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garyg
04-21-2013, 12:29 PM
I'm wondering if others have had the same experience in trading with dealers. I approached a well known dealer regarding a trade that involved two excellent vintage ukes (lots of documentation of quality and sound) for one of the dealer's vintage ukes. I calculated a low retail value for the ukes and offered that in trade. The dealer instead counter-offered to trade me wholesale value on my ukes for full retail on his uke. Of course I said no, but I'm curious how common this practice is? I'll never buy anything from this well known store, but I wondered if others have had similar experiences. Enquiring minds want to know! g2

didgeridoo2
04-21-2013, 12:48 PM
I wouldn't expect anything but wholesale value for a trade with a retailer.

haole
04-21-2013, 12:50 PM
Dealers usually give lowball offers because they're trying to make a profit off your stuff. I've only traded gear with dealers when I wanted to downsize as quickly as possible and they had exactly the bass I was looking for. In hindsight, I would've been better off selling the stuff individually to people who were actually interested in what I had and then negotiating a better cash price for the bass.

Hippie Dribble
04-21-2013, 12:58 PM
The two times I tried such a thing I was offered around 30% of the value of my instrument as trade. Needless to say it didn't happen. Those kind of deals are for desperate folks only...

remy26
04-21-2013, 12:58 PM
Yes, I've had lots of experience with this. It's very rare to get anything close to fair value on trade-ins. I just experienced it again yesterday. I found a uke that I wanted and had a guitar I could move. I was offered about a quarter of the price as to what the dealer would turn around and sell it for. No big deal, I decided to move forward with an offer for the uke I was interested in without the trade anyway. The guy wouldn't move off his eBay listed price even though it hadn't had a bid the first time around it was posted. Needless to say, I walked without the new uke while still carrying my guitar.

Can't really fault them for it though. They can run the business as they see fit. Just the same as I can patronize the businesses I choose.

OldePhart
04-21-2013, 03:51 PM
Unless you run into a dealer who is more collector than dealer you are unlikely to get anything remotely approaching an even trade. Most dealers don't want to trade and (perhaps rightly) feel that they are doing you a favor if they agree to do so. Trades don't pay the rent and utilities, let alone put groceries in the kid's mouths!

John

AndrewKuker
04-21-2013, 09:19 PM
If you want a descent price you sell it to the end user. A music store will only be slightly better than a pawn shop when it comes to these things.
One way to see what you can get is to search completed listings on ebay. See what they sold for and what they didn't, look at condition etc.

garyg
04-22-2013, 02:37 AM
Well that was interesting, perhaps I should have mentioned that as someone who has been buying and selling vintage ukes for several years I know the market quite well, and that the trade offers made to the dealer were sufficiently low so that they could have held onto the ukes for several years and still done very well. Most interesting is that the "beat the trader" practice seems to be widespread, but I simply won't patronize any store that has to make a profit on both ends of the deal. Although the uke that I wanted was unusual - a Martin Taro Patch, the price was high and it had been in the dealers inventory for awhile. But being patient is the key to any good buy, so I walked away. cheers, g2

mm stan
04-22-2013, 03:14 AM
Yes most dealers want to make money on you both ways....that is how it is to pay for their overhead...best is sell it yourself on craigslist, marketplace or ebay..

pakhan
04-22-2013, 03:27 AM
As a dealer,

I agree with Andrew- I usually just can't offer a good trade price on a uke... unless it is something I know I already have a customer for. Most of the trades are trade ups, with worsens the situation.

Also, if it's a brand we carry, sometimes, our trade pricing is below what the second hand market is, which means it doesn't make sense to take that instrument on, unless at a low price. At the end of the day, we have business to run and mouths to feed so we have to make the offers which make the numbers work. Even though I would have loved to bring in quite a number of instruments over the years, sometimes, the numbers just don't work.

Most of the time, I do tell folks that I would rather not make an offer as it's going to be too low. If the customer insists on bringing instruments into the trade deal, then I have to make the numbers work.

Terence

HBolte
04-22-2013, 03:40 AM
Yes most dealers want to make money on you both ways....that is how it is to pay for their overhead...best is sell it yourself on craigslist, marketplace or ebay..

Yep, no different than a car dealer. They make money on your trade-in and on the new car they sell you. Dealers are in business to make a profit, can't blame them.

didgeridoo2
04-22-2013, 04:50 AM
the trade offers made to the dealer were sufficiently low so that they could have held onto the ukes for several years and still done very well. Most interesting is that the "beat the trader" practice seems to be widespread, but I simply won't patronize any store that has to make a profit on both ends of the deal.
Holding onto a product for a couple of years isn't ideal when you pay rent on the space that product takes up. Andrew was right in suggesting that an end user will give you the most profit for your uke. I don't sell ukes, but I do sell high end retail products and most of the time trades cloud up any deal.

