SumoMuffin

Long story short: I met somebody who's sitting on a rather large collection of C&V bikes and components and wants to liquidate a large part of his collection. I would like to purchase most of it. The plan is to sit down one day, go through the collection, determine a fair market value together for everything, then discount the fair market value and this is what I would pay. Now, what is a fair discount for me taking on the storage and leg work of this collection? I'm thinking 60% off of fair market value. I don't want to rip the seller off, though, as he is a nice guy who loves bikes as much as any of us and would like to remain on friendly terms. But I still want this to be a profitable investment. Advice?

T-Mar

You're being very generous. In such a situtation, I would shoot for 30-35%. Even with him being a friend, I wouldn't go over 50%. You'll spend a lot of time estimating, moving, inventorying, cleaning, tuning-up, etc. Chances are, you'll sit on a lot of it, for a long time. Unless, you're very conservative with your estimates, most will probably go for less than you think.

repechage

If its just cataloging and sales administration, 20%. where you don't own it, just facilitate.
If you have to clean up, fix stuff, (tape bars etc.) then it could approach the bigger discount.
A big lot group almost always goes for a discount.
If these bikes are not top tier machines, then the big discount applies, just too much risk.

Ex Pres 

I guess this comes down to what are your intentions? Ride some - or are you trying to flip the entire stock of what you buy? It sounds more like you're trying to flip it.
A couple of non-bike examples:
1. a grocery store - very high turnover, but must support a store and all the trappings of one(employees, utilities, licenses, etc) Everything regular price item in the store is marked up double- ie 100% mark-up, 50% margin, however you want to look at it. The store owns every bit of the merchandise, but has to throw some away & has some losses to theft, etc.
2. an art gallery/ agent - much lower turnover. Still probably has a storefront to support - but owns nothing in the way of merchandise. All of it is still owned by the artist - and the gallery also will most likely have an exclusive contract with the artist as well. The gallery will take 40%-50% of every sale.

Your proposed business is somewhere between these two extremes - but you can see the discounts are near the same. Except the biggest difference - you're going to be paying for slower moving merchandise.

And this also points out why eBay was such a game-changer.

ericbaker

I think you are right where id want to be. Pay 40% of what i think i could sell it for. Depending on how many bikes, as that bottom line number gets bigger and bigger, the discount should get deeper too.

Also correct me if I'm wrong but it doesnt seem like you are trying to start a business or anything, just that have been presented with the opportunity to buy some cool bikes and make a few bucks. That leaeves more room for prices to move around since you don't have overhead to worry about nearly as much.

SumoMuffin

The collection is varied in the content. There's some nice stuff Campy derailleurs, brakes, hubs, etc. Several upper level Shimano and SunTour components. The frames and complete bikes were somewhat limited from what I saw, but there may be some gems. There was a Raleigh Competition in good shape with full Campy groupset. He also said he has a good amount of NOS stuff, but I didn't see it so don't know what it is. My intentions for what to do with the stuff if I do buy it is somewhat varied. I'll set up a couple of bikes for myself, flip some of it soon, and finally I've always toyed around with the idea of opening a shop one day that specializes in C&V bike and restorations (but also have some new merch. too). So having the stock would definitely help. Basically I have the extra money to do it, I have the space to store it, and I have the time to sit on it.