When Can Dropping Prices Be Worthwhile

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Prices climb and prices fall. It’s a fact of economics—supply and demand 101. Everyone knows what to do when buyouts ensue, prices are spiking, and cards are flying off the shelves. No one is too upset about having to raise prices on cardboard, increasing sales (and, often, profit margins) in step.

But what happens during a momentary bout of weakness in the Magic market? Dropping prices on cards feels so much worse than raising prices, especially if it means potential losses could be incurred. Because of this aversion to dropping prices, sales volume instead decreases and inventory sits around for longer than anticipated.

I believe this is suboptimal. While no one likes dropping their prices, there are many significant benefits to doing so to encourage sales.

A Quick Caveat

Before I dive into why I am a proponent of price decreases, I need to clarify my perspective. I am not a store owner. I do not pay rent to sell Magic cards. I do not rely on this hobby to pay for anything other than the hobby itself and my kids’ college fund. Because of my casual engagement with the hobby, I can be much more agile when making decisions to slash prices.

I understand such a decision cannot always be taken as lightly when profits from Magic sales are required to keep one’s lights on. Dropping prices on a significant percentage of one’s inventory could mean the difference between a profit and a loss for the month. Too many months like that, and a business won’t stay in business for very long.

Despite this complexity, I’d still maintain that the practice of dropping prices can be positive. If nothing else, the considerations I’ll outline below should be relevant whether you sell ten cards a month or ten cards an hour.

Sometimes the Price Just Isn’t Right

No matter your motivation—whether to maintain liquidity, to make a profit, or to raise cash to purchase other cards—a decision to sell cards should be relatively fixed. You may decide that you’re willing to sell a card if it rises above a given price. This is akin to setting a limit sell order on the stock market. However at the end of the day, if you’re comfortable letting a card go, it’s probably because you don’t feel you need it any longer.

This is precisely the thought process I navigate when deciding what card to sell next. I’ll browse through my collection and identify the card I’m least attached to—preferably one that has appreciated since I purchased it, but not always. Once I find the card(s), I research prices and post them up for sale.

Sometimes I am lucky. I’ll post the card at a price point I’m happy with, usually around 10% below TCG low, and it’ll sell within minutes. This is exactly what happened when I posted a damaged Arabian Nights City of Brass and a Legends Hellfire for sale last week. They both sold right away without any need for negotiation.

Sometimes this doesn’t go exactly as planned, especially on a more obscure, less playable card. For example, a couple of weeks ago I decided I wanted to sell my BGS 8.5 Alpha[ Shed Weakness. I forgot precisely what I paid for the card, but the bottom line was that I already had an ungraded copy in my collection and I had no need for this more expensive version. What’s more, 8.5 wasn’t high enough of a grade to really get me excited about its collectability.

After doing some research, I created an eBay listing for the card and set a price just shy of $100. This was still significantly cheaper than other graded copies on eBay (even copies with poorer grades were posted at prices north of $120 and beyond). After a day or two at that price, however, I quickly realized I was too high. No sold copies had gone for that much, and while the graded nature of the card added some value, I doubt it added more than $10-$20 of premium over a near-mint price point.

Because I had already decided I would sell the card, I began dropping its price. Every day or two I’d cut another $5 to $10 off the eBay price. I even submitted an offer to a watcher of my eBay listing for a lower price. Still, no one bought the card.

This is where things get interesting—I was committed to selling this card. It didn’t matter what I had paid for it because what is in the past is in the past. The only thing I could control is what I sell the card for. Of course, I wouldn’t drop my price so low that it wouldn’t make any sense—for example, to sell for less than a near mint copy sells for on Card Kingdom’s site would have been crazy. Likewise, ABUGames’ buy price for “mint” copies could have also acted as a price floor.

Because I wanted the sale, I took the difficult decision to cut prices further. Eventually, a fellow Quiet Speculation member expressed interest in the card and I cut them a fair deal. Was it the amount I had hoped to get when I made the decision to sell the card? Not quite. But I wanted to make the sale to raise cash, and I adjusted the price in order to meet this objective.