OldePhart
04-22-2013, 06:56 AM
Most of the trades are trade ups, with worsens the situation.


Very good point on that, though it may not apply to the OP's specific situation.

Still, there have been several times I've seen listings on Craig's List that read something like, "I have 2 Squier Strats, a Squier Tele, an Epiphone LP, a Samick SG clone, and an Ibanez 7-string - will trade all for a Gibson Les Paul or Paul Read Smith in nice condition..."

I always think to myself..."I'm very happy that you have finally learned that six two-hundred dollar guitars are not as good as one nice guitar - but why on earth would anyone who has a nice guitar want to trade it for your six pieces of junk?" :)

John

RichM
04-22-2013, 07:45 AM
Very good feedback on this thread. A dealer who tries to make a profit on both ends of a deal is a businessman-- he is in the business to make a profit, after all. As many have observed, most dealers are interested in turning their stock into cash, not into more stock. The dealer has accepted the risk of selling the instruments, he is entitled to the rewards. If you are certain that you are giving the dealer a "great deal" in terms of trade, all you need to do is sell your instruments, pay cash for what the dealer has, and pocket the difference. Simple, right?

Oh, but what's that, you say? You can't sell your instruments right away? Or you can't get the price you want? Or you're afraid the dealer will sell his great instrument before you can turn yours into cash?

Welcome to Business 101. You want what the dealer has more than the dealer wants what you have. And so he has the strong position in the negotiation. You see, at the end of the transaction, you would have what you want: a new instrument. The dealer doesn't have what *he* wants (ie, cash); in fact, now he has two instruments he needs to sell, instead of one.

garyg
04-22-2013, 08:06 AM
Okay, I was curious about how common this practice was and it appears universal. However I can do without the snide and condescending responses that really have little to do with my original question. I didn't want to go into great detail about the situation but I did try to indicate that I know quite a bit about the buying and selling of vintage instruments, and frankly there is a reasonable rebuttal for many of the "duh, that's the way business works" comments of many of the posts, but those points weren't addressing what I had asked. So that's the end of the thread for me. Thanks to those of you who did answer the original question which was how common is this practice. cheers, g2


Very good feedback on this thread. A dealer who tries to make a profit on both ends of a deal is a businessman-- he is in the business to make a profit, after all. As many have observed, most dealers are interested in turning their stock into cash, not into more stock. The dealer has accepted the risk of selling the instruments, he is entitled to the rewards. If you are certain that you are giving the dealer a "great deal" in terms of trade, all you need to do is sell your instruments, pay cash for what the dealer has, and pocket the difference. Simple, right?

Oh, but what's that, you say? You can't sell your instruments right away? Or you can't get the price you want? Or you're afraid the dealer will sell his great instrument before you can turn yours into cash?

Welcome to Business 101. You want what the dealer has more than the dealer wants what you have. And so he has the strong position in the negotiation. You see, at the end of the transaction, you would have what you want: a new instrument. The dealer doesn't have what *he* wants (ie, cash); in fact, now he has two instruments he needs to sell, instead of one.

Kamanaaloha
04-22-2013, 08:21 AM
they have to make a profit...if you are expecting market $ on your ukes u are mistaken...if they make no money...how can they stay in business?

RichM
04-22-2013, 08:31 AM
Okay, I was curious about how common this practice was and it appears universal. However I can do without the snide and condescending responses that really have little to do with my original question. I didn't want to go into great detail about the situation but I did try to indicate that I know quite a bit about the buying and selling of vintage instruments, and frankly there is a reasonable rebuttal for many of the "duh, that's the way business works" comments of many of the posts, but those points weren't addressing what I had asked. So that's the end of the thread for me. Thanks to those of you who did answer the original question which was how common is this practice. cheers, g2

I certainly had no intention of being condescending, and I apologize if it came across that way. I was discussing the realities of doing business with a dealer, which I think are highly germane to this conversation. In your original post, you expressed surprise that the dealer expected to make a profit on both transactions, and at the fact he didn't seem to realize what a great deal he was being offered. My response and other responses have been fully responsive to those points, explaining why dealers feel the need to make a profit, and why your great deal wasn't such a great deal. If you already knew all that, I'm not sure I see the point of you starting this thread. But hopefully it will be educational to others.

