The PF Has A Great Idea

Yesterday I received an email announcement of a new service the Philatelic Foundation is now providing. I see it as a step in the right direction, and I have told them so. Here is the gist of their announcement:




In October I had submitted two items to them for certification, and calculated the catalog values using the graded-value pages in the current Specialized catalog. I asked the PF to assign a grade to them as part of the service they were to do. This they did for one of the stamps but not the other. However, when it came time to tally the final fees for these stamps they ignored the graded value corresponding to the grade they had assigned and used the basic catalog listing value (which presumes a faultless grade of VF). Despite the inconsistency I did not rant and rave, but submitted the fee. However, I did point out that their handling was inconsistent with their stated opinion of the stamp.

That was two weeks ago, and now this message arrives. Here is the congratulatory note I sent them:

essayk,

This is a most welcome step for the PF. I have always wondered why the cert price is so high just based on the VF/sound CV (for most) and resisted sending any items that were of lower grade/condition just due to the perception of not being able to at least "break even" if selling. This move should help bring many more stamps out of the woodwork, and to make more "reference" stamps available.

-dave

Agreed, this is a move in the right direction. Hopefully they will continue it by extending the thresholds.

Interesting, certainly good news for some.

But I cannot help but wonder about this policy in terms of time and scope of work. Does doing an analysis on a lower grade stamp mean that an expert is saving some of his/her time? Is there something that makes passing an opinion on a lower condition stamp easier or faster that they can offer a better price? Perhaps they don't prioritize the lesser quality stamps when scheduling?

Or is this really just a marketing plan to capture more business and issuing an opinion takes about the same amount of time regardless of stamp condition?

I am a bit perplexed on why cert services use rate structures based upon catalog value. It would seem to me that some stamp issues require a lot more time and expertise to identify than others (independent of CV).
Don

Don, I think that it is a bit of all of the above and it's win for the vast majority of people. I highly doubt that they would risk their reputation by spending less time during expertization. The possibility of these receiving a lower priority is a likely possibility. However, they already seem to work with a backlog.

The certification service rate structures have always puzzled me. Maybe they don't want to make a difficult to expertize issue less collectible. Maybe because they don't want to affect catalog value as a matter of ethics.

It seems to me that part of the risk of running an expertising operation is the possibility of damage or loss of a submission. If you were to imagine that PF were to take out an insurance policy on each item they receive, they would have to pay more for more expensive items. Now if an item has a stated catalog value but is really not worth as much due to faults, why charge the higher premium? Why not charge the premium based on the actual value of the item? I think that is what is going on here.

This is intended to compete with a similar service that PSE started offering several months ago.

There are several stamps I would love to get certed, but due to faults their value is nowhere near Scott, and the regular PF fees would be a HUGE compared to the stamp's actual value.

What I don't like is that unlike PSE, the PF is limiting it to (1) stamps that catalog between $5,000 and $10,000 (so if I have a faulty stamp that catalogs $4,000 I don't get any break on cert fees??) and (2) that are worth less than 25% of the catalog value (who makes that determination and how?).

I applaud the initiative, but I'm disappointed at the limitations involved.

smauggie, good questions. I'm not very familiar with certification processes. However, I remember from Jingi's possible Orangeburg coil thread that the amount of insurance is determined by the owner upon submission. This makes it so the submitter, not the expertizing service is responsible for determining insurance coverage and makes sense since the expertizers have no idea of what you are submitting until the stamp submitted for expertization is received and the process is completed.

revenuecollector, who/how the less than 25% of CV is determined by is a a great point. Is that determination made after expertization? Is the certificate not issued and no fees assessed if it's over 25% CV? If so, do they contact you to ask if you want to proceed under the "normal" rate?

I much prefer the way PSE handles the qualification criteria for their program. Rather than dealing with subjective value, the requirement is that the stamp grades less than an F70 by their grading criteria.

I think its a move in the right direction. As with most changes, it will have to take it's due course and in time will be fine tuned to serve its point. If one of those points is to bring more material out of the closet so to speak, than I agree the catalogue value having to be $5,000 to $10,000 will vastly limit a majority of those high value but faulty items to qualify. That being counterproductive, again I think there will no doubt need to be some tweeks with those catalogue value limits.

I can't imagine any reduction of attention and time expertizers apply will be reduced simply because that too would reduce respect for those certs, which we all know where that would lead.

Smauggie makes a good point as this new service may also help to reduce those insurance costs and good business sense.

