Russian Stamp Valuation Issues


How much is any given stamp worth (be it Russian or not)?  Well, that is sort of like asking "how high is up", isn't it!


 

"Executive Summary"

This page mainly discusses the differences between different methods of valuing stamps.

For some interesting data on current stamp values, have a look at these pages.

In very quick terms, good quality older issues will generally trade around 50% of Scott on eBay, and sometimes trade at above Scott values, whereas ordinary quality and more recent issues will often trade for vastly less than the 15c values shown in Scott.

If you'd like to read more, please continue.  :)

 


 

This has become an extensive page, so much so that not only have I tried to add an "executive summary" but here too now is a contents/index to what follows!  I'm trying to avoid having to split it into a series of sub-pages.....

Contents

The Battle of the Catalogs

The Global Marketplace

Exchange Rate Issues

Changing the Method of Valuation

More is Less Part 1 (Sets are worth less)

More is Less Part 2 (Sheets are worth less)

The 15c (now 20c) Myth

What Goes Up Must Go Up Further?

The Spread between buying and selling prices

So rare that no-one knows its value!

Expertising and Certificates

A Dealer's Perspective

Interpreting Auction Sales Data

Some Summary Conclusions


The Battle of the Catalogs

I've got a bunch of different Russian stamp catalogs, from Scott, Michel, Stanley Gibbons, and various Russian publishers.  Guess what.  None of the catalogs uses the same numbering system, so there is no way that you can cross reference stamps from one catalog to the other.

And guess what else.  None of the catalogs consistently agree with any of the other catalogs in terms of stamp values.  Many times I've noticed that Michel shows prices ten times higher than Scott and I've found one example where SG is thirty times higher than Scott (and this is after adjusting for the different currencies and their exchange rates)!

And as for the Russian catalogs, their values are, alas absolutely meaningless (notable exception - the 1999 Liapin catalog prices in US currency).  The rapid depreciation in the Russian ruble has made it impossible for any catalog values based on the Russian currency to have any relevance at all to the actual values of the stamps.  Kind of sad, isn't it - that the country that issued the stamps can't participate in setting their current values!

Which catalog is the "best"?  Hard to say.  The "worst" is probably the general Stanley Gibbons (SG) catalog, although its specialist volume on Russia is very good.  I'd rate Scott a second worst (or third best, depending on your perspective), with the SG specialist catalog ahead of Scott, and probably put Michel in tying in first place with SG.  Check the section on literature reviews for more specifics on this subject.

Any of the catalogs are reasonably okay for most general reference, but when you have an unusual variant of a stamp, or are trying to work your way through the thicket of different issues in the complicated period between the onset of the revolution in 1917 and the gradual stabilising under Communist control late in the 1920s, then neither Scott nor the general SG is very helpful.

Conventional wisdom has it that Scott values are too low (I usually see this claim from dealers hoping to sell over the Scott pricing!), but I've never yet encountered a convincing reason why this should be so.  This is not to alter the reality of the observed fact, but I really would like to have a credible explanation for why Scott consistently undervalues compared to SG and Michel, and, if Scott really truly does price too low, how come most eBay auction material sells for less than 50% of this low price!  I laugh to see auctions where the seller says "Scott prices too low at $10, actual market price is $20-25" and then the stamp sells for $5!  Seems to me that the "market" is speaking and telling the seller that he is dead wrong, and rather than being too low, Scott prices are too high most of the time!!!

If you're selling stamps, you of course want to look for values in Michel or SG and hope your buyer accepts them without complaint.  If you're buying, then you want to pull out your Scott and negotiate down from the prices in that!

The Global Marketplace

It surprises me that there are such major differences in stamp values in different parts of the world, and while I have little direct experience of this, lots of people tell me that it is so, and - until shown otherwise - I'll accept these statements at face value (even if usually they are given to me in the context of trying to justify charging me a higher price!).

It appears that Germany pays the highest prices for Russian stamps.  Many times I'm trying to negotiate good prices with Russian stamp dealers, and instead of accepting my offer of a low percentage of the Scott value, they ask instead for a high percentage of the Michel value (which many times would mean that I'm paying much more than full Scott value!).  They tell me that they have German collectors and dealers who regularly visit and buy up most of their stock, and who base their pricing on Michel prices rather than Scott prices, and so, they say, why should they sell to me for much less than they can sell to a German next time he is in town!  I find it hard to come up with a good answer to that question.