PedalFreak
04-22-2013, 08:35 AM
At my shop we give you roughly 50-60% of what we feel we can sell it for. If your item can sell for $100, and we can sell it fast you'd get $60 in trade. Have to remember a shop is a business, and we are in business to make money. Sure it's a cool business, but in the end need to make cash. But we always tell our customers that the best thing to do is to sell it yourself. You'll get the most money that way :)

RichM
04-22-2013, 08:51 AM
As a real-life example: I have wanted a Ludwig Wendell Hall banjo uke for a long time. One came along recently that was in wonderful condition, one of the best I've seen. The seller wanted too much for it. I got him to moderate his expectations a little, but in the end, his bottom price was still above market. I went back and forth, decided I really wanted it, and bit the bullet and paid too much. I love the thing, and the pain of paying too much will ebb in time. As a collector and a player, I'm happy to have this instrument, and I wanted it more than a few more dollars in my pocket. If I went to sell it, I probably would not get my purchase price back. I don't particularly care, because, as mentioned before, I love it.

This is a decision a dealer would *never* make. For the most part, dealers acquire instruments in the belief that they can resell them for more than they bought them for. As a collector, I can make emotional decisions. Dealer's can't, or they won't be dealers very long.

Because of my very large instrument collection, sometimes friends will ask me if I want to open a music store. I tell them they're crazy; loving instruments and selling instruments are such different things. I would never sell the really good stuff that came in the door, because I would want to keep it for myself!

Dan Uke
04-22-2013, 01:12 PM
It costs a lot of money to operate a business so it is a universal practice. If you want to see how people negotiate prices, just watch Pawn Stars.

Why would people consider trades anyways? There are many reasons but I can think of several:

1) Hassle of selling and packing
2) Potential complaints from buyers
3) Don't know who to sell it to
4) Takes a very long time to find the right buyer
5) They want something right away

Time is money.

Eyeguy
04-22-2013, 02:21 PM
garyg,

Back to the question as originally posed, yes, I believe your experience is very common in the dealer world. As a long time vintage guitar buyer, seller, and unsuccessful trader, I have learned I am better off selling my potential trade-in on the open market, or, at worst, putting it on consignment with a dealer, for all of the reasons already outlined. As for the dealer not moving on the asking price of the taropatch, I find that just a tad bit unusual. Unless something is extremely rare and guaranteed to sell for the asking price, or, has only been listed for a short time and as such not yet been given ample time for customer traffic (neither which seems to apply to your taropatch), my personal experience is such that most dealers are fairly receptive to statements such as, "I see your taropatch has been on the market for a while. I am very interested in it and would be prepared to give you ___$ in cash right now if you would consider my offer". Obviously, the offer has to be reasonable and open to counter-offer, and one must be prepared to back up offers with payment on the spot, but I have had much success in acquiring fine vintage instruments this way, particularly when the instrument in question has been taking up dealer inventory space for a good while.

I'm guessing you already know all this, and it's possible your dealer in question is just stubborn and not a great person to deal with. It happens. Their prerogative, of course, but not great business acumen either, as the object is to sell stuff. Just my opinion, and you know what they say, everyone is the world's greatest authority on their own opinion.

garyg
04-23-2013, 04:59 AM
Okay, just to clarify. First, I never asked how business is conducted, so all the comments like "the guy has to make a profit" "gotta pay the bills" etc. are irrelevant. In fact, I've run a successful part-time small business for 20+ years so I'm well aware of the issues involved in running a business. Second I didn't go into much detail about the trade, only said that I was offering quality ukes for a quality uke, so comments like "why your great deal wasn't such a great deal" are irrelevant because neither you nor anyone else knows how "great" a deal it was. Third, why would I want to trade rather than sell outright -- well trading two ukes to a dealer who supposedly knows their value is much easier than listing and selling two separate ukes, mailing two separate packages, dealing with two separate buyers with unknown levels of uke knowledge, etc. Finally, as someone who does know the vintage uke market, I can tell you that it has been highly unstable for at least the last 1.5 years and the majority of sale prices seem to be based on impulse buys rather than be indicative of any long term stable market. As an example, I offered a mid 20's Martin 0M in excellent condition (no cracks, no repairs) great tone etc. here at UU for ~$575 and no one even made an offer. I put that uke on ebay and it brought $775, but at the same time on ebay I've recently put multiple good ukes (Kamaka, Johnny Marvin PoW, etc. with low prices and they've gone unsold. The vintage uke market right now is down and good buys can be had but it's a frustrating market to sell in. Finally, I'm sorry that some folks don't see the point of my question, but as a teacher of 30+ years I've learned that there are no dumb questions and that someone with information perhaps should try and clarify what the actual question is, if they're so sure it's a dumb one. onwards and upwards, g2



I certainly had no intention of being condescending, and I apologize if it came across that way. I was discussing the realities of doing business with a dealer, which I think are highly germane to this conversation. In your original post, you expressed surprise that the dealer expected to make a profit on both transactions, and at the fact he didn't seem to realize what a great deal he was being offered. My response and other responses have been fully responsive to those points, explaining why dealers feel the need to make a profit, and why your great deal wasn't such a great deal. If you already knew all that, I'm not sure I see the point of you starting this thread. But hopefully it will be educational to others.

