Discover Vintage America - DECEMBER 2019
Getting real about pricing – 'leaving room' for a profit
I was shopping the other day in a store from a famous grocery chain that favors "BOGO" pricing: Buy One, Get One [Free]. On a BOGO item I would normally buy if it were reasonably priced, I saw that the price per item was twice what I would normally pay for it – which means, of course, that I'd be paying what I normally pay for each item, exposing the "free" offer as bogus.
I recently acquired this Royal Copenhagen porcelain "Love Birds" model for the ridiculously low price of $18. Its value is around $100 or so. It gets high marks for quality and artistic merit (note the outstretched wing and tail and the reticulated floral hummock on which the birds are perched). But as a model produced over many decades, it is not "rare," which accounts for its relatively modest value. On resale, if I priced it anywhere between $50 and $75, I'd be making a good deal more than 100 percent profit while still offering the collector an incentive to buy.
Some antique dealers use a similar ploy: price an item to the absolute max and then offer a come-on sale at 50 percent off.
On the other hand, pickers/dealers feel their margins being squeezed by the expectations of private sellers who don't understand why dealers don't want to pay them every cent of what the owner thinks the items are worth. Dealers may have to educate other sellers about the need to "leave room" in the price the dealer pays in order to make a reasonable profit on resale and that dealers have overhead costs that private sellers don't.
How much profit is enough?
It's hard to help private sellers and end consumers get real about pricing if dealers don't do that themselves. If you want to teach it, you have to model it.
Every once in a while, we dealers find "steals" we can offer in resale at huge profits of several hundred percent and still build in a deal for a buyer. But if I have to pay $100 for an item that's theoretically worth three times that, maybe pricing it at 100 percent profit ($200) is enough. In fact, 100 percent profit on the majority of merchandise ("steal" acquisitions aside) should be the pricing target.
This means, of course, that the dealer has to be careful what to pay on acquisition. Sometimes, we'll have to settle for considerably less than 100 percent profit if we have to pay a bit more for a special item; in such cases, each dealer will have to decide how much margin is enough.
Pricing pitfalls for new dealers
Many new dealers rent space in an antique mall as a means for them to downsize their collections. Recently, I moved into a smaller display space at half the rent I was paying for two larger cases. The dealer who moved into one of the tall cases I'd vacated was offering items especially consistent with my own collector interests, so I was immediately drawn to this eye candy – but just as fast repelled by the price tags.
There is no incentive for a buyer to pay those prices as long as they believe they can get the same items cheaper elsewhere on the secondary market. I predict this seller will have to get real very soon, or else I'll see a new dealer in that space in less than three months.
Exceptional items command a premium
Of course, the genuinely rare and exceptional item can command high prices simply because it isn't otherwise available at any price. This means, however, that we all have to get real about discerning the difference between the rare and the merely scarce or the "nice but not rare." There is perhaps no more often abused term on the secondary market than the word "rare." So much "rare" merchandise is offered on eBay as to make the term very nigh to meaningless.
'I should have priced it higher'
I sometimes hear dealers say, after a quick sale, "Oh, I should have priced it higher." Well…no. Maybe you just priced it right for a quick sale. Or maybe the merchandise was fresh enough to draw new interest. Or maybe the right buyer came along sooner rather than later. A quick sale at an item priced at a profit we can live with should be an occasion for an end-goal celebration, not a cause for regret.