)


I strongly recommend buying the Cox Catalog 3rd Edition from your favorite SCRIPOPHILY DEALER. Catalog cover
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