RichM
04-23-2013, 05:12 AM
Okay, just to clarify. First, I never asked how business is conducted, so all the comments like "the guy has to make a profit" "gotta pay the bills" etc. are irrelevant. ...... Finally, I'm sorry that some folks don't see the point of my question, but as a teacher of 30+ years I've learned that there are no dumb questions and that someone with information perhaps should try and clarify what the actual question is, if they're so sure it's a dumb one. onwards and upwards, g2

You asked a question in a public forum, and got a variety of responses, as befits posing a question to a community. As far as I can see, all of the responses you received were relevant to your original post. Many of the ideas shared here are quite valuable. I'm sorry you're taking the responses so personally, but part of participating in a forum is accepting not everybody agrees with you.

Wishing you much success in your future endeavors-- as we share a lot of the same interests, I hope we run into each other again.

didgeridoo2
04-23-2013, 05:38 AM
Rich makes a good point.

I read your original post again and realized that I reacted immediately, based on my experiences, to your objection on the trade values for your instruments. It's an almost daily part of my work life. I didn't focus in the full retail asking price part until you posted again today. One other reason the dealer might be doing that is that he is already stretching his perceived wholesale value of your ukes and left himself no where to go on the new one? Would he discount the new one if you removed the trades from the deal? Or, perhaps he overpaid for the taro patch in another trade deal?

I've had rough deals when trading in instruments. As you see by my name, I've also played and collected didgeridoo. Besides there being a vintage market for them too, you also have to consider that a lot of didges can be considered artifacts. And then there's cultural sensitivity issues. Putting actual value on them can be daunting, and shipping them is a nightmare.

lowendrick
04-23-2013, 05:54 AM
Yes most dealers want to make money on you both ways....that is how it is to pay for their overhead...best is sell it yourself on craigslist, marketplace or ebay..

This has been my experience. Several years ago i walked into a large local music shop that was a dealer for Martin and Taylor guitars. I had a really nice Taylor 712 that I wanted to trade for a new Taylor Limited Edition 414ce. They initially offered me $800 for my Taylor and they wanted $1800 for the 414ce. I knew my 712 was worth at least 1200. I said no and walked away. I came back about a month later and tried a different salesperson. This time they offered me $400!! I put the 712 on ebay and got $1550 for it!!!!! I then went back to that shop and asked about their policy to match prices which they confirmed. I had a print ad from a big mail order company that listed the 414ce ltd for $1500. The salesperson was visibly upset and said he would honor the price but I would have to pay tax.

I get the business side of it, but I had purchased lots of instruments and gear from them. They also did all my luthier work. This interaction definitely hurt our buyer/seller relationship. But in the end I got what I wanted.

gitarzan
04-23-2013, 05:57 AM
A month or so ago, I took three guitars to a dealer and traded them for one. If I took what I paid for the guitars I traded in, and compared to what I got for them, I probably lost $250. BUT! I got rid of three I did not want and were gathering dust, and got one that I had been wanting for years.

I would never expect a dealer to NOT make money on a deal.

RichM
04-23-2013, 06:01 AM
I get the business side of it, but I had purchased lots of instruments and gear from them. They also did all my luthier work. This interaction definitely hurt our buyer/seller relationship. But in the end I got what I wanted.

I try as hard as I can to take the emotion out of any negotiation. The seller wants as much money as he can get, which is natural. The buyer wants the lowest price, also natural. Usually, nobody is trying to screw anybody, they just want to get the best price. The best negotiations are win/win where both parties feel like they came out okay.

I do remember buying a Stelling banjo from a dealer at a bluegrass festival. It was priced at $1200, which if you know Stelling banjos, is *very* reasonable. I went to buy it at asking price and, and the dealer said, "This banjo has some issues, I wouldn't feel right selling it to you at that price. How about $1000?"

THAT doesn't happen often!

coolkayaker1
04-23-2013, 06:41 AM
A dealer is never going to give you as much as you can get from selling anything directly to a buyer.

So, back to your first post, garyg: not only is it common, it's ubiquitous.