With the Internet being a truly international way of buying and selling, you'd think that pricing would tend to become more uniform across the world, but that doesn't seem to have happened yet.  Doubtless it will in the future, but whether that means that prices in the US will increase, or prices in Germany will decrease - well, that is anyone's guess, isn't it!

Exchange Rate Issues

I'm writing this having just seen a stamp for sale on eBay.  Not only was the seller quoting the much higher Michel catalog price in preference to the much lower Scott price, but he was also dishonestly converting from DM to $.  The seller (an active seller of Russian material who was once banned from eBay but is now back again under a slightly altered name) claimed that DM400 = US$225.  In actual fact, at today's exchange rate (Aug 00), DM400 = US$184.  This $41 difference in valuation represents a 22% inflation of its value by the seller - hardly an honest or fair action.

The moral - if you are basing your purchasing on the claimed catalog value of a stamp, and the catalog value was originally stated in a foreign currency, do your homework and check the current applicable exchange rate which may be different to that claimed by the seller.  There are a lot of web sites that offer exchange rate converters - I use Yahoo's currency page and indeed have it added to a personal "my Yahoo" page for convenience.

Changing the Method of Valuation

Here's another nasty trap and trick.  Different catalogs value stamps differently.  By this I mean that one catalog may use as a reference point a different quality of stamp than another catalog.

Indeed, it gets worse than this.  The same catalog may, over time, change its own basis of valuation, shifting from using one stamp quality as its reference standard to a higher (or lower) stamp quality.  This means that stamp values may seem to go sharply up (or down) from one year to another, but all that has happened is that the method of valuation has changed.

Another obvious issue is whether the stamps are valued as hinged or unhinged - indeed, most catalogs commonly value old stamps as hinged and newer stamps as unhinged (the changeover point occurs for stamps issued in and after 1946 with Scott - their number 1021 is the first stamp that they value as unhinged).

A slightly less obvious issue is whether used stamps are valued on the basis of being postally used or cancelled to order (CTO) (it seems most are valued as CTO).

The method of valuation really doesn't matter much for minimum value stamps, but becomes more important when you're talking about stamps with "real" and substantial value.  If you're buying/selling stamps worth more than perhaps $10 each, then it becomes worth your time to ensure that you accurately understand/describe the stamp for sale, and the basis of its value and selling price.

More is Less Part 1 (Sets are worth less)

I've got a set of six stamps, each of which shows a minimum catalog value of 15c.  But the value for the complete set of six stamps is only 60c, not the 90c that simple math would suggest.

This is discussed more below under the heading "The 15c myth".

This tends to be a bit of an exception, of course.  Normally, for stamps with "real" value, the set price is exactly the total of the individual stamp values.  However, I've always thought that this is a bit counter-intuitive.  If you're like me, you have lots and lots of partial sets, and you just need one or two stamps to fill the set, or perhaps you have a set where you currently only have one stamp and need to get another four or however many to fill it.  In both these cases, buying a complete set is wasteful to you because you are buying more stamps than you actually need.  This tends to suggest to me that the individual stamps in a set are more valuable by themselves, because it then allows a collector to pick and choose exactly which stamps he wants.  Furthermore, selling stamps on this individual basis is more time consuming and therefore more costly for the seller than selling as a collection, so they are more motivated to charge higher prices.

So, in my opinion, complete sets should be sold for less than individual stamps.  I hasten to sadly point out that the marketplace doesn't agree with me!  :)

More is Less Part 2 (Sheets are worth less)

I still remember the first time that I acquired a sheet of stamps.  It was actually a quarter sheet of 25 stamps issued in the 1920s - back then they would issue a large sheet of 100 stamps made up into four sections each of 25 stamps in a 5x5 square.  The dealer at the stamp show was not a Russian specialist, and described it as a full sheet, and told me that getting such a full sheet of such old stamps was very rare, and so therefore he had put a considerable premium on the sheet compared to the simple calculation of taking the single stamp value and multiplying it by 25.

