December 2005 Mineral News

New Pricing Standards For Mineral Specimens

John Watson Fallbrook, California

Because of the release onto the market of so many collections over the last several years, the influx of Chinese specimens in abundance and the dramatic rise in specimen prices, industry has adopted a new set of pricing conventions. These new conventions will enable the buyer to accurately gauge the value of any specimen offered in the new commodity environment of the 21st century.

Back in the days even before the influx of Mexican specimens, the numbers of pieces changing hands were quite small by today's standards. The dealer would obtain pieces that were individually priced and then would double the price for retail sale. This was necessary to cover the expense of doing business. Some dealers tripled the price, though then some collectors viewed even doubling as only marginally ethical. They viewed the hobby as a small group of people all in the same boat. But tripling paid for better cases and lighting, advertising and even printed labels. This doubling and tripling of individually priced specimens was called Stone Age pricing. This is pricing done in Archeozoic units called dollars, or Euros or whatever national currency is trendy or required at the moment.

But as stated before, the specimen trade has entered a new world. Big bunches of specimens or collections are purchased en toto. The dealer must then determine how he should price these to stay in business and perhaps to buy a new BMW this year. Each batch is divided into three parts (the Gallic technique) and each is priced separately. The "bottom third" is wholesaled off into mineral outer space. The top third, containing the "killers" is priced individually. The rest generally becomes stagnant inventory awaiting a blowout sale for alert collectors to pounce on. The killers are priced at whatever level the dealer needs to maintain his desired standard of living and to payoff the entire collection purchase. All else is storage, work and maybe some profit.

The killers will be priced in housing equivalents (HE) or in furnishings equivalents (FE) or by exponential notation. Housing equivalents are based on units of $100,000 or, as we often say, $100k. Thus, a specimen priced at $125k would simply be labeled at 1.25HE. A real house could cost anywhere from 2HE to well over 10HE. This could also revolutionize real estate pricing. For heavy hitter mineral auctions, bidders could just say "2" ($200k) or "3 and a half' ($350k).

Killer and near-killer specimens will be priced in furnishings equivalents (FE). This has been called for by the housepersons in the minerals world. One need only think of king size beds, recliners, sofas, dining room table and chairs. Here the pricing is done in increments of $1k. So, for instance, a specimen priced at 2.5FE would require the outlay of $2500. Some of that middle third of the purchased collection will be priced in FE. So a good $500 piece would have a price label of 0.5FE or "half an FE." This really puts the prices on mineral specimens in correlation with things the world understands much better such as refrigerators, plasma TV s, beds, new shower enclosure, etc. So, a refrigerator at $1000 is priced the same as a mineral specimen with a price label as lFE (or just "an FE").

Some may be oblivious to equivalents or not care to think of prices that way. Or those dealers and collectors with some vestigial memory remnants of mathematical notation may simply want to use exponential pricing. These prices would consist of a coefficient and an exponent of 10. For instance, that $2500 specimen would simply be tagged at 2.5e3. A $500 specimen would be tagged at 5e2. A Furnishings Equivalent (FE) is simply e3. A housing equivalent would be e5. It's very simple and straightforward and elegant. This way one can negotiate the coefficient or really play hardball and negotiate the exponent. Exponents seem so trendy since gasoline, real estate, and mineral specimen prices seem to be rising exponentially.

Industry Affairs Associate

Publisher's Comment: Before everyone starts complaining about John's pricing observations, there is more truth in these concepts than one might imagine. In the early days (i.e., 30 years ago or so) of my mineral dealing career, specimens purchased during trips to Russia were often funded with blue jeans and Marlboro cartons. Likewise, Elmwood miners occasionally needed a new washing machine or color TV, and these became pricing units for various lots of calcites, fluorites, and galenas (i.e. "leads" as they were called).  So, don't laugh at the thought of HE's and FE's!

                     

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