MGM
04-23-2013, 07:01 AM
As a buyer of vintage used ukes I can say you will get the most as Andrew said selling to the end user.....Remember dealers buy their wares at wholesale and have to weigh whether to put cash into new inventory that moves fast or older pieces which can be profitable if held on for a long time which is also a cost factor....Its simple...want the most for your uke....sell direct (or possibly consign which hasn't been mentioned) if you want cash fast..... a dealer is a option but return is less...

Dan Uke
04-23-2013, 07:45 AM
One thing we have to realize in a big group setting, you get many different answers. This is not a classroom setting where if you get an answer you don't like, you tell them it's wrong.

A simple question like do you prefer Worth Brown or Worth Clear will get someone to respond that they like Southcoast or don't like Aquilas!

coolkayaker1
04-23-2013, 07:59 AM
A simple question like do you prefer Worth Brown or Worth Clear will get someone to respond that they like Southcoast or don't like Aquilas!

And even worse, someone may even say they don't like the original poster for even mentioning strings. :)

mm stan
04-23-2013, 09:05 AM
I can imagine the looks some dealers and pawn shops get when they offer a low ball price through negociations....I can imagine how they feel, I myself wouldn't be able to do that.... but that's business I guess :)
I dont mind dealers making money, maybe not both ways... If that is the case, I would keep the uke or pass it on and buy a uke from them.... I do support our dealers... :)

stevepetergal
04-23-2013, 11:01 AM
Too bad you say you'll never buy from this dealer. I don't think it's right to expect them to pay retail. They are in business. Why should they make nothing when you're trying to profit from them? I recommend selling your instruments retail on the open market, and putting this dealer back on your list of possibilities.

Paul December
04-23-2013, 11:32 AM
One thing we have to realize in a big group setting, you get many different answers. This is not a classroom setting where if you get an answer you don't like, you tell them it's wrong.

A simple question like do you prefer Worth Brown or Worth Clear will get someone to respond that they like Southcoast or don't like Aquilas!

And some people here just can't pass up an opportunity to be snarky
(Not directed at nongdam).
I've pretty much given up on asking opinions here because of certain know-it-alls :(

Kamanaaloha
04-23-2013, 11:58 AM
First: I have not traded with dealers with regards to ukulele.

Secondly: However, I have actually sold things for people on consignment...sold stuff on consignment...am a financial analyst...by trade, and know about the pursuit of profit.

As many others have stated...your best bet...is to sell them yourself for a price you want...or do not sell.

Dealers have to take their cut...and the difference is the amount they have to sell your ukulele for and what they paid for it...costs also include the following; lights, lease, insurance, labor, stale inventory, transportation, shipping, security, bank charges, etc.

Were you expecting a different response from the dealer? I am thinking yes...hence the post, but if you were asking for sympathy in this forum, and not expecting other responses, then maybe this is not the proper venue.

All that said, I hope you get the best price you can get for your personal treasures...and that what you finally get out of it, puts a smile on your face...or do not do it, imho!

larson1951
04-23-2013, 11:18 PM
i agree with you
i mean no disrespect but reading through some of the posts on this thread i get the feeling that a dealer should give someone 300 dollars for a uke and then sell it for the same?
and still pay his overhead and have something left to feed his family?
anybody owns a successful business makes a profit if they expect to exist

lowendrick
04-24-2013, 03:07 AM
i agree with you
i mean no disrespect but reading through some of the posts on this thread i get the feeling that a dealer should give someone 300 dollars for a uke and then sell it for the same?
and still pay his overhead and have something left to feed his family?
anybody owns a successful business makes a profit if they expect to exist

I don't think this is what anyone is saying. I don't deny a dealer's right to make money on a trade. They are in business to make money, always. That is fair. But, if you read my earlier post, sometimes they get greedy and take advantage of customers.

The same dealer offered me $800 one day and then only $400 a month later (And the salesperson told me it was the nicest Taylor guitar he ever played so I doubt it would have become stale inventory). I would have taken $1000 and they could have sold it for $1250 easily. I got $1550 on ebay.
For the other guitar that I wanted to buy they wanted $1800, but were forced to sell to me for $1500 because of price matching and they weren't happy about it. Even if they paid wholesale at about 65% they would have made $330 on the sale at $1500.

If the deal went down my way they would have made $250 on the trade and $330 on the new guitar. Total= $580

If the deal went down their way they would have made $800 on the trade (on $400 trade in value) and $630 on the new guitar. Total= $1430

I don't know, you be the judge. How much are they entitled to? How much is too much? FWIW, they damaged the relationship of a really good customer. Is THAT worth it?

didgeridoo2
04-24-2013, 03:19 AM
I don't think this is what anyone is saying. I don't deny a dealer's right to make money on a trade. They are in business to make money, always. That is fair. But, if you read my earlier post, sometimes they get greedy and take advantage of customers.

