Pricing collectibles is more art than science, and most guides have some errors in them, so large (or at least very vocal) numbers of people mistrust them.
I still use them, however. Knowing how they’re produced–or would be produced, in a perfect world with perfect data–helps someone to use them to maximum effect. The principles are the same for any guide, whether you’re talking trains or video games or baseball cards or any other collectible.
The math and science behind price guides
The statistics are easy when you know how many of a given item were produced. Then you need to find a statistically significant sample size–the equation is in any college-level elementary statistics textbook–and then collect data from all available sources, ideally a mix of Ebay sales, show sales, and dealer sales. Exceptionally high and low prices should be discarded; there are rules for that, too.
The trouble is that sales data may not exist. You can go with asking prices, but the trouble with that is the people who show up at every show with the same merchandise year after year and almost never sell any of it because their prices are too high. It’s worth what the buyer says it’s worth, not the dealer. But in the absence of sales data, pricing data is the next-best thing.
The bigger problem is that production data usually doesn’t exist. So there’s some guesswork involved, whether it’s trying to extrapolate it from something you do know, or just collecting as much data as you possibly can. That’s the problem with the oft-repeated advice to “just look at what it sold for on Ebay”–it’s a small sample size. Especially if you’re talking the last two months’ worth of sales, which is all you can see on Ebay without paying for a service. The sample size is too small, and doesn’t account for seasonal variance in prices. Demand for baseball cards is lower in winter, when train prices are higher, and vice versa.
So the guides aren’t perfect. But a good statistician will still do better than I can do looking at a few Ebay auctions.
How I used a price guide to save $80
So here’s a true story of how I used a guide. Several years ago, I was looking for some Marx street lamps for my train layout. All the available price guides at the time stated $30 was a fair price in very good condition. Knowing that, I went hunting at the next train show. I quickly found a pair of them for $15. I bought them, of course. I saw a couple more for $20 apiece, so I bought those too. When I saw a couple of people selling singles for $40, I had to make a decision whether to buy, haggle or keep walking. Frankly, $40 wasn’t too far out of line but I decided not to buy. But was it a rip-off? Most people would say yes, but I say no. Here’s why.
Had I bought all of them, I would have spent $135 for six lights, yielding an average of $22.50 per light. The average is still below the book value of $30. That’s why I say $40 wasn’t too far out of line. It’s high, but if I complain about that price that’s $10 above average, I have to complain about my below-average prices too. I can’t have it both ways.
Knowing the book value, I was able to cherry-pick the bargains since I don’t have a basement-sized layout and don’t have to buy every street lamp in sight. And the money I saved by not buying the $40 lamps paid for the price guide. Instead, I got my lamps for an average of $13.75 apiece, which is well below average.
When I’m building a baseball card set, I always end up overpaying for a few cards because I run out of patience. But having a price guide helps me limit my overpays to just a small number of cards I have trouble finding.
Any time I plan on going to a train show, I survey my train layout to see what I’m missing, then I price those items in advance. It keeps me from overpaying for items, and tells me when to jump when I see a bargain. Knowing the value of a complete item also helps me price junkers fairly. I can look up the cost of replacement parts easily; all I need is a a smartphone with an Internet connection for that. If I see an item missing $10 worth of parts and it’s priced at a discount of more than $10, I might go ahead and buy it.
An example of beginners overpaying
As tempting as it is to skip the price guides and spend the money on trains instead, in the long run, it’s better to get the guides. Otherwise, you end up like two people in an Ebay auction we talked about on the Yahoo Marxtrain group back in February 2013. Two people got into a bidding war over a common Marx cattle car, and the “winner” ended up paying $105. A fair price on that car would have been $20 and it often sells for less than that. There’s a rarer variant of the same car that’s worth $50-$60, but this car wasn’t it. All I can assume is that two people misread the description, mistook it for the rarer variation, and then one of them ended up paying twice what the rare variant was worth.
Both of those bidders would be much happier right now if they’d bought a $13 price guide. Both of them would have the car they want, and enough money left in their pockets to buy something else nice.
That was extreme, but it’s not the only time we’ve seen things like that happen.