Cash price vs trade value

[mitchntx]

Is this a head scratcher for any one else?

Why would there be a difference and be dumb enough to advertise it?

When I see a gun I'm interested in and am considering a trade offer and see a 10-15% increase in "trade value", the value of my trade must be worth that inflation as well.

So what's the point?

[psyfly]

Mitch:

Sometimes (often enough, I think) the point is someone has something I've been wanting and I have something he/she wants to trade for and neither of us has the cash free to put up. In that case, one or the other of us is willing to do the down-trade in order to get what we want now while it's available and while I/he/she has the opportunity to do so.

The desire to get what I want now (and while it's available) will often outweigh the fact that I can get more for mine in cash $ than his is worth. Then I have to try to find what I want for sale (not always easy).

Despite appearances, both parties usually end up feeling it's a win-win.

Or, did I miss your point?

Best,

Will

[Rifleman1776]

It creates a talking point. A clever trader/dealer will be able to read your desire to make the purchase and know how to negotiate with you. If you are up against and experienced trader the only way to come out unburned is to be willing to walk away. And do it.

[mitchntx]

I didn't articulate very well ... I was just one cup into the day. Sorry.

Maybe a for instance ...

I was reading a classified for a handgun and the owner advertised it at $750 cash and $900 trade.

So if I had trade fodder and it's FMV was ~$750, would I make the offer?

If I do, I have over-inflated the value which is the exact same thing as the seller. So what is the point?

That's no different than a car salesman offering you $1000 more for your trade-in and inflating the sales price of the new car $1000.

I'm not grasping the reasoning behind that marketing strategy.

[Double Naught Spy]

That's no different than a car salesman offering you $1000 more for your trade-in and inflating the sales price of the new car $1000.

I'm not grasping the reasoning behind that marketing strategy.

No, the salesman isn't inflating the price of the new item. You are getting more on trade-in than you would in cash because the salesman is spreading the costs between the items and hoping to get two deals instead of one. They will buy your gun for $750, but the business is better off if they can also turn over stock and make a sale. So, they offer you $900 if you want to put that toward purchasing another item.

They aren't inflating the price of the other item. They are actually reducing their profit, but they are making a profit where they otherwise would not be making it, and they have your trade-in to help make up some of the difference.

In other words, their prices are their prices regardless of your trade-in or even if you come in the store. However, they are willing to take a hit on their profits for the opportunity to make a sale now, sale later (of your used gun you just traded in to them), and make you happier as a customer.

It really is good business.

With that said, you virtually NEVER get the full value out of trading in an item to a business that has to then resell the item. You end up selling closer to wholesale than retail, but when you sell to another individual, you are more apt to get closer to retail. By bumping up the $ to a higher trade-in value, you will get closer to the retail value out of your gun, but still likely won't get full retail value out of it as compared to selling to an individual.

[mitchntx]

It really is good business.

I find it rather shady. Probably why I drive a vehicle till the wheels fall off and then and only then set foot on a dealership's lot.

Tell me what you will buy my car/gun/whatever for and tell me what you will sell your car/gun/whatever for and let's make medicine.

Why make something so simple so complicated?

For me, there are two prices on everything ... FMV and what I want for it.
If I'm ready to move onto something else, I'll price it accordingly.
If I have something you want to buy and I'm still "attached", I'll price it accordingly.
I won't advertise two prices.

I guess that's just me.

[Yung.gunr]

Let's say that I have a 92FS I wanna sell for $550 but I haven't been getting any bites on it I may then be open to trade it. But, I don't REALLY want to trade so I will require that if someone wants to trade their item must be worth $650.

That way I get rid of a gun I don't want and maybe get something better. Then the guy who has the higher end gun wants to get rid of his and really wants a 92 but doesn't have the cash to go and buy it.

That may be a scenario... It is kinda silly, but it happens (shrug)..

I don't think it's shady. It's just his way of saying he doesn't really want to trade, but if that's all you got he wants to end up on top of the trade.

[Double Naught Spy]

I guess that's just me.

You don't don't like the fact that the dealer is willing to give you more for your item if you buy another than if they just buy it from you outright. It isn't shady or complicated. It is actually very much up front and simple.

It is a common practice that happens across a myriad of industries/businesses where sellers are also buyers. Your will find it with guns, cars, boats, planes, industrial equipment, furniture, farm equipment, jewelry, and so on.

For me, there are two prices on everything ... FMV and what I want for it.
If I'm ready to move onto something else, I'll price it accordingly.
If I have something you want to buy and I'm still "attached", I'll price it accordingly.
I won't advertise two prices.

