Why Are Some Stamps So Expensive?

After looking online for some stamps, I noticed the prices were so high that you could fill a car with gas for the price of a stamp. I also know there are some that worth well over a house. What makes the stamp so valuable? Is it the condition, the year, both?

Also, how much do you think your collection is worth? (If you are willing to share)

Supply and demand set the prices. There are some stamps that are sought after by many collectors - such as US #1 that drive the price up considering how many copies are actually available. There are other stamps that only a few known copies exist but might only fetch half the price of the US #1.

Of course, I believe we all over value our collections, but if you are honest with yourself, most of our collections are not that valuable. I have a few stamps that would be pulled out of my collection and sold as individual stamps, but the overall collection would only get a fraction of the catalog value. Modern stamps will be sold at a significant discount, so my modern US stamps might fetch 50% of the face value!

I do have a daughter that is interested in stamp collecting so I sit down with her on a regular basis and show her where the value is in the collection. I also have a high level inventory for her that estimates how much she may get if any single lot from my collection is sold. Of course, I'm hoping that she takes over the collection and keeps it in the family, but I might be dreaming!

In my opinion, there are no interest to get a stamp to a high price. We should be honest, the price in the catalog is the retail prize, the prize you will pay in a store, not the real value of the stamp. I rather prefer a really beautiful stamp representing a portion of nature of a specific country or a beautiful monument at 20 cents in catalog than an old dude/chick/flag who appear every year on the general series at $200. I love this little piece of art otherwise this is only a little square of paper.

So if collectors and dealers (who I think make up the majority of the stamp community) realize that stamps are realistically only worth a fraction of the catalog value, why is there no pressure on the catalog companies to bring their prices into line with the real world prices? I know that they can charge what they like, and someone somewhere might buy them, but the differences in catalog vs. realized is huge. Just my newbie two cents...

Some stamps were issued in large numbers, others in smaller numbers. Stampworld.com usually gives the number issued. But that's only part of the formula. There can be reasons why even when a large number was issued, fewer (relatively speaking) have survived. And then all sorts of other reasons make one stamp more desired than another stamp even if the number available is the same. Some countries and regions have long histories of collectors--in some European countries perhaps half the population was collecting stamps at one point. IN other regions, far fewer stamp collectors existed, so demand was low and prices stayed lower. Latin American stamps have never been as popular or in demand as European or European colonial or US or Canada stamps have been. Trends come and go--China, Russia, India enjoyed something of a rising demand for a while, then declined. United Nations stamps have never been that much in demand.

And so it goes.

One thing to keep in mind is that you will never recover the money you spend on stamps. You are buying from sellers who themselves paid the going sale value for the stamps. That seller, if he can, gains a profit margin on what he sells to you. When you sell, you will sell more or less at the price the dealer paid, before his profit margin. In some instance, yes, you'll buy at a bargain and sell at a great gain, but over all, over the years, virtually no one ever breaks even. Even those who "break even" actually lose money if inflation is taken into account.

Yes, there are exceptions. But don't count on being one. The basic principle, enunciated again and again on this forum and elsewhere is, don't collect stamps to come away with a gain on your "investment." This is a hobby and you spend money on it in order to gain the enjoyment of the hobby. If 60 years from now you or your heirs end up "breaking even" (highly unlikely), that's a plus. But do not count on it or you (or your heirs) will be disappointed.

So, collect what you like, enjoy it, but consider the money you spend, for the most part, like the money you spend on other forms of recreation or entertainment. For the most part.

edited for typo

As has been said, supply and demand is the driving factor. If there are 100,000 collectors who want a stamp where only 50,000 exist, the price will rise so that only those who can afford them and are willing to pay for them will be able to get a copy. There are untold numbers of stamps where the reverse is true - maybe a million exist, but only 100,000 collectors want one. Those are the kind of stamps that sell for pennies or less. Get to the stamps where only a few (or even just one) exist, and it's basically He Who Has The Deepest Pockets will be the owner.

As to some other points, dealers and collectors don't particularly want (consciously or not) realistic catalog prices. Dealers like to sell and collectors like to buy at a discount off of catalog prices. Also keep in mind that catalog prices are for qty 1 stamp in significantly above average condition, purchased from a full service dealer. In that context, prices aren't all that unrealistic. "Average" (F/VF or lower grades) will always sell at a steep discount off of catalog. In a perfect world, each stamp would have a chart of prices in different conditions and grades, but it's unrealistic to expect catalog publishers to try to keep up on that, given the several hundred thousand stamps listed.