Why I Forced the Sale

Why didn’t I just put the card back on my shelf and hold onto it for some more time? Won’t a BGS 8.5 Alpha card be worth more years from now than it’s worth today?

These are fair questions that I briefly considered while I was making this sale. But there are a couple of reasons I decided to move forward with selling.

First, I wanted liquidity. Whether you’re a small-time, casual player like me, a backpack grinder, or a major vendor, you’ll recognize the value of liquidity. I’d rather sell things quickly for a small profit than sell things slowly for a large profit. Having constant turnover in one’s inventory (or collection) keeps things fresh and ensures agility in a rapidly changing market environment. In my case, the sale gave me some more cash with which to buy other cards I wanted for the collection.

Second, there’s the opportunity cost of sitting on a card. If I am trying to sell the card for $100 and no one buys it, it effectively means I am continuing to “buy” the card myself at that price. Think about it. A decision not to sell an asset is akin to a decision to buy that asset at the end of each day. As long as I kept my price point so high, I was declaring that if the price was any less, I’d rather keep the card. This just wasn’t the case. I was motivated to sell, so I dropped the price…eventually, if it still hadn’t sold, I would have been OK with keeping it, but that price point would have been a good bit lower. By selling the card, I generate cash that can be used to buy something with better growth prospects, or at least something I’m more excited to own.

Lastly, and most psychologically, I had already made the decision to sell the card. Therefore, in my mind, it was already as good as sold. Once I accepted the fact the card would no longer be in my collection, I was eager to move it. This is a bit illogical, I’ll admit, and can lead to some suboptimal transactions. But the excitement of making a sale, followed by the thrill of hunting for another fun card and the MTG mail day that ensues, is enough to really push me. If I sit on the same cards endlessly, it makes it easy for me to lose interest in the hobby. Ensuring turnover in my collection keeps things fresh, helps me remain relevant as a writer, and helps me stay abreast of pricing trends. All are reasonable considerations to a somewhat unreasonable motivation.

Wrapping It Up

No one wants to lose money on their Magic cards. Sometimes, it’s an unnecessary evil of the hobby. To fully avoid this, you could just keep your prices elevated and wait for prices to come up to you. I wouldn’t recommend this plan though.

Instead, if you’re committed to selling cards, I’m a big fan of following market forces and selling them at prices where they’ll sell. It’s a lot of fun when these prices keep climbing. But sometimes prices move in the opposite direction and we are stuck with a difficult choice. Do we keep our prices stagnant and see a significant drop-off in sales? Or do we drop prices to make the sales and maintain sales volume?

Understanding I’m not running a business, I’m of the camp that prices should be dropped. It can be done gradually, and on just a few cards at a time. But any card that isn’t bulk can be sold if the price is right—sometimes it’s just a matter of finding that price point. I've done this multiple times throughout my career, most recently with my graded Alpha Shed Weakness. In nearly every instance, I have not regretted the sale. The benefits of raising cash, improving liquidity, and avoiding unnecessary opportunity costs far outweigh the cost of a stagnant inventory and slowing of sales.

So as you examine your inventory and wonder at the recent slow-down in sales, ask yourself if perhaps a few small price adjustments lower would be helpful. If you’re not motivated to sell, you could wait and see if the holiday season brings a round of sales and a spike in buying. But if you’re like me and you want the cash now (perhaps to do buying during the holiday sales), there are some benefits to dropping prices. At least consider it.

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Sigmund Ausfresser

Sigmund first started playing Magic when Visions was the newest set, back in 1997. Things were simpler back then. After playing casual Magic for about ten years, he tried his hand at competitive play. It took about two years before Sigmund starting taking down drafts. Since then, he moved his focus towards Legacy and MTG finance. Now that he's married and works full-time, Sigmund enjoys the game by reading up on trends and using this knowledge in buying/selling cards.

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