Ah, but you DO have two prices depending on your emotional attachment. The dealers two offers to buy are not based on emotional attachments, but in trying to make deals and in doing so to make money. They would much rather pay a little more for your gun and sell you something and make some profit now and then profit later on selling the gun you sold them, than to give you a bunch of money and have you walk away, no direct profit being made from the transaction until sometime later when they resell your gun. A bird in the the hand...

Think of the higher offering for trade-in as the incentive to buy. That is all it is. It isn't shady in the least.

[mitchntx]

DNS ... I just don't follow the logic of offering me more in trade in an attempt to get me to spend more on something else.

I understand how an emotional buyer can get swept away in new gun/car/whatever fever and make a bad decision when the "deal" appears better than it is.

It appears to me that we are looking at this from two differing vantage points. I'm looking at it as a potential buyer and you are viewing from a potential seller's point of view.

In your scenario ... advantage seller.

Like I said, I would just prefer something a little more honest and upfront. No inflation of anything ... just FMV and let's make medicine.

Ah, but you DO have two prices depending on your emotional attachment.

Why yes ... with emotional attachment, I probably wouldn't want to sell. It would take a heckuva deal to turn it loose.

I have an old, well worn, beat up Winchester 30-30 lever action that I learned to shoot with my dad. I've seen them at shows for $300 ... I wouldn't take $3000 for it.

So in that regard ... I do have two prices.

[Double Naught Spy]

DNS ... I just don't follow the logic of offering me more in trade in an attempt to get me to spend more on something else.

How can you NOT understand this? Do you think the dealer is in business, to buy things? No. The dealer is in business to sell things. Profit is made in sales, not in purchases.

It isn't about advantage. It is about business. To stay in business means making a profit. When businesses fail to make a profit, they fail.

Since you have your 2 prices and you are okay with having two prices, I don't see why you don't feel the buyer, a dealer, can't offer you two different amounts. Why do you get to have two selling prices but the dealer can't have 2 offering prices?

However, to put it into your emotional framework of what you are attached to or not, the dealer is more attached to cash than to merchandise. So your gun is worth less cash to the dealer as a cash purchase than as a trade-in. It really is that simple, especially when that cash is walking out the door and immediately reducing the dealer's financial position without any profit attained than giving you more credit for the same gun, making some immediate profit on the purchase you then make because of the trade-in.

[Cowboy_mo]

In my experience, trying to trade guns like trying to trade vehicles is always a losing proposition for ME.

The seller (be it car dealer or gun dealer) wants to get retail price for his gun/vehicle and wants to give me WHOLESALE price for my gun/vehicle so he can make a profit on BOTH items.

I have always come out better by selling my item and having CASH in hand to purchase the new item.

Now if someone advertises $550 cash or $750 trade, they are simply trying to raise their "cash" price up to retail level while the cash price is below retail.

Guess I should also add the same 'trade rules' have also held up during 30 years of being in the horse business.

[Double Naught Spy]

Cowboy, absolutely!!! As I said above, you will never get full value trading in an item to a dealer (not realistically anyway) and certainly NEVER selling to a dealer.

Selling to a dealer or trading in to a dealer is sort of the lazy way to do things. It saves you all the hassle of having to deal with all the yahoos that want to look at, touch, toy with, and more often than not, not buy what you are selling. So when you sell or trade to the dealer, you are transferring to the dealer all the hassles that come with the dealer then having to resell the item. That involves time. Time = money or cost to the dealer.

If folks watch some of the hokey pawn shop shows like pawn stars, they bring in an expert who states the value of an item and then the customer virtually always says that is how much they want for the item. However, the pawnbrokers then always have to explain that they can't ever make money by paying full price for an item because then when they sell it for full price, the make ZERO money. Making $0 actually translates into an actual operating loss because of the time and overhead that then go into trying to sell the item.

There is a very good reason why there are wholesale prices and retail prices. The difference between wholesale and retail has to account for all of the related expenses in bringing a given item to market and hopefully making a little profit along the way, which may only be a few percent.

Contrary to popular belief, businesses really never break even on anything. Either they make a profit or they take a loss. Actually breaking even given all the expenses of overhead and such make it virtually impossible for the sale of a given item to actually break even.

[mitchntx]

DNS ... I'm not trying to debate the business practices of a dealer. My points surround individual to individual transactions.

While I did liken the cash price vs trade price to when buying a car, it has nothing to do with the business viability of a dealership or gun store, rather an individual engaging in SIMILAR activities ... what I consider shady practices ... in order to milk more $$ from a trade.

Individual to individual isn't necessarily about making money, rather than trading something I can live without in order to get my hands on something I would like to live with.

Simple ... FMV to FMV and cash can make up the difference. I don't see the point of artificially altering real world value.

If your standards are different then I can respect that just as I would hope you could respect mine.

[Double Naught Spy]

Somebody please help mitch.

[mitchntx]

[TMD]

One simple reason and one reason only.
Cash is king.

