What are collectibles 'worth' when they don't sell?

I consider the question of unsold items everyday because it affects my catalog. However, it indirectly affects all dealers and all collectors, in every type of collectible, in every specialty.

Although you may not notice it, I adjust my prices constantly, primarily on the basis of recent sales. However, non-sales also enter my equations. Why did something NOT sell? Should I lower my estimates based upon recent non-sales?

As you might guess, it depends.

It depends, of course, on where item have failed to sell. A non-sale on eBay means almost nothing. A non-sale in a well-attended European auction might signal a sea-change.

Collectors' personal issues control checkbooks. Let's face it; it is a universal truth that life gets in the way. Collectors will get into arguments. Collectors will have monetary problems. Collectors will experience competing needs for money or illnesses or vacations or hail storms or broken computers. These events happen to everyone, but, statistically they don't happen to everyone at the same time. But, sometimes they do exactly that and there is no way of knowing that it has happened. Moreover, life can get in the way for only one or two collectors and their absense might make all the difference in the non-sales of key items.

Lack of eyeballs. No matter what is being offered, sales depend on collectors learning about offerings. Generally speaking, the more people who know about upcoming sales, the greater the number of examinations of inventory. Ideally, the greater the number of looks, the greater the number of sales. That all sounds very simple.

Even if an auction house sends out large numbers of catalogs or eBay touts very large numbers of members, it doesn't mean a thing if offerings fail to reach the right kinds of eyeballs.

Inappropriate audiences. The reality is that eBay sellers are never going to sell thousand dollar items to buyers who never spend more than a hundred dollars. And auction house are never going to sell $50 items when they send catalogs to buyers who routinely buy $50,000 collectibles. Sellers need to match their buyers to their offerings. And vice-versa.

Price. The underpinning assumption of capitalism is that sales depend on price. The accepted rule is that lower prices result in more sales. But that only works to a point. Unrealistically low prices can stymie sales if they cause collectors to worry about the threat of hoards lowering the value of their existing collections. Witness how absurdly eBay prices have adversely affected the sales of practically all collectibles.

Unrealistically high prices can also have a long-lasting effect on sales. Once collectors get turned off by high prices from certain houses and dealers, they may never buy from those outlets again, even if prices subsequently drop.

Risk. In my opinion, the issue of risk in hobbies like ours is the least understood and the most under-researched factor that affects sales of collectibles. I generally consider the impression of risk to be even more important than price. Simply put, every interaction between sellers and buyers affects the impression of risk and the flow of money. Obviously, customer service is a gigantic concern. The more sellers can lower the impression of the risk of purchase, the more likely collectors will buy.

Basically, the more sellers can focus on the qualities of the items they are selling, the more they can positively manipulate the comfort level of their potential buyers. Sellers automatically lower risk when they show good pictures of the exact items they are selling. They lower risk when they give precise information about problems, availability, scarcity, color, smell, feel, texture, age and so forth. There is nothing earth-shaking here; I'm simply talking about David Ogilvy's mantra, "The more you tell, the more you sell."

Sadly, many amateur sellers try to use senseless hype to sell their collectibles. They fail to realize that hype usually works to their detriment among collectors. Do such sellers really think words like "WOW!", "Unbelievable!" and "L@@K" have any positive effect on would-be buyers? If so, why don't they see such drivel in the catalogs of Christie's, Sotheby's, Spink, Heritage and Stack's Bowers? Maybe because it doesn't work? Maybe because hype increases the impression of risk among collectors?

Each of these topics is an article – or book – in its own right. And each affects how I answer the question of, "What is a collectible worth if it doesn't sell?" But here is my general approach.

Non-sale on eBay. I pay little attention if something does not sell on eBay. In fact, unless certificates are extraordinary, I don't even look. And I NEVER adjust prices up or down based upon non-sales on eBay.

Non-sale from low-priced auction houses. I have not encountered any such auctions in a long time. I fear all low-prices auction houses have fallen victim to, or moved their operations to, eBay.

Non-sale from mid-priced auction houses. If minimum-bid prices are reasonable, and descriptions and photos are good, I try to get some feeling from my correspondents about the issues of eyeballs and audiences. If their audiences are good and they are reaching adequate numbers of collectors, then non-sales are probably indicative of weak markets. If the same items fail to sell after a couple attempts, then I definitely lower price estimates 10% to 20%.

Non-sale from high-priced auction houses. I generally assume those kinds of houses enjoy good penetration (eyeballs) in good audiences (good matches with inventory.) At first blush, it would seem most non-sales would result from general high prices. However, it is also possible that some, if not many, non-sales actually reflect an over-valuing of rarity. I have found in conversations with correspondents that many who routinely buy expensive certificates buy only those certificates that fit their specialties. For them, rarity outside of their specialties is not particularly compelling. It is for that exact reason that certain highly rare items may appeal to only limited subsets of collectors. Once a few such collectors acquire rarities for the sake of rarity, there may be few if any more buyers on the sidelines.

I also find high-priced auction houses tend to focus heavily on autographed certificates, and those items follow cycles of interest different from otherwise ordinary certificates. It appears that highly specialized collectors tend to focus on collecting only those autographs of the highest quality. They may well delay buying second- and third-tier items while waiting for better quality autographs to appear.

For these reasons, I usually wait for typical items to go unsold three or four times before I lower my price estimates. It is not unusual to see items of ordinary rarity go unsold several times and then suddenly sell at prices measurably higher than had been rejected several months before.

On the other hand, I often lower price estimates quickly for unsold rarities when historic price behavior suggests they are not remarkably desirable. As I have argued many, many times, desirability is vastly more important for sales than rarity.

The conclusion? I definitely adjust prices based upon non-sales. It seems perfectly obvious to me that if items go unsold several times at one price, then they are not worth that price.