Collecting - Secondary Market

Secondary Market

The retail price of a collectible is valid only at the moment it was purchased. Once the collectible comes into the buyer’s possession, its value is linked to what is called the secondary market. Once a collectible is purchased, most of the costs associated with the retail price (i.e. advertising, production cost, shipping cost, etc.) must be deducted from the retail cost to determine the object’s immediate value on the secondary market, thus, retail cost is not equivalent to secondary market resale value. Depending on several different factors, individuals, auctioneers, and secondary retailers may sell a collectible for more, the same, or less than what they originally paid for it. These factors include, but are not limited to, condition, age, supply, and demand.

The 1960s through the early 1990s were major years for the manufacturing of contemporary collectibles. While some individuals purchased contemporary collectibles to enjoy and use, many purchased them as investments. Speculative secondary markets developed for many of these pieces. Because so many people bought for investment purposes, duplicates are common. And although many collectibles were labeled as "limited editions," the actual number of items produced was very large. The result of this is that there is very little demand for many (but not all) items produced during this time period, which means their secondary market values are often low.

There is no secondary market for an item unless someone is willing to buy it, and an object's value is whatever the buyer is willing to pay for it. Industry leaders believe that the secondary market is important for several reasons: primarily to allow experienced collectors to upgrade their collections, to stimulate the market and encourage new collectors, and to provide a means for monetary appreciation. To upgrade a collection, a collector may wish to dispose of things they no longer enjoy to produce the capital to buy other things. To stimulate the market, collectors may obtain some good quality pieces that have been traded in the past. They have an opportunity to learn the history of the hobby by owning some of the items that have been favorites in the past. Another reason is to make money, by selling an item with appreciated value.

A price guide is a resource such as a book or website that lists typical selling prices. The first price guide was the Stanley Gibbons catalogue issued in November 1865.