And I remember the second time that I acquired a sheet of stamps.  This was a full sheet of all four sections of 25 stamps, but it had been folded into quarters for easier storage and the perforations were separating on the folds.  The person that sold it to me (an apparently reputable and experienced Russian dealer from Australia) did not disclose the fact that the perforations were largely separated, and when I emailed him about this, told me that this was normal for such old sheets, and that he had never ever, among the hundreds of sheets he had seen, ever seen one in perfect condition.

These two events, dear reader, represent two "big lies" in this field.

While sometimes a full sheet may be more valuable than the individual stamps, this would only be in cases where the stamps themselves are very rare.  From an ordinary collector's point of view, sheets are generally considered to be of little interest because they are too difficult to store and display.  I've sometimes noticed premiums being gained by selling corner blocks of four stamps, and/or strips of two or four or whatever, but there is little if any added value in full sheets.

And as for my Australian "friend", shortly after he said he had never ever, in his vast experience, seen a perfect full sheet of that era, I bought a dozen of them cheaply on eBay, all perfect!  I offered to sell him some, but he never replied to the email.  Hmmm....

The 15c (now 20c) Myth

Update :  For their 2001 catalog, Scott increased their minimum value from 15c up to 20c.  This was intended to bring the minimum price a stamp is sold by a dealer to a value more in line with what a dealer needs to sell it for and break even/make a profit, but it remains almost as difficult to profit when selling stamps, one at a time, at 20c as it does at 15c, and it further destroys any attempt at an underlying accurate marketplace value for the stamps themselves.  The balance of this section is as written when the minimum remained 15c, and it remains even more true now that the minimum has increased to 20c.

Look in an American Scott catalog and you'll see a great number of stamps valued at 15c, which is the minimum value that Scott ascribe to any given stamp.  How much are these stamps really truly worth?

Up until the 2000 catalog, you could sort of guess a bit as to whether the 15c was a "real" value or an imaginary value by looking at the total value given for the set within which the stamp was a part.  For example, a set of four stamps, each of which individually showed a value of 15c might have shown a total set value of 20c - which obviously indicates that the real underlying value of each stamp is 5c (or less).  On the other hand, if the set value is 60c, then this suggests that the 15c per stamp value is more realistic.

This all changed in 2000 when Scott made a lamentable decision to "dumb down" their catalog values.  Apparently some of the stupider members of our hobby didn't understand the concept that the 15c value is merely a minimum value that the catalog shows, and kept complaining about the fact that there were "mistakes" in adding up the values of each stamp in a set and discovering that the total was less than the sum of the values.  So instead of educating, Scott gives up and no longer shows set values as being anything other than the simple sum of the individual values, no matter how unreal this makes their total.

Get a 1999 catalog if possible and keep it as a valuable reference for this reason.

So how much are low value Russian stamps worth?  Well, that is a good question, and the answer is probably one which no-one really wants to admit to.  Suffice it to say that I've seen CTO stamps from the 1960s-80s offered for sale as low as 0.38c each (in minimum quantities of 100,000 - offered to me from a dealer in Russia), and MNH stamps of the same period for sale as low as 0.75c each (a lot of 80,000 stamps in sheets on eBay in April 2000).  But at the same time, I've also seen these same stamps sold for 2-10c each (CTO) and up to 18c or even more each (MNH) in lots of 100 or so on eBay, so plainly the market has quite a bit of spread in value.

For whatever reason, there seems to be a huge supply of Russian stamps of the 60s-80s available for sale at present, and there seems to be no likelihood whatsoever of most of the stamps from this period ever becoming scarce.  As such, their values are unlikely ever to appreciate much, and the 15c minimum is nothing more than a figment of imagination, or the value that you'd pay if you wanted to buy just one only stamp at a time.

What Goes Up Must Go Up Further?

What is the better stamp for investment purposes?  The stamp that has gone up and up in value in recent years, or the stamp that has not moved much in value at all?

That is a hard question to answer, and the occasional moves in and out of the philatelic market of speculators and investors (as opposed to collectors) can also severely distort stamp prices.

However, in general terms, it is probably fair to say that the stamps with the most potential for upside increases in value are ones that are in excellent condition and of excellent quality, and which already are truly rare and of high value.  Sure, a 20c stamp may increase to 25c in the catalog - but try actually selling it for this price.  On the other hand, the $200 stamp may well increase to $250, and also it is going to be much easier to sell a single $250 stamp for close to its true value (and sometimes over it) than it would be to sell 1,000 low value stamps for anything close to their full catalog value.

