Lesson 12: Value
Value is somewhat of an elephant in the room. While some collectors are not particularly interested in the value of their collections, others maintain fastidious records of what they paid and the catalog value for their collections. Friends, relatives and acquaintances frequently ask questions about value or “what’s it worth” when they find out that someone is a stamp collector. And, of course, values must be set any time stamps are bought and sold. Here is some general guidance.
Condition: Condition is discussed in more detail in lesson 7. A damaged stamp may only fetch 10% of the value of a pristine example, and a mint stamp that is never hinged may fetch multiples of the value of a hinged stamp. The spread of values is typically accentuated for rarer or higher-value material. The Scott U.S. specialized catalog includes a section that prices stamps in different “grades.”
Supply and Demand: Like any other goods or services, and as a matter of economics, prices are set at the intersection of supply and demand. For most basic material, prices are relatively stable. The “supply” of many rare stamp items (and even more so in esoteric areas of postal history) is very limited, but so is the number of collectors who are interested in an item. In many specialty areas, there are so few advanced collectors that the entry or exit of a single collector can significantly influence prices.
It’s worth noting that the stamp “market” is highly imperfect. Stamps are not commodities, and dealers have different information and business practices. You can expect to see wide variations in pricing between dealers, at auction, and so on. Do your homework before seeking out expensive material, and keep in mind that frequently if a price is too good to be true, there may be something wrong with the seller or the item.
Catalog Values: Catalog values are only a guide. While Scott catalog values are intended to approximate the retail price of a stamp from a dealer, those catalog values only apply to stamps in very fine condition (stamps in better condition can be expected to sell for more, while inferior examples sell for less). It is typical for dealers to sell at a discount from catalog value (40 to 70 percent of catalog is not uncommon), and deeper discounts tend to occur online or at auction. When buying from a dealer, keep in mind that the dealer must make a profit to stay in business, and you are paying for the dealer’s time in locating and organizing material so that you can readily find it. As a related point, most catalogs have a minimum value for the most common stamps – Scott now has a minimum value of 25 cents. You should not assume that a common stamp is worth 25 cents, either when buying or selling, or that four minimum value stamps are worth the same as a single stamp with a catalog value of one dollar.
Collections and packets: Buying stamps in collections or packets is frequently more affordable than buying stamps individually. Collections and packets tend to sell at lower percentages of catalog value, but of course you may have to buy duplicates or material you don’t want along with the material you do want. Packets may include only stamps of a particular country, subject matter or time period, and may include as few as ten stamps or many thousands. Be alert to claims of “all different” or “all complete sets” or similar descriptions as possible indicators of the quality of stamp packets.
Wholesale vs. Retail: As a related point, expect that when you sell a collection to a dealer (or even another collector), you will sell at a wholesale price. Dealers must buy at a lower price than they sell. It’s common for collections to sell at a low percentage of catalog value; dealers tend to have an overabundance of common material and are usually more interested in acquiring specific material that they know they can sell or don’t already have in stock. For this reason, it can be difficult to make money on your collection.
Investment: Many people buy stamps as an investment, hoping that they will increase in value. This is a risky proposition, because it’s difficult to predict where and when prices will go up and when they will go down. Stamps are not a commodity and many factors go into values, plus if you buy at retail you will have to face the potential for resale at a wholesale value. For most collectors, it’s best to think of the money spent on a stamp collection like you view money spent on movies, or golf, or dining out – the money is spent on an experience, not as an investment. That said, stamp collections almost always have a residual value, which can be significant, even if it’s not the full amount that was paid by the collector to assemble the collection.
Inherited or Donated Collections: Non-collectors frequently are left to deal with abandoned collections or collections left behind by deceased family members. As a general rule, well-maintained collections where a collector spent significant resources on the collection (for example buying at auction) or was a specialist, are more likely to have resale value. Many large collections actually have surprisingly little value in the end because common material remains common. Most United States mint stamps after 1940 have not appreciated in value beyond their issued “face value” and in fact sell at a discount below face value, to be used as postage. For more general guidance, here are a few articles: