My niece has apparently started collecting coins. Not ridiculously expensive ones, from what I know just the 2007-2015 Presidential Dollar Coin set. I'm pretty sure that these coins are not old enough, rare enough, or cool enough to really be worth more than one dollar each. But my wife paid $2.69 each to have two of them shipped to our house for my niece's birthday.
Now lest anyone thinks ill of my wife for spending 2.69 times the worth of each coin to get them. I submit to you the following:
As a customer we got:
1. Convenience (of reciept) - the coins were delivered directly to our door and ordered from our couch. In order for us to do this on our own we would have the hassle of going to the bank, ordering a roll, bag or something of $1 coins, sorting through the coins and returning the unneeded coins back to the bank (or spending them). We would have to repeat the process until the two coins we were looking for were obtained.
2. Selection - both the coins were immediately available and in stock. So no return trips to the bank and no sorting.
3. Convenience (of time) - I'm sure it did not take my wife more then a few minutes to peruse and order. The bank method, assuming we found the right coins on the first pass, would likely take 30 minutes to drive to and from the bank twice (or I suppose you could sort them in the lobby) and sort the coins and return the uncollected coins.
2 coins @ $2.69 per coin = $5.38 USD
minus 2 coins @ $1 each = $3.38 USD = cost of transaction
$3.38 * 2 (sets of 30 minutes) = $6.76 per hour.
Even at the median hourly wage in the USA in 2014 of $17.09 per hour, this is a no brainer!
So just how much should a $1 Presidential Coin be worth? Well, if we paid an "average" American to get two coins for us in the above parameters, it would cost $5.27 per coin. Of course this does not factor in gas, car maintenance, taxes, FICA, healthcare, paid leave, vacation, retirement, time for payroll, hiring, firing, theft etc.
Obviously al51ny (the gracious guy on e-bay who sold us the coins at an apparent loss to him) is dealing in large numbers of coins and likely enjoys sifting through thousands of coins to find the diamonds in the rough. He is probably a major collector who is sifting through coins anyway and doesn't mind categorizing them, packaging them, and shipping them. He probably thinks my wife is a dolt for buying $1 coins for 2 dollars and 69 cents. Clearly she is buying them at a loss...
But it is to his gain. Win - Win. The best kind of commerce. We are buying birthday happiness for our niece at $1.69 loss per coin. He is shipping junk in a small envelope for probably just under $1 in profit and likely doesn't waste much time in the process. If he does a large enough scale he could become very wealthy at this. Simultaneously the paper company sold two envelopes and two coin holders, the office supply store sold printer ink, a printer, a pen and 6 staples, the post office sold a stamp, e-bay got some commissions, and you got to read this post. So, Win - win - win - win - win - win - win. The bank lost the battle, but will win the war and the government won all the battles and will the war (taxes on each party and huge margins on the dollar in the first place--fodder for another day).
I love business. Thank you al51ny for enriching my life a little on the cheap. When open markets win, we all win!