While in general it is normal to expect that stamps for a given country would all tend to more or less uniformly change in value, there are exceptions to this.  The first exception is to realise that low value stamps are probably always going to be low value stamps - don't expect the stamps that show minimum catalog values to ever increase (except if the catalog increases its minimum value amount!).  The second exception is due to trends in the collecting marketplace.  For example, in recent years the concept of "original gum" has become very much more important than used to be the case, and now original gummed stamps have increased in value compared to stamps that have lost their original gum.  Who knows what other new points of distinction may not occur in the future.

Pricing within a country tends to move in a ragged sort of fashion, depending on how thorough an annual review a catalog does of the country and its pricing, and how many "high profile" auctions have been held during the past year to set some new benchmark prices.

While some people will suggest that specific stamps have greater than average chances for increases in value in the future, my feeling is that as long as you are buying excellent quality mid to high value stamps to start with, you'll probably get as good an increase in value this way as by trying to pick specific individual stamps.

The Spread between buying and selling prices

Some people forget that stamp dealers need to make a profit - it is their living (well, for the fulltime "professional" dealers, anyway!).  This means that they want to buy stamps for less than they sell them for.  The difference between the buying and selling price is sometimes referred to as the "spread" and the trick for anyone, whether buying or selling, is to try and minimise this spread to their advantage - ie, to sell for as high a price as possible and to buy for as low a price as possible.

The size of the spread varies wildly.  To suggest a ballpark number, for reasonable stamps of actual value (not minimal value) that are in a ready to resell condition, and for which there is a reasonable sort of market that the dealer can hope to sell the stamps in a reasonable period of time within, you can generally expect to sell stamps to a dealer for about half the price of what you can expect to buy the stamps back from that same dealer.

So rare that no-one knows its value!

I've got a very rare Russian stamp - it doesn't appear in any of the catalogs - it is a triple overprinted stamp.  So what is it worth?  The catalogs show prices for the regular stamp, for the stamp with a normal overprint, an inverted overprint, and a double overprint.  But no catalog gives a price for the triple overprint.

Is it safe to assume that, due to the rarity of this stamp, it is worth a lot more than the double overprint?

Apparently not!  No-one I've spoken to has wanted to give me a value for it.  I asked one dealer who specialises in rare and high value Russian stamps, and his response to me was "tell me how much you think it is worth and maybe I'll make you an offer".  Hardly very helpful, and obviously he was hoping that I'd name a figure much less than his own guess and then he'd buy it from me, laughing all the way to the bank.

This phenomenon can also be seen in altered form on eBay.  Indeed, just this morning I saw someone trying to sell two rare Wenden issues that are listed in Michel as having a value of 1250DM (about US$600).  He had an opening bid of $44, and with the lot closing in a couple of hours, no bids!  This is a clear example of a stamp that has a real and high value, but because it isn't listed in Scott, for most people it therefore "doesn't exist" and is of no interest.

Strange but true.  Once you move into high value and rare stamps, the market for buying and selling these stamps changes drastically and different rules apply.  One thing is for sure - eBay is seldom the best way to sell such stamps, although sometimes it can be a great way to buy them!

Expertising and Certificates

When a stamp is "expertised" it is examined by one (or sometimes several) recognised expert on that aspect of philately, who expresses an opinion as to its identity, quality, condition, and genuineness.

Some stamps may be offered with a certificate of genuineness to reassure buyers that the stamp they are getting is not fake.

The key issue to be considered many times is not so much what the certificate says, but who it is that prepared the certificate.  I noted with some amusement a dealer on eBay offering his stamps with certificates of genuineness.  I asked him who was certifying to the genuineness of the stamps he was selling.  His answer - himself!

It should go without saying that such certificates are of minimal value.  Appropriate certifying bodies would include the leading Russian specialist societies (see the links page), leading international stamp dealers with a major reputation and substantial inhouse expertising resource, major regular stamp societies such as APS, but not individuals who buy and sell stamps on eBay in the hope of turning a quick dollar or two profit in between their buying and their selling.

For more information on expertising, please refer to our page on this subject.

