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This is where you as a seller will have to make your own decisions. Based on the formula above, would you bother spending $10 to make $21? Would you spend $1000 to make $2100? If no to the former and yes to the latter, then where do you draw the line between the two?
You might consider a sliding percentage based on certain factors. A small lot with a lower resale value (say, five books that should sell for $100) you may only want to offer 10%. Plugging in to the formula above, this would yield an offer of $10 for a final profit of $49. This works out to a 4.9 profit factor, as opposed to 2.1 at 20%.
But you run the risk of losing the lot if you lowball the offer. There is a big difference between $10 (10%) versus $20 (20%) for 5 books, and this difference is magnified as the lots get bigger. A collection owner might be quite happy with a $500 offer but insulted by $250. A common piece of advice I've seen from very experienced sellers is to make your best offer your first offer. I tend to agree, but there is a caveat. If you open with your very best offer, you have no negotiation room. This means that if the owner doesn't accept the offer, you have the choice of going over your limit or walking away. The experienced sellers I referenced above would probably say walk away, and it could well be that the owner decides to accept your offer when they see you heading for the door. If not, then you still have capital for the next collection. To me, offering top dollar is important if you plan on making this a significant part of your business model. Word-of-mouth and reputation are key factors to consider. The importance of getting a reputation as someone who offers a good price for good books cannot be over-emphasized, and book people do talk to other book people.
One strategy you can use to influence the decision is to offer to pay in cash. Cash reassures an owner who might be concerned about finding out the check is bad after the dealer has already left with the books. Anticipating how much to bring can be a problem. At my last house call I brought $2000 in cash and ended up writing a check for the balance. Still, seeing $2000 in cash was a very persuasive argument.
Another factor to consider in pricing is how much of the collection will you be able to use? My minimum price for listing a book online is $20; less than that and the profit to work ratio just isn't worth it. In any collection there are going to be books that fall below your minimum cutoff. A brick and mortar owner will be able to squeeze profit out of these books, as they become shelf stock. To an online only seller they are a simple liability: They take effort to move, and they eat up valuable space. You can try flogging them as bulk lots on craigslist or eBay, or selling them at flea markets, but that takes up time and energy that might be better spent elsewhere - that's up to you. Another solution might be donating them to an FOL or thrift store and taking a tax deduction. In addition to selling online I also sell at science fiction conventions, so I knew that nearly all of the 400+ books in the SF collection I went to look at would be useful to me. This made it possible for me to offer a little more than I would otherwise.
How easy will it be to sell the books; alternatively, how quickly can you recover your investment? This is difficult to quantify and very difficult to teach. It basically comes down to experience. I have a lot of knowledge in the SF field, so when I made the house call, it was pretty easy for me to gauge how desirable the books were and to estimate how long it might take for me to get my purchase price back. There were several very desirable high spot titles in the group, and I estimated that it would take no more than 6 months to begin showing a profit; and potentially a lot less than that. In fact, with only a very small part of the lot listed over the past couple weeks, I've already had some sales totaling almost 5% of my original purchase price.
What is the distribution of value within the lot? How you approach a large lot with mostly junk and a small number of higher value books will be different than a large lot of mostly medium value books, even if the total retail value works out the same. With the former, estimate the retail worth of the higher value books then deduct some for the bother of having to move and dispose of the rest of the junk. You might be tempted to cherry pick here if the owner allows, but be careful: when you've pulled out the small group you want, the owner could change his or her mind about selling to you. You might just end up doing a free book consultation and walk away with nothing but a wasted day. You should also consider that in that big pile of junk may be some hidden gems. An extreme example: In the SF lot I have been talking about, there were a number of books that I immediately condemned to the worthless pile, including a hardback copy of the US Scholastic edition of JK Rowling's The Prisoner of Azkaban. I've seen so many copies of this title, all of them later printings, that I automatically dismissed it. Days later when I finally worked through to the copy, I found that I had been right and that it was in fact a fourth printing. I also found out that it was signed by Rowling. I emailed the previous owner, who confirmed that he had gone to a book signing at a local Washington DC bookstore when Rowling was touring the US. He had forgotten about it when he pulled out the handful of signed books to show me.
Up to now, most of this discussion assumes you have a fair idea of, or at least a really good guess at, the resale value of the collection you are looking at. I was well prepared when I went to view the large lot of SF hardbacks and it didn't take me long to come up with an resale estimate and thus an offer. But what do you do when you come up against a group of books outside your comfort/knowledge zone? There are some good rules of thumb that can help you to decide the potential for a group of books and point you towards a decision to buy or pass. More on that next time in the final installment of this series.
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