Dealer mark-ups on trade-ins?

TrevinDevon

Is there's any sort of standard mark-up policy among dealers who accept trade-ins? I'm looking to put in an offer on a pre-owned instrument (it's priced in the £1.5 to £2k range), but it would be useful to know roughly what they might have paid for it. Have you traded an instrument and then seen it in the dealer's window for a lot more than you got for it? (Or I guess I could just wait for what I'm after to appear on here )

fretmeister

I don't think you can tell with any accuracy.

Sometimes the trade is value was really cheap because the person selling wanted rid. Sometimes the item increases or decreases in demand after the trade in.

Different dealers also have different overheads, and sometimes an instrument just needs a polish, and others need a deep clean, new strings, repair something minor etc.

And that's before we get to whether vat is on it or not.

But compared to ebay and private sales I would expect the same used instrument in a shop to be 25% more.

If I was you, I'd search ebay completed listings and compare with that.

markj

I traded in a Gibson es335 in part ex for my Martin HD28 in January at Frailers in Runcorn, I was given £1800 for it. Frank at at Frailers sold it for £2000 around a month later.

Andy79

I talked about a trade with PMT, was offered around half market value. The guy advised me to sell privately 

domforr

I discussed trading my 1966 Gibson J50 at a Denmark st shop and he said he'd give me £1000 for it - also suggested selling privately. I think some of them have a big mark up.

FelineGuitars

I think someone on here explained it like this 
£1000 new value guitar

Seller gets £350 in trade in or sale to shop
Shop will sell for £700 (might get knocked down though)

HMRC will take £117 as VAT
leaves the shop £233 (assuming they didn't discount it)

This may pay towards shop staff wages & NI, rent, heat & light, phones & internet & website maintenance, business rates, business insurance.

Shop owner would have to do a lot of trade to get a Ferrari though

TrevinDevon

Thanks for the replies. Rather a mixed bag, then. I hadn't thought about VAT, I must admit. Perhaps the best course would be to offer the eBay price with 5% or so on top for the fact that a good dealer shouldn't be selling a lemon and/or will offer a warranty and gauge the response. Of course, dealers have overheads that private sellers don't, and ultimately it's about subjective valuation on both sides.

Strangefan

Try Facebook selling groups, I have had alot of luck there, a lot of people will say theirs a lot of time wasters etc but tbh every selling site is the same these days and they all have lowballers scammers or time wasters, and you don't get a particular sort of person using one or another, so you may as well try them all. 

CMW335

Had good and bad offers in the past 

GuitarPoint in Germany gave me €4200 trade in value on a 1962 J45 which was a lot more than I was selling it for on here.

Another reverb dealer only the eu however offered £3k for my 59 Tele refin which I sold for £8500

What is it you are buying and what are you trading in? Might find the same deal on private market 

TrevinDevon

CMW335 said:

Had good and bad offers in the past 

GuitarPoint in Germany gave me €4200 trade in value on a 1962 J45 which was a lot more than I was selling it for on here.

Another reverb dealer only the eu however offered £3k for my 59 Tele refin which I sold for £8500

What is it you are buying and what are you trading in? Might find the same deal on private market 

Like I say, subjective I'm not trading anything in, just buying used and trying to get an idea of the wriggle room.

TrevinDevon

Strangefan said:

Try Facebook selling groups, I have had alot of luck there, a lot of people will say theirs a lot of time wasters etc but tbh every selling site is the same these days and they all have lowballers scammers or time wasters, and you don't get a particular sort of person using one or another, so you may as well try them all. 

Yes, I do monitor fb and every other site I can find, both commercial and private. A dealer has just come up with what I was hoping to buy, though at more than I was hoping to pay, hence the OP.

FatPete

FelineGuitars said:

I think someone on here explained it like this 
£1000 new value guitar

Seller gets £350 in trade in or sale to shop
Shop will sell for £700 (might get knocked down though)

HMRC will take £117 as VAT
leaves the shop £233 (assuming they didn't discount it)

This may pay towards shop staff wages & NI, rent, heat & light, phones & internet & website maintenance, business rates, business insurance.

Shop owner would have to do a lot of trade to get a Ferrari though

Most dealers will use the second hand margin scheme where VAT is only paid on the profit. In this example it would be £58.35.

ICBM

Impossible to tell - it could be anything between about half the marked price right up to the marked price, if it was traded in against a much more expensive item the shop was desperate to get rid of...

Don't try to second guess, just make a decent offer and see what they say. You will not win the argument by trying to work out what they paid for it and then add on what you think they should be making on it.

TrevinDevon

Makes sense. Thanks.

Tex Mexico

I've never talked about a part-ex to a reputable shop where they haven't told me to sell it privately for twice what they could offer. Even if they are taking your £2k guitar off you for £750, they'll still make very little on it and most shops, especially those who mainly deal in new stock, don't necessarily want to have stock in they haven't selected.

They will do it however because it is technically profitable, but in the main I've been offered the highest (as a percentage of RRP) for a Les Paul Classic, as it would sell quickly, and the lowest for some BC Rich thing which would clearly have hung around gathering dust for months.

FunkyGibbon

I’ve sold a number of guitars through a local shop on concession and also on Denmark Street. In both cases, we discussed how much I wanted for it and then in D St they sold it for the best price they could get and paid me what we’d agreed. Locally we set the price together and I paid them a commission which I think was 10-15% of the final sale price.

artiebear

I used to spend hours trying to work these things out. In the end, its a) how much margin is in the FS item b) what's yours worth s/h c) how long FS been on sale, ever decreasing margins d) how much cashflow does your retailer need e) is your retailer an optimist who thinks he can get some quick return off your guitar as opposed to the long return on his/her stock f) you have a hugely rare /vintage piece that you are, obviously unaware of, then they might offer you ( after looking into your eyes ) 30% of the going rate 

In truth, no issue with the guys who deal, there are more good guys than bad 'and a lot of them love guitars, which is a good thing.

koneguitarist

I dont have a music shop anymore, but so many reasons why listed above. Most of you want guitar shops, but don't want them to make money out of you? 

DB1

My experience is about 40-50% markup for the store on a straight sale to them. 

GuyR

Never any harm in making a bid in a polite and respectful way. I would avoid any kind of entitled one-sided rationale which is likely to antagonise the seller and make them less likely to be flexible. 
Good will is the most under rated factor in striking deals.

TrevinDevon

@Tex Mexico Although if they've taken your £2k guitar for £750 and sold you a full-price £4k brand-new one, they've presumably made the same profit if they sell yours for £750 plus any overheads as they would have done if you hadn't traded it in. If they sell it for more than that, then they've made a bit more.

@FunkyGibbon Good to know, although consignment and trade-in are different, of course.

@artiebear Of course, business is business, and bargaining is bargaining. I don't think anyone is trying to rip anyone off 99% of the time either, but both sides need to be happy with the deal.

@koneguitarist I don't think anyone is saying that. If dealers didn't make money we wouldn't have anywhere to buy our instruments from. Nothing wrong with a level playing field, though.

@DB1 Perhaps that's to be expected on a straight sale, though. No profit to them until they sell it, whereas on a trade-in the profit has been made already.

@GuyR Well said, and that's really the solution, I think. Bid what you're prepared to pay, and if the dealer agrees, happy days. If not, don't cry about it. No different from eBay.