A Dealer's Perspective

I asked Trevor Pateman, a Russian specialist dealer in the UK, why he doesn't sell individual stamps and service want lists for stamps subsequent to 1959.  His response is both informative and also evidences an underlying credible desire to be as fair to his clients as possible :

One of the problems in dealing with stamps (as distinct from postal history) is that the principal catalogues are published either by firms which don't sell stamps at all, or by firms (like Stanley Gibbons) which stock very selectively. The catalogues can consequently be insensitive to the costs of acquiring and sorting specific sorts of material - eg, Civil War period material where if you want to do other than offer Job Lots 'as is' there is a continuous labour of sorting genuine and forged and reprint material.

Likewise, where there is no such problem and no shortage of cheap material, as with later Soviet issues, the game often isn't worth the candle - I can do more interesting and profitable things than service long wants lists of stamps none of which ought to costs more than a few cents. Collectors can buy these quite cheaply as Year Units anyway from lots of other dealers.

The cut off in what I deal in is a bit arbitrary and varies from time to time - I happened to have an organised stock ex another dealer up to the end of the 50s and then nothing except unsorted heaps. I do supply established clients with material right up to 1991, in the form of Pick Anywheres and even priced individual sets, but it is not business I want to encourage - I do it as a service to clients who have wider interests, say covering the whole period of the Soviet Union

Interpreting Auction Sales Data

Update :  eBay have introduced a new feature on a trial basis in Nov/Dec 2000 - a "Buy it Now" option.  When this is used, the seller can specify a trigger price point, which, if the first bidder chooses to pay, will allow that bidder to close the auction and immediately purchase the item at the "buy it now" price.  As yet this is not a widely used feature.  It is hard to know how much additional information about values can be imputed to this new data point - plainly one would think that the "Buy it Now" price represents the higher side of what the seller hopes to sell the stamp for, but equally plainly, if a buyer agrees to that price, he is implying an opinion on his part that, if he doesn't offer that price, someone else may end up bidding more than that amount.  So, if an item sells at its "Buy it Now" price, it would seem that it represents a price that the seller thinks is moderately high and that the buyer thinks is moderately low!

I am including some auction sales data in my sections on stamp information to give added information about the possible value of specific stamps.  But the more I do this, the more I realise just how unsatisfactory this data is, and it perhaps falls under the heading of "a little knowledge is a dangerous thing"!

I'm still going to continue to include this data, but it is very important that you realise just how limited the value of this data actually is.

The major factor that reduces the value of the sales data is the small number of people that actually even see the auction and think about bidding, and of course, the even smaller number of people that really truly actually bid on the stamps.  From what I can gather from the various eBay auctions that include visible counters to count the number of times that the lot is viewed by someone, it would seem that most auction lots are viewed somewhere between 5-100 times, with a common number being 10-30 times.

When you filter out of this total number of page views the number of times that a page is repeatedly viewed by one person, and the number of times that people view the page by mistake (clicked on the wrong link) or just out of totally idle curiosity with no intention of bidding on the stamps, no matter what the asking price, and then when you filter out even more the people that will bid on stamps when they are offered at ridiculously low prices, but who have no serious interest in buying them at anywhere close to regular market value, then all of a sudden, these 5-100 page views quickly reduce down to two or three or four only people seriously interested in buying the stamps.

To use an economist's term, an eBay auction is not an "efficient" marketplace due to its small size.

The next factor is that when stamps are being sold in sets or in some other form with more than one stamp per lot, some people will bid at a lower value for the complete lot of stamps because they only need to fill one or two gaps in their collection and so the total number of stamps has less intrinsic value to them.

The next thing is that clever buyers look at the "total cost" of buying a lot, including the postage and handling charges (both for them to mail off a check and the charges levied by the seller).  While these costs are minimal as a fraction of a $50 lot, for a $1 stamp where there is obviously at least 66c of postage and handling costs, then these costs will often depress the amount of money that a buyer is willing to pay to get the stamp(s).

This factor becomes even more important when sellers are located outside of the US - especially when they say "money orders, bank checks, or cash only".  The hassle factors of having to get a money order, and the risk factor of sending cash to a foreign country, all discourage many people from otherwise bidding on such lots, thereby depressing the sales price of these lots.