The same dealer offered me $800 one day and then only $400 a month later (And the salesperson told me it was the nicest Taylor guitar he ever played so I doubt it would have become stale inventory). I would have taken $1000 and they could have sold it for $1250 easily. I got $1550 on ebay.
For the other guitar that I wanted to buy they wanted $1800, but were forced to sell to me for $1500 because of price matching and they weren't happy about it. Even if they paid wholesale at about 65% they would have made $330 on the sale at $1500.

If the deal went down my way they would have made $250 on the trade and $330 on the new guitar. Total= $580

If the deal went down their way they would have made $800 on the trade (on $400 trade in value) and $630 on the new guitar. Total= $1430

I don't know, you be the judge. How much are they entitled to? How much is too much? FWIW, they damaged the relationship of a really good customer. Is THAT worth it?
Based on your assumption that the dealer did the trade your way, you're asking them to make 20% profit on your old guitar. Retailers can't survive at that rate. It's unrealistic.

garyg
04-24-2013, 03:21 AM
Why can't people do simple math? Here's the deal, The Taro Patch is $2K so let's assume that the dealer paid $1K , I value my Kamaka and PoW very conservatively at 1K retail, I then knock off a few hundred off his price and offer my two ukes plus $550 cash. So if the dealer did indeed pay $1K for the uke, he's got two ukes valued conservatively at $1K (one of these ukes alone was for sale at Elderly for $800) plus $550 cash. So let's say he sells the two ukes for 1K, then he's got 55% profit. Actually, I low-balled the cash expecting a counter offer after the dealer said he was interested in the trade. As expected, he came back with a counter offer of "more cash". So I upped my counter offer to $775, which again assuming a $1K purchase price and sale of my ukes would be a whopping 77% profit. The dealer then basically reneged on the deal and said that the only deal that he would take was $1800 cash plus the Kamaka, which was what prompted my original post because that was highway robbery in my book. Nonetheless, all of you who have made statements to the effect of "there's no profit for the dealer" are simply wrong, although it is contingent on the dealer to sell the ukes. But this could be done at highly discounted prices and the dealer could still easily keep their profit margin at 25-30%. As I said in a previous post, I never presented the details and it is impossible for an outsider to evaluate the deal without the details, although I did say the deal included profit for the dealer. Needless to say, I didn't take the deal, but as I've said multiple times, I was curious about whether the practice of greatly undervaluing trade-ins was widespread or just a function of this usurious dealer. Everyone is right who said a business can do whatever it likes, just as a consumer can. However, I don't need any uke that badly that I am forced to deal with businesses that use shady practices. But as for the question of profit, there is no doubt that there was plenty of profit in the deal for the dealer.



i agree with you
i mean no disrespect but reading through some of the posts on this thread i get the feeling that a dealer should give someone 300 dollars for a uke and then sell it for the same?
and still pay his overhead and have something left to feed his family?
anybody owns a successful business makes a profit if they expect to exist

lowendrick
04-24-2013, 03:32 AM
Based on your assumption that the dealer did the trade your way, you're asking them to make 20% profit on your old guitar. Retailers can't survive at that rate. It's unrealistic.

Actually, it would have been 25% profit (250 of 1000). Their way would have been 225% profit, is that more fair?

didgeridoo2
04-24-2013, 03:37 AM
Actually, it would have been 25% profit (250 of 1000). Their way would have been 225% profit, is that more fair?

Woops, you're right. 6am here. 25% is still unrealistic. And they would have made 56% if they gave you $800, not 225.

In retail terms that's 20 pts of margin is what I meant. Most retailers want at least 40 to 45 pts.

lowendrick
04-24-2013, 03:46 AM
Why can't people do simple math? Here's the deal, The Taro Patch is $2K so let's assume that the dealer paid $1K , I value my Kamaka and PoW very conservatively at 1K retail, I then knock off a few hundred off his price and offer my two ukes plus $550 cash. So if the dealer did indeed pay $1K for the uke, he's got two ukes valued conservatively at $1K (one of these ukes alone was for sale at Elderly for $800) plus $550 cash. So let's say he sells the two ukes for 1K, then he's got 55% profit. Actually, I low-balled the cash expecting a counter offer after the dealer said he was interested in the trade. As expected, he came back with a counter offer of "more cash". So I upped my counter offer to $775, which again assuming a $1K purchase price and sale of my ukes would be a whopping 77% profit. The dealer then basically reneged on the deal and said that the only deal that he would take was $1800 cash plus the Kamaka, which was what prompted my original post because that was highway robbery in my book. Nonetheless, all of you who have made statements to the effect of "there's no profit for the dealer" are simply wrong, although it is contingent on the dealer to sell the ukes. But this could be done at highly discounted prices and the dealer could still easily keep their profit margin at 25-30%. As I said in a previous post, I never presented the details and it is impossible for an outsider to evaluate the deal without the details, although I did say the deal included profit for the dealer. Needless to say, I didn't take the deal, but as I've said multiple times, I was curious about whether the practice of greatly undervaluing trade-ins was widespread or just a function of this usurious dealer. Everyone is right who said a business can do whatever it likes, just as a consumer can. However, I don't need any uke that badly that I am forced to deal with businesses that use shady practices. But as for the question of profit, there is no doubt that there was plenty of profit in the deal for the dealer.