I'm actually in the process of taking a complete inventory with catalog values of my German area collection, mostly for insurance purposes. The catalg value would probably buy me a pretty decent, newer vehicle, or pay for a nice remodeling of my house. However, if I sold my entire collection at once to a dealer or at auction, I figure I *might* get 10% of that catalog value. If I sold them directly to other collectors as singles and sets, I might realize 15-50% of catalog per stamp or set, depending on the stamps. Maybe I'd get 20-30% (if I'm lucky) in total, after expenses, selling them in that fasion.

In the end, a collection or a stamp is worth whatever someone is willing to pay for it. Accordingly, catalog values are basically just a reference point. I know that a stamp listed in the catalog at $100 isn't going to cost me $100, but I also know it's going to cost me significantly more than 50 cents or a dollar. Without published catalog prices, I'd have no clue as to an estimated value.

Actually, the missing factor here is condition. The Scott catalogue values really are fairly accurate for truly very fine condition stamps. Stanley Gibbons and Michel catalogue values are usually higher and therefore farther off.

But for truly very fine stamps, people will often pay 80% or 90% of Scott value, sometimes 110% or 120% or more. All that the Scott catalogue claims to provide is a value for a stamp in very fine condition. Not superb condition but very fine condition. If very fine condition value for used United States Sott no. 9 is $110.00 (2012 value), then collectors who truly want very fine stamps will in fact pay anywhere from $88 to $132 dollars for a truly very fine example. The trouble is that you just don't see that many very fine, truly very fine, examples of Scott US no. 9 on offer. Go to the front of the Scott catalogue and look at the examples of fine, f/vf, very fine, extra fine. Look hard at the very fine picture. Then compare that to what's on offer on ebay. THen go to Robert A Siegel Auctions and do a Siegel power search for US Scott no. 9 and look at the ones that are described as very fine and check their prices. They'll be within that $90-130 range, for the most part. THey won't be selling for 30% of Scott cv.

Moreover, relatively few of us collect at the very fine level. We can't afford it. Or we think we can't. We buy at the fine level (maybe 50% of cv, sometimes lower, sometimes higher). Maybe fine/very fine (50-70 % of cv, more or less).

Sometimes we settle for average, maybe even below average.

But the drop off from very fine to average is steep. Even from very fine to fine the dropoff is considerable. Because most of us operate at average or fine rather than very fine, we are accustomed to a 50% or 60% or more discount from catalogue value.

It's a matter of perception. We all recognize a very fine stamp when we see it. We admire them. But most of us actually purchase stamps that are somewhat (not too much, now) off center or have a few (not too many) short perfs or a cancellation that isn't really all that nice but. . . we can't afford the very fine and, perhaps just as is important, the supply of very fine stamps offered on the main venues is relatively small compared to the immense number of well, average, stamps being offered. So we settle for average or fine and get used to 25-50% of cv rather than 80% of cv.

Those who want only very fine stamps and are willing to pay for them usually buy their stamps from a favored dealer or at public auctions. ebay simply is not the place to hold out, without exception, for very fine quality. And that's why on ebay, 25-40% of Scott cv (lower percent of SG cv in most cases) obtains.

So, Scott cv is not really too far off if one truly pays attention to and insists on very fine quality. Most of us take shortcuts.

Artfulhinger and Hieronymous those are very fine posts!

The other thing to remember is that CV is for a stamp without any faults. Most stamps as old as US #9 (160 or so years old) haven't survived unscathed, and many have "problems" of one sort or another. CV is for a stamp that is sound in all respects (unusual by itself for an old stamp), and very well centered (even more unusual). I really don't know, percentage wise, how many stamps fall into that category, but it's got to be in the single digits, likely low single digits. Basically a US #9, sound with VF centering is actually a pretty scarce and desirable stamp for that issue, and indeed would probably command close to full CV. If 95% of the stamps on the market (classic stamps only) fall short of this, it shouldn't be surprising that stamps are selling right and left at large discounts off catalog. None of this applies to modern issues, of course. They're also valued in sound VF, but nearly all modern issues are sound and VF.

Is stamp grading the same as for coins?

I'll let someone else answer your question about stamp grading. Myself, I've always considered grading as a scam to jack up prices.

I agree about good points by A. Hinger and Hieronymous. I'll add that rarity doesn't always equate with a high price. One of the specialty societies that I belong to is the Mexico Elmhurst Philatelic Society. I recently bought several reference books written & published by Society members. One of the books examines what is known as the Foreign Mail Stamps issued during 1879-1883 (for use on letters leaving the country). 25 total stamps were issued. But because all early Mexican stamps were overprinted with year, postal district and occasionally sub-district, there are over 1,900 possible combinations. Add in almost 400 known overprint errors and varieties. Some small districts may have received only 50 stamps of a given denomination (Mexican post office kept very good records of all stamps sent, and returned unsold, with these overprints, done from 1856 through about 1890). Factor in the passage of 130 years and one can quickly see that some issues may have 10 or fewer examples surviving. Yet these stamps, in general, have very low catalog prices in Scott.

Regarding my own collection, it's insured with the APS insurance service for $40,000, which roughly is replacement cost. Actual catalog probably is $60,000. Value at auction somewhere between 5K and 15K. An example given above was for a single US stamp. If you want to see what collections sell for, minus any auction house seller commission, visit the web site of Dr. Robert Friedman and Sons. They price their country collections based on condition and general "hotness" of the country. Assume they have a 50-100% mark-up, depending on the collection and country(s). That may give you a rough idea of what a collection might command when sold. (Disclosure: I am a long time satisfied Friedman customer, but have no financial interest and have never met the family). Steve

Stamp and coin grades refer to two different things. Coin grades reflect the state of preservation or the amount of wear on a coin. A coin in VF condition is kind of middle of the pack, moderately worn, but with most of the design still visible, etc.

When you hear the word "grade" as pertaining to stamps, it actually has nothing to do with its state of preservation - "grade" has to do with how well the stamp design is centered within the margins. A horribly off centered stamp, for example, is much less attractive to most collectors than one that is well centered, and well centered stamps sell for higher prices, sometimes dramatically so. Fine, Very Fine, Extremely Fine, Superb, etc, refer to how well the stamp is centered and does not address if the stamp is damaged in some fashion.

The proper term to describe the state of a stamp's preservation is "condition". Thus "very fine condition" is somewhat of a misnomer, although you'll hear it from collectors (myself included) on occasion. A stamp can have VF centering but be in a bad condition if it's creased, torn, stained, etc. The combination of condition and grade has a lot to do with stamp values, particularly on really old stamps. There isn't really a standard set of terms like F or VF to describe condition, although "sound" is most often used to describe a stamp that isn't damaged in any way. If a stamp is damaged, the seller should inform the buyer of the nature of the damage, such as a thin spot, a crease, etc.

Climber Steve,

It was my impression that the APS Hugh Wood insurance was only for market value, not replacement cost. So that if I lost my collection and made a claim, even if I had insured for replacement cost level, the payout would only be market value. As you note, replacement cost is much higher--because we sell at auction to dealers who are going to mark up for profit. So replacement cost is my buying cost but my selling value is half that, at best.

Am I wrong about the terms of the Hugh Wood policies?

Artful,

Thank you for that reminder. In my comment I did not distinguish carefully enough between centering and condition. As a practical matter, those who are willing to live with less than very-fine centering also usually compromise on condition, are willing to accept minor faults, wear, a missing perf or two, more obscuring cancel etc. So in our lingua franca we use "condition" to include both centering and "state of preservation" (a nice choice of words by you) and integrate the two into a "50%" (fine, more or less) or 70% or 40% (average, more or less) of catalogue value as a way to rate overall "condition."

But it is important for a newcomer to the hobby to realize that technically, the grades found in the front of Scott catalogues refer to centering, and that centering is really, really, really important.


Edited for typo

What does centering really means?
Does it refer to the picture being in the center of the stamp?

Centering does in fact refer to how-well centered the image is on a stamp, or said another way how even the margins are. It's important to note that some Europeans, especially the English, focus on "freshness" when referring to a stamp as being very fine. Not to say the English don't consider centering, but in my experience it's not as much as focus as with North American collectors.