Another factor is the "bargain" factor.  At any given time on eBay there is an incredible variety of stamps for sale (I just looked, and at present there are 97,083 lots of stamps, of which 1138 are in the Russia category).  A casual general collector is more likely to only want to buy bargain lots rather than full price lots, because he knows that, no matter what he does today, tomorrow will bring another 15,000 new lots onto eBay to tempt him anew!  I've regularly noticed that people bidding what I would consider to be stupidly high amounts of money for stamps on eBay are almost always new to eBay - the longer a person has been active on eBay, the more their bidding practices become increasingly conservative, because they realise that every new day brings more potential bargains, and it is better to hoard one's available cash and to bid wisely and well, rather than to rush at every lot, no matter what the cost!

Another similar factor is what a marketeer would call "brand cannibalisation".  There are so many stamps on eBay all competing for the scarce buyer's money that they tend to compete against each other so as to lower the overall value for which all stamps sell for.  A simpler way of putting this would be "the law of supply and demand" - there is vastly more supply of stamps on eBay than there is demand from buyers.

Here's another factor.  Most eBay buyers tend not to be true specialists; and/or the true specialists that are present have already filled most of their special needs.  This means that unusual and high value items are being offered in a marketplace which doesn't really strongly appreciate or value such items.

Here's another negative.  "Sniping".  This is when a person waits until literally the last minute to place a bid for a lot, leaving other bidders no time to respond and to place further bids themselves.  Sure, in theory, everyone can place proxy bids up to their theoretical maximum, but human nature being what it is, we all tend to start off bidding conservatively, and then the more we get involved, and the more we think about it, quite likely the more that we are prepared to increase our bid.  I know, speaking personally, that many times I've been "sniped" and after having been sniped, I've regretted not having placed a higher proxy bid myself, and also regretted eBay's truly stupid policy of allowing sniping.  Some other auction sites automatically extend an auction when a late bid comes in, to give other people a chance to respond, but for some inexplicable reason, eBay doesn't do this.  Sniping is a lose/lose deal for everyone except the sniper - it deprives other people of a chance to continue bidding on something they want, and it deprives the seller of selling their lot for top dollar.  Heck, it even deprives eBay itself of some more sales commission!

So all these factors tend to depress the value for which stamps are sold on eBay.

Offset against these are one or two positive factors that might sometimes increase the value for which stamps are sold.

The first is "auction fever" - the situation whereby you end up bidding more than you planned to bid just because you don't want to let someone else "take" the stamps away from you.

A closely related part of this "auction fever" is where you see lots of other people strongly bidding on some stamps and use that as justification to continue bidding yourself, because "it must be valuable with all this interest"!

A third factor is that sometimes you'll get a clash between two "rogue" bidders that end up pushing a stamp value sky-high.  This may happen when two people each see one relatively rare stamp that they need to fill an important gap in their collection.  They decide to buy the stamp, even if it costs twice as much as catalog value (for example) just so as to stop messing around looking for the stamp, and to close a gap in their collection.  I've sometimes seen stamps where the bidding history for a stamp valued at, eg $5, might show four or five people placing bids around the $2-3 mark, and then two people that placed bids up to perhaps $10 or thereabouts - clearly a situation where the $10 bidding was anomalous.

A fourth factor is uninformed bidders that rush in to buy something without really thinking it through.  I recently saw a lot of 35 old imperial Russian definitives offered for sale.  I ended up looking at this lot very carefully as I wrote about it elsewhere on this site as well, and determined that, as best I could tell from the scan, none of these stamps had catalog values over the minimum 15c each - indeed, the lot was obviously picked over to start with.  These old stamps are amazingly common, and I'd put the value of a bulk lot of 35 of them at something like $2 maximum.  The stamps were offered at an opening bid of $10, and two people bid, selling for $10.50 - which is exactly 30c per stamp!  What's more, the seller was in Belgium so the shipping costs and hassle factor also have to be added to this.  This is an example of a junk collection of close to valueless stamps selling for five times what they "should" be worth!

So, what can we conclude from the above analysis?  Well, we can conclude that usually eBay sales prices do not accurately reflect the marketplace pricing as a whole, and that while they typically are lower than the theoretical market value, they also sometimes are much higher!  In other words, we can't conclude much at all from a single eBay sale result, although we can start to get some information when we see a series of sales of the same item.

