Subject: Real Cost vs Real Value; was Re: eBay sniping

From: Doc Shipley <[email-masked]>
Date: Mon Apr 28 01:22:49 2003

Preface:
   I come at this from a slightly different viewpoint.  My father was a 
manufacturer, as well as distributor of other firms' product.  I 
literally grew up wheeling and dealing, and learning through loss of my 
allowance the difference between cost, value, and the expenses that lie 
between.
   My mother is a professor of business economics at a business college, 
and teaches at a nuts & bolts level.  What's different is that they 
were also missionaries in Uganda and Kenya for several months each year 
while Mother was taking her Master's, and she used the Ugandan economy 
and the concept of "relative regional valuation" in her thesis.  I 
absorbed a good bit of that, although not at any deep level.
   I've found eBay to be a very compressed, very accelerated microcosmic 
example of not only my mother's observations, but of general business 
principles of valuation and distribution.

   To quote the, uhm, well, anyway, to quote Richard Erlacher,

   "See below, plz."

On Friday, April 25, 2003, at 02:14 PM, Vintage Computer Festival wrote:

> On Fri, 25 Apr 2003, Doc Shipley wrote:
>>    Regional and *perceived* scarcity are much more relevant factors to
>> real current value than some assigned global scarcity.  A good example
>> is the plight of the DEC collectors in Australia and New Zealand, who
>> would commit unnnatural acts for a working VAX.  Meanwhile, I have a
>> stack of them in storage, besides the several I use at home.  I would
>> drive across town to rescue another VS3100, but I doubt that I'd pay
>> cash for one.
>
> Wasn't someone just arguing in a message a short while ago that eBay 
> has
> now opened up a global market and therefore increased demand to the 
> same
> finite supply?  Of course, this depends on whether or not you use eBay 
> to
> market your wares.  And then there's the issue of shipping charges, 
> which
> adds to the overall "value" that a person will assign to something.  
> If it
> can be had for $1 but costs $99 to ship, it could be considered to be
> worth just as much as someone who could pick it up locally and would be
> willing to pay $100.  This assumes that the buyer is taking shipping 
> into
> consideration when they put down their bid.
>
> But regional scarcity implies ignorance on the part of the buyer.  You
> cannot always rely on this.  And in a global market like collectable
> computers, you cannot completely rely on this anymore.

   Here I think you're not recognizing the difference between value and 
cost.  To mix our examples, the real _cost_ of a VAXstation 3100 in 
Austin - to me - is, say, $1 USD.  To someone in Melbourne, I'm 
guessing the cost is much closer to $100 USD.  Since I know there are 
persons in Australia who would like to have one, and they haven't 
contacted me to inquire about shipping arrangements, I can safely 
assume that the real _value_ in Australia doesn't approach the real 
_cost_.
   That's the condition of regional scarcity to which I referred.  While 
my example isn't extreme enough to warrant shipping a container of 
VAXen, it does imply, rightly I think, that the Australian owner of a 
VAXstation 3100 could expect a selling price many times higher than I 
could expect.

>>    Understand that I'm not nit-picking.  I'm trying to demonstrate 
>> that
>> the "artificial" influences on eBay, realtime auctions, the feeding
>> frenzies I've seen at swap meets -- they are _valid_ factors in the
>> value of any product, and doubly so with collectibles.
>
> I can't entirely agree.  I'll pull up an old example.  If people are
> regularly paying $10 for Apple //e's and then some uninformed buyer one
> day pays $500, are all Apple //e's suddenly worth $500? or some
> significant amount over $10 that is arrived at by averaging in the $500
> sale?
>
> I say no, it's still only worth $10.

   To you as buyer or to you as seller?  As buyer, absolutely.  If the 
thing was worth more than $10 to me as a buyer, and they had been 
selling at $10, I'd have already sated myself on $11 Apple //e's, so 
that spike would be irrelevant.  :)
   As seller, it's more complicated.  The answer would be "No, but yes." 
  If I put an Apple //e on the newsgroup at a fixed price, I'd look at 
the low side of this config and condition, as indicated by eBay and any 
other references I can find to actual sales, add 25-50%, and settle for 
the best offer.  If I have 100 //e's and I put them up at a Dutch 
auction, I would have to expect $8 or $9 each at best.  Auctioned as a 
single lot, maybe $2 each or even less.  If I have 100 units and I 
auction them singly, well presented, records of high price spikes would 
either be rare enough to not affect the average sale, or common enough 
to indicate that I may benefit from that mania.

>>    My PDP-11/53's "true" "objective" value would have to be nil. 
>> There's
>> nothing it can do that can't be done more efficiently by a later
>> PDP-11, and nothing *I* do with it that I couldn't do in SIMH, much
>> faster and at a much lower real expense.  Its value is *entirely*
>> emotional, and entirely subjective.
>
> Then what was it worth when it was new?  Wasn't the "value" then also
> entirely emotional and subjective?

   Sure.  Its "value" was simply more widely acknowledged.

	Doc