I think many many dealers give low ball trade-in quotes. The difference to me is how much they work with you (or don't) to find some middle ground so you (and they) can feel like you are getting a fair deal. Too many times dealers make you feel like you're getting raped and you leave disappointed. The best dealers are the ones who maintain their customers by working with them so they feel good about the transaction. By no small coincidence, the dealer I spoke of went out of business, whereas the one's who continue to be successful have worked to maintain good customer relationships with reasonable profit margins.

lowendrick
04-24-2013, 03:51 AM
Woops, you're right. 6am here. 25% is still unrealistic. And they would have made 56% if they gave you $800, not 225.

In retail terms that's 20 pts of margin is what I meant. Most retailers want at least 40 to 45 pts.

We're splitting hairs here, but I was referring to their last offer of $400. If they gave me the $1000 and sold for what I did at $1550 they would have gotten their 55%. Isn't that enough?

OldePhart
04-24-2013, 03:57 AM
Why can't people do simple math? Good question... :)


...But this could be done at highly discounted prices and the dealer could still easily keep their profit margin at 25-30%...

And therein lies the rub...conventional wisdom has it that a slow-turnover retail brick and mortar business (which includes musical instruments, hobby shops, and so on) must maintain about a 50% markup or they won't be in business in five years. In contrast, a high-volume fast-turnover retail business (think, grocery store) can operate on as little as 5% markup. Those figures are from twenty years ago (the last time I worked retail) and before the internet but the overhead costs of having a physical location have, if anything, gone up. This is why "mail order" and now the internet have very nearly eliminated the mom and pop shop in all but the largest markets.

Now, that said, should the owner have made an exception for you because you're a long-time customer? Maybe, that's the sort of thing every business owner has to decide for him or herself. However, I know that most small retail shops that don't have a thriving internet business to support them are skating on the verge of bankruptcy these days. Even twenty years ago when I worked part time in a hobby shop how willing the owner was to wheel and deal was directly related to whether he'd already made enough that month to cover the rent and utilities or whether he was hoping for a big sale to put him over the hump for the month.

John

garyg
04-24-2013, 03:58 AM
Well said!


I think many many dealers give low ball trade-in quotes. The difference to me is how much they work with you (or don't) to find some middle ground so you (and they) can feel like you are getting a fair deal. Too many times dealers make you feel like you're getting raped and you leave disappointed. The best dealers are the ones who maintain their customers by working with them so they feel good about the transaction. By no small coincidence, the dealer I spoke of went out of business, whereas the one's who continue to be successful have worked to maintain good customer relationships with reasonable profit margins.

didgeridoo2
04-24-2013, 04:05 AM
We're splitting hairs here, but I was referring to their last offer of $400. If they gave me the $1000 and sold for what I did at $1550 they would have gotten their 55%. Isn't that enough?
Still early here and I read your post that they would give you $800, not $400. In my business, when we take a trade in for $400, we ask ourselves if we can get $800 for it. We may only get $700 which would be just under 43 pts margin. I think a buyer has to assume that from a retailer. Trades are way too emotional for some people and most folks will say, I can get such and such for it if I sell it on my own. So I say "Great! Sell it yourself and get more. its your best option. Now lets talk about the product I'm selling."

garyg
04-24-2013, 04:20 AM
Interesting points John, I wondered what the necessary profit margin of small businesses was. But realistically, if the dealer, took my ukes and $775, he could have sold a Kamaka 71-72 soprano in excellent condition and the Johnny Marvin Prince of Wales each for $400 (complete bargains and less than I have in both ukes) and come away with over 55% profit. If he took the $550 obviously he'd have to get $1000, but even valuing these ukes at $500 each, or the PoW at 600 and the Kamaka at $400 is lowballing the price. That's one reason to talk to a dealer, ideally the have a waiting clientele for quality ukes and can call someone up and say "Hey I've got a great deal for you". Hopefully we've now resolved the profit issue at least. Onwards and upwards, g2



Good question... :)



And therein lies the rub...conventional wisdom has it that a slow-turnover retail brick and mortar business (which includes musical instruments, hobby shops, and so on) must maintain about a 50% markup or they won't be in business in five years. In contrast, a high-volume fast-turnover retail business (think, grocery store) can operate on as little as 5% markup. Those figures are from twenty years ago (the last time I worked retail) and before the internet but the overhead costs of having a physical location have, if anything, gone up. This is why "mail order" and now the internet have very nearly eliminated the mom and pop shop in all but the largest markets.