An auction that has many bidders all fighting over a lot gives you a more reliable feeling for what the stamp might be really worth, and also shows you that it is a more in demand and popular stamp (or it might just show you that the stamp opened for a very low price!).

If you are attempting to use the data that I am collating to assess what you should pay to buy certain stamps, then if you are looking to buy bargain values, obviously you don't want to bid over the lowest prices that you've seen the stamp(s) or comparable stamps being sold for; if you are wanting to buy the stamp(s) because you need it to fill a gap in your album, then generally you wouldn't want to normally pay over the higher auction selling prices or the catalog price, whichever is the lower.

There is another limitation about auction pricing.  Typically in a non-auction environment, you set the price you want to sell an item for and then you sit back and wait until someone comes along willing to buy it at that price.  Two obvious examples are cars and houses - if you are selling your car or house, you know that you can price high, but then you will probably have to wait longer until you come across someone that is prepared to pay high, or you can price low for a quick sale.  The thing about an auction is that it reduces the ability to have an item on sale indefinitely until this "reserve" price is met.  You have a short window of time (7-10 days is normal) and that is all.  Now it is a sad fact of life that there are more people that will buy stamps at low prices than at high prices!  If you strike it lucky, your stamp will be on auction at the same time as two people willing to pay a high price see it, and they will enter into a collossal bidding war and your stamp will end up selling way over catalog price.  If you're not lucky, only the "bottom feeders" will be bidding, and the stamp might sell for only your low opening bid price.  Both prices - the "lucky high price" and the "unlucky low price" are, by definition, fair market prices.  But it is important to understand that the market is not a single "efficient" market where everyone is willing to pay exactly the same for the same thing.  It is a messy changing mix of people and the prices they are willing to pay, and most eBay prices, with a few notable exceptions, tend to more accurately reflect the lower end of realisable prices, rather than the higher end for people willing to wait until a "high price" paying person happens along.  This explains in part the difference in pricing philosophy and service between specialist Russian dealers and eBay.  If you absolutely must have an EF MNH copy of stamp number 837 right now, then you go to a specialist dealer and pay close to full catalog price (and sometimes even more!) in return for the convenience and service.  However, if you're willing to accept an unknown quality MH copy of 837 in with a mix of other stamps, and are in no hurry, then you'll probably find what you want, sooner or later, on eBay.

One final issue about auction sales figures, and this is quite an interesting piece of analysis.  The price that a stamp sells for generally shows more than we might think, and also less than we might think.

It does not show the maximum price that anyone was prepared to pay.  Rather, it shows us an amount slightly higher than the second highest price that a person was prepared to pay.  For example, one person may be willing to pay $25 for a stamp, but if no-one else is prepared to pay more than $12, then the stamp will sell for $12.  Which is the "correct" market value?  The $12 that the stamp actually sold for, or the secret $25 that the high bidder was prepared to bid up to?  That is a riddle to which there is no easy answer, but it is an important issue to keep in mind - winning bids are not the highest possible bids, but are instead sort of the second highest bids plus a few cents over that.  For this reason, auction selling prices never reflect full market prices, but rather are some unknown percentage of what the high bidder really truly is prepared to pay.

Which leads to the second interpretive point.  The sale price does not show the price that just one person was prepared to pay, but also shows the price (less the minimum bid increment) that a second person was also prepared to pay.  For example, an auction that closes at $10.75 with three people bidding on it - I only record what the winning bid was, but you can infer from that what the second highest bid was - by definition it will be somewhere between the same price (remember that two bids at the same value mean the earlier bidder wins) and no less than the minimum bid increment (probably about 50c for a $10 item) below it.  We don't record what the third (and any other) people placed as their maximum bids (except where a lot of people are all bidding over catalog price), but it is interesting to understand just how much can be interpreted from the information that is presented.

Some Summary Conclusions

Believe it or not, we are generally lucky that our hobby comprises the collecting of such moderately priced material.  I continue to be astonished at how inexpensive 100+ year old stamps are, and while the dollar cost is low, the pleasure, interest, and enjoyment factors are all very high.