[K1500]

The cash the dealer gives you gets him a used gun. He must then put it out and resell it to make a profit. Meanwhile, his cash is tied up and you may walk with your cash.

The higher trade value is because you then buy something from him. He makes money on both the used gun you traded and the new one you bought. He is willing to give you a higher trade allowance because he makes money on two transactions instead of one. In addition, he ties up less of his cash. Essentially, he makes slightly less per transaction, and is sharing a bit of the profit with you.

This is why stores like WalMart want to give you a gift card instead of cash if you return something without a receipt. You then buy something else with the money in store, and they make a profit on it.

Furthermore, I believe you pay sales tax on the net difference, which makes a trade even better for you.

[Cowboy_mo]

Ok Mitch, follow my logic. The INDIVIDUAL in the case you cited is thinking like a Dealer. He is thinking, I can make money on what I am selling AND I can also make money on the gun I am trading for.

Now, as has been pointed out, CASH IS KING, always has been and always will be.

[mitchntx]

Ok Mitch, follow my logic.

I follow the logic. I don't understand the point.

Seller jacks his trade value up for whatever reason. Doesn't matter.
The buyer, in turn, increases the fodder's trade value as well.

If I'm the buyer, I'd be stupid not to.


At any rate ... I appreciate the life coaching.
I obviously see things a lot simpler than most.
When I see two prices advertised, I move on. Lots of guns out there.

[wolverine_173]

trading has always worked well for me

[MLeake]

OP, one thing that also can come into play with trades is a (potentially) significant reduction in sales tax.

For instance, years back I traded my Acura in toward an Explorer. I received $7000 in trade-in value, but I had already worked the dealer down to actual cost plus $500 on the sale (since I knew via edmunds.com that he was getting another $750 in factory incentive money for the sale; it was the end of the month; it was a rainy Sunday...).

In theory, I could have sold the car for $8500 to $9000.

That would have required advertising costs, some delays, and letting people test drive the car - which could induce risks ranging from attracting some psycho, to just getting a bad driver who damages the car during the test drive.

But, to top it off, sales tax in that area at that time was about 9%. Sales Tax is paid on net purchase price. My (then) $25,000 SUV was actually being sold to me for $18,000 - so I was making $630 in net tax not required.

Suddenly, my $7630 isn't too far from the lower end $8500, and I haven't had to advertise, haven't had to wait, haven't had to run any risks whatever.

Now, translate the concept into gun purchases and trade-ins, vs listing and selling one's own then buying, and it's similar.

Then again, I have been relatively successful selling guns I no longer want on gunbroker, so odds are I'd just sell another gun or two, then pay the lower cash price.

[Double Naught Spy]

I follow the logic. I don't understand the point.

No, if you followed the logic, you would understand the point.

When I see two prices advertised, I move on.

Link to an example?

[mitchntx]

DNS ... I appreciate your taking the effort to change my point of view.

I don't know how many times you think you need to repeat yourself. I know I'm getting a little tired of restating how it appears from my world.

Link to an example?

I found a couple examples on Texas Gun Trader dot com. But I'm not going to link because it very well could be some one on here and I don't want any individual thinking I'm picking on them.

But I will say, they are not hard to find ... cash value $750 trade value $900.


How about this ...

If you have a gun you are wanting to trade, I will automatically and artificially inflate the value of my offered trade by 15% so that everything remains reasonably equal. Fair enough?

For everyone else, I'll be 100% at FMV.

[Double Naught Spy]

You seem even more confused. How about instead of making up bogus examples that you actually provide some real proof of your believed shady deals. You say you fear the people may be members here. You have nothing to fear by that. If that is the case, they have made offers on a public venue and so they have nothing to hide. That YOU think the deal is shady is your opinion, but contrary to your belief, it is a common, established, often used business practice. You have nothing to fear by posting a link that you don't understand. That you keep flipflopping around in your descriptions does not help. You need to provide actual examples about which you have expressed a lack of comprehension.

Otherwise, you just appear to be complaining about imaginary things and they are imaginary because you won't cite any real examples.

[Baba Louie]

Horse tradin and hagglin... He is thinking, "Did you come here to buy?"... and/or conversely, You're thinking, "Did he come here to sell?"

For some people, that's the thing. Horse tradin... Screwing, er, I mean, selling to someone for profit. For others, a good deal is a good deal and both parties win. Used is used. New is new but might be used. What I want is what I want and I know how much that is worth to me. YMMV. As does the seller/trader.

People who inflate to trade are looking for the PT Barnum kind of buyer... and those kind of people are out there. Know the value of the thing, or things as it were (yours and his) have cash ready and of course be ready to walk away with a smile on your face from unscrupulous types.

The age old phrase "Caveat Emptor" rings true for a reason, be it horses, antiques or firearms. Such is life.