Now, that said, should the owner have made an exception for you because you're a long-time customer? Maybe, that's the sort of thing every business owner has to decide for him or herself. However, I know that most small retail shops that don't have a thriving internet business to support them are skating on the verge of bankruptcy these days. Even twenty years ago when I worked part time in a hobby shop how willing the owner was to wheel and deal was directly related to whether he'd already made enough that month to cover the rent and utilities or whether he was hoping for a big sale to put him over the hump for the month.

John

didgeridoo2
04-24-2013, 04:35 AM
Gary,

Does this dealer actively seek trades? Or do you believe them to buy used ukes for the sole purpose of turning them around? The reason for my question is that we don't actively seek trades. We do it, but would rather not. We don't buy used stuff to sell because its a bit of a pain and warranties don't transfer.

Also, they may not need to retain the same margins I do. Rent in Los Angeles is high and we have warehousing to consider. If the store you're dealing with is a mom and pop with low overhead costs, they may not need to profit as much.

garyg
04-24-2013, 04:40 AM
He11, even I'm getting bored with the sound of my own voice. Didge, this is a major player in vintage instruments, otherwise I wouldn't have approached them. cheers mate, g2




Gary,

Does this dealer actively seek trades? Or do you believe them to buy used ukes for the sole purpose of turning them around? The reason for my question is that we don't actively seek trades. We do it, but would rather not. We don't buy used stuff to sell because its a bit of a pain and warranties don't transfer.

Also, they may not need to retain the same margins I do. Rent in Los Angeles is high and we have warehousing to consider. If the store you're dealing with is a mom and pop with low overhead costs, they may not need to profit as much.

coolkayaker1
04-24-2013, 07:37 AM
We could simplify this entire discussion by taking the word "dealer" out of it altogether.

You have a uke, you offer for me to buy it, I give you a price, you take it or leave it. Might get to one more back-and-forth and then, end of negotiation. You either sold it, or you didn't

No mystery--it's been done for thousands of years.

+++ For you to second guess me as to why my offer is what it is, or for me to second guess why you didn't take the offer is pure mental gymnastics, and inconsequential. +++

To pontificate about what the dealer could have sold it for, his overhead costs, etc. is no more relevant than trying to guess what garyg's cost of humidification, driving it elsewhere for another quote, eBay fees, etc. are. It's not worthy of discussion.

Stevepetergal has an excellent point in that regard. There's no ill-will or bad feelings; it's a simple discussion. Anyone who holds venom over something so trivial as someone not offering them what they think something is worth to the other person really ought to direct their attention at things that they can change in this world.

My 2 cents, a general statement, not directed at anyone; just the principle of bargaining.

RichM
04-24-2013, 08:06 AM
Yes, very well said, indeed. These are business transactions, and like all business transactions, they involve negotiation. If a buyer (or trader) makes you an offer that you find untenable, make them a counter-offer, or do business elsewhere. It doesn't make them bad people, dishonest, or greedy;; it just means there's a price point at which it's useful to them, and it may not be the same as yours. I have seen dealers in this thread described as "shady;" I see nothing shady about stating what your best offer is upfront and then declining to do business if the other party isn't interested.

I suppose it would be different if the dealer attempted to mislead someone on the value of their instrument, but there's no evidence of that in any of the stories on this thread. And we have had a few dealers on this thread confirm that they can't offer anything near the retail value of an instrument on a trade, and encouraged sellers to pursue private sales for the highest dollar. So there seems to be no shadiness at all.

Despite the OP's insistence that he only wants to know if the practices is common, he then goes on to do some mathematical calculations to show how profitable the deal would have been to the dealer. In the end *none* of that matters; whatever the criteria are, there wasn't enough value in the deal for the dealer to want to do it. I see absolutely no evidence of dishonesty, poor business practice, or manipulation. In the end, trades just aren't that attractive to many dealers.

coolkayaker1
04-24-2013, 08:11 AM
Right on, RichM. Well said.

Dan Uke
04-26-2013, 06:40 PM
Well said from the last two