My first comment is that the dollar cost issues are many times given more importance than they should.  Who really cares if you managed to save 10%, or if you unwittingly paid "over the odds" for a selection of stamps that you wanted, and which you needed to fill a gap in your collection!  The "value" to you exceeds the dollar cost, and you willingly chose to pay it.

Cost issues are really only of primary importance to people in the business of buying and selling stamps.  For most of us, who occasionally buy and rarely sell stamps, our interest should be limited to ensuring that we are buying sensibly, and beyond that, our focus should be more placed on most of the other aspects of enjoying our hobby.

And now for what I call "The Situational Theory of Stamp Values"!  The cost you pay for a given stamp needs to reflect three underlying variables :

  1. The underlying value of the stamp (which sort of means "what did it originally cost for the person who is selling it to originally buy it)
  2. The notional open market value of the stamp (which sort of means both the normal buying/selling price and also the catalog value)
  3. The handling/inventorying/management costs and legitimate profit needs of the person selling it to you

If you are buying a single low value stamp, then the values given to these three factors might be 1c, 1-15c, and $1.00, meaning that there is no way that a dealer can sensibly sell it to you for close to the catalog value of 15c.  This is why Trevor Pateman doesn't like selling low value stamps.

If you are buying a bulk lot of 200 unsorted stamps, then the values given to these three factors might be $2.00, $5-$40, and $2.50.  This means that the dealer can sensibly take his purchase cost ($2.00), add to that his costs of sale ($2.50) and sell it to you for somewhere between $5 and $40 and have you pleased at the price you paid and have him pleased at the return he earned.

One last example.  You are buying a single high value stamp, with the values for these factors being $85, $125, and $5.  In this case also the dealer can sensible add his costs of sale ($5) to the price he paid for the stamp ($85) and profitably sell the stamp to you anywhere between $90 and $125.

So, my Situational Theory says that the value of a stamp is not a constant.  It is a variable which reflects the circumstances of the transaction more than the actual value of the stamp.  The lower the value of the stamp, the more impact the circumstances of the sale will have.  And recognising that most of the stamps we all buy and sell are low value (ie under perhaps $50 a piece) then this Situational Theory is the dominant factor in determining how much stamps sell for.

The Situational Theory applies equally to buyers and to sellers.  For example, say you inherit or in some other way acquire a large collection of approximately 100,000 worldwide stamps, some in glassines, some in albums, some on stock pages, some loose, etc etc.  And let's also say (horror!) that you just want to sell them rather than keep them.  How much can you sell them for?  What is their value?

Well, the Situational Theory says that how much you can sell them for depends on how you sell them, and also depends on how much added time cost you are prepared to put into the stamps to prepare them for sale.

Clearly the easiest thing to do is simply to advertise the whole lot on eBay as a collection.  In such a case, you may get an average of somewhere between 0.5c and 2.0c a stamp depending on how well you market the lot - ie, it will sell for between $500 and $2000.  The good news is that it has taken you maybe half an hour to scan some images and put together an eBay sale listing.

The next thing you could do is split it into country collections, and sell each individual country collection on eBay.  Maybe this means you'll get a bit of a premium compared to selling the entire lot (but maybe you won't!).  Let's say you get between 1c and 5c a stamp selling in 50 different country collections.  So you get between $1000 and $5000.  And you have also had to spend maybe 50-100 hours sorting through the collection and preparing 50 different eBay lots and handling 50 different sales.  This means you end up earning somewhere between a low of $10/hr and a high of $100/hr, or to put it another way, you have worked up to 99 extra hours to earn anywhere from no more money to perhaps $4000 more money.

This example can extend all the way down to selling the 100,000 stamps individually, of course, and in general, you'll probably tend to find that there is a "sweet spot" at which point the extra time you spend earns you no more money and costs you a great deal more hassle.

Last of All

And, now, really truly lastly (!) - my final observation on this subject.  The key issue is not what you pay for stamps, but what you can sell them for again in the future!  This is the wonderful thing about our hobby.  Unlike most hobbies, the money we spend on enjoying our hobby (ie by purchasing stamps) is not money lost for ever.  Depending on how well we buy the stamps we collect, and what happens to overall stamp prices, it is possible for us to end up with a collection that is worth potentially as much or more than what we paid for it - a valuable legacy to pass on to a future generation, or a valuable nest-egg to cash in when needed.


 

This page last modified on May 15, 2010