Only time will tell...but I agree it's certainly a move in the right direction.

I can't say with certainty what the logic is behind their rates, but I'd guess it works somewhat like a commission. Their fee is probably based at some point on what they perceive their value-add is to the stamp. A cert adds more value to a $10,000 stamp than it does to a $100 stamp, and if their expertizing service is responsible for that added value, the fee is basically their cut.

This is a big (and interesting!) subject in which I obviously have more than a passing interest! I am with those who believe that the PSE terms are better/more favorable, than the PFs. PSE's is rather simple - if the stamp grades less than a certain grade number then the stamp costs "X" to certify and further, if the stamp is "not genuine", then the fee is cut in half.

And I am convinced that the primary reason these cut-rates were started were competitive. PSE was losing a lot of business over the last few years, and needed to come up with some new twists in order to regain some of the lost market, so that's what the new owners decided to do. In response, the PF has introduced the rates as explained in the beginning of the thread. It will be REALLY interesting to see if APEX and PSAG decides to follow along and do something similar.

I have always felt that charging fees based ONLY on a perentage of Scott (or market) value was somewhat convoluted. On the other hand, I've had conversations with past PF executives who explained the enormous costs they are subject to (in salaries, office space, insurances, utilities, etc) and was told that if they did NOT charge those prices, they could not stay in business.

For me personally, I started my service based ONLY on a flat fee, no matter how much a stamp cataloged, and held the line on that policy for 5+ years. In the last few, I've added two levels now based on Scott value, but one only adds $10. to the base fee (for stamps cataloging $1,000.-$4,999.) and then I added a higher fee for those over $5,000. Frankly, I added these higher fees only because I wanted to reduce the amount of business I was getting. A few years ago I was looking at 6,000-7,000 stamps per year - far too many for a one-man operation! Thanks to the increased rates, I lost probably 1/3 of my clients, but not much in income, which was the other goal.

Is it more time-consuming to expertize items that are of higher value? Generally no. The same step-by-step process is followed for virtually every item. A few types require more time, yes, but not based on their value but rather what category they are, and those are coils, locals/carriers, provisionals and some other specialized areas. Some very difficult specialized things I simply will not do (most Banknote Special Printings, Hawaiian Missionary and Numeral Issues, Philippines "Victory" handstamps, etc.

I think these reduced rates are great for owners of off-quality material who might now be able to justify getting them expertized where before, they could not. Only time will tell if the expert services will be able to maintain the reduced rates AND not hurt their income because of the loss of the higher fees. After all, it would not be good to see ANY of the services fail. In my view, we need them all. We should want them all to be successful (and I don't say this because I have an expert service, but rather my deep-rooted belief in the great value and importance of these services as the "watchdogs" of the hobby - the "insurance policy" you acquire when you get an independant third-party opinion/examination is vital to your financial well being.).

Bottom line. If you buy better stamps with your hard-earned money, you need to have them verified by third-party expert services. In my own personal collecting, I have widely used the other expert services and the last exhibit collection I formed (U.S. Postal Card Major Errors) I had EVERY item certified! I rest my case!

2c: Limiting the fee adjustments to stamps valued over U$D 5k may be a way of making sure that the doors are not blown-off the hinges. Once they are successfully handling any increased business that comes their way, they can lower the limit, and get some more.




Don: A complex fee structure imposes a certain cost on both the service and the customer, so something like 'we say its worth $, and that'll cost you %' has a nice all-in feel to it.

As Artful notes, the cert adds more value to a higher-value stamp; moreover, the certifier risks more rep on a stamp that is more likely to be examined, more closely, as time goes on.

But, to carry your thought further, why can't the submitter select the exact features to be certified?

I see three types of features for individual stamps: identification, condition, valuation.

Identification: printing method (rotary/flat), perforation count, color/shade, sheet/coil/booklet, overprints, etc.

Condition: folds, thins, centering, freshness, etc.

Valuation: numerical grade, %CV, etc.

Off-hand, I do not see why each of these cannot be a separate test, for its own fee.

For a final identification, you would have to pay for all of the relevant-to-that-stamp component tests, of course.

Y'all can tell me if assigning the numerical grade should be under condition or valution.

I have deliberately omitted any mention of original gum, but that's me.

Cheers,

/s/ ikeyPikey

Older certs used to only say whether the stamp was genuine or not, and omit any reference to condition. This leads to no end of problems. Those two facts must be together on a cert or the cert is basically worthless. Grading has always been a separate item available on request.