APS Expertizing Service Errors?

Going back to part of the original discussion, i.e. the fee being determined by the value of the stamp: As a CPA, this bothers me. It essentially ties the expert's fee to the work he/she does, totally destroying any independence the expert might have. That's why auditors (who issue opinions on financial statements) cannot have a performance based fee structure, and, in fact, can't even issue an opinion if the client still owes the auditor money.
I also wonder if there is a second review process built into the expertizing. There certainly is in any audit. Makes on wonder if a shake-up in expertizing process is needed.

Alan

As has been explained before, the fee is based on the value of the stamp because the insurance rates are based on the value of the stamp. It costs more to keep a more valuable stamp on the premises. The value of the stamp does not necessarily have anything to do with the amount of work required to expertise that stamp, and the independence comes from not knowing who submitted the stamp while it is being expertised.

In addition, many experts don't receive a fee - it goes to the organisation.

"the fee is based on the value of the stamp because the insurance rates are based on the value of the stamp"

PSE, for example has a fee structure of:"$30 min or 5% SCV Max fee: $600" So they have established that it cost $30 to determine what the stamp is. If the increase in fees were due to insurance, you are suggesting that insurance is $570 per stamp for the more expensive stamps. I guess I am having trouble believing that insurance is costing that much.

They haven't established that it costs $30 to determine what the stamp is, only that $30 is the minimum fee. Just as the PF has a $27 minimum fee. I fail to understand why people think using the cat value to determine the fee is a problem. There is no other logical standard to use.

I am curious.

The cost effort to expertise a Scott 901 is not any different than a Scott 1053. The only difference is catalog value (not the actual replacement price).

Is the insurance aspect mentioned to insure while in the possession of the firm? If they lost the item would you get catalog value back?

The mailing insurance is not a flat percentage.

I would not think that a company/organization would constantly contact their insurance company to readjust the amount of coverage throughout each month. I assume they annually purchase what they think they typically need at any given time based upon their history and understanding. This cost does not appear to me to be any different than any other fixed expense; it is one of the costs of doing business for them.
Don

It seems to me that, in general, although not in all cases, the time and effort required to establish the genuineness of a more valuable stamp is likely to be greater. Where it is not, the higher payment (which will, of course, result in a higher value stamp for the collector) presumably cross-subsidises the commoner items where more time than anticipated was required or is ploughed back into the organisation, which, in the case of the RPSL , is a charity.

My understanding of the RPSL's conditions is that the collector is responsible for insurance covering the stamp both whilst in transit and on the RPSL's premises.

Sooooo in looking at the theory of escalating expertizing fees based upon CV, does grading have the same sliding scale? Just curious because if it is due to insurance, they would have the same higher risk based upon higher materials in hand.

Could expertizers use a different fee structure? Certainly. There are reasons for and against the current fee structure. However, much of the discussion seems to assume that the expertizers are raking in the money. The PF is a non-profit and according to their webpage donors "enable[] us to keep the doors open." The APS financial statement for 2015 shows expertizing revenue of $139,494 and expenses of $166,578.
I believe PSE and PSAG are privately held, so I'm not aware of public information.

Every group probably has different cost structures so one conclusion may not apply to all. I looked at the APS financials and do not see a specific line item for insurance. They have a lot in the stamp store so this must be insured.

I am not assuming that the expertizing services are raking it in. I just don't understand why they base their fees on catalog value.

What would make more sense to me is a service based on the amount of work to be done. Some stamps the expertizing services are just looking at condition issues: short perfs, thins re-perfs, etc. Other stamps require detailed examination, looking for alterations of the design, fake cancellations, fake or pressed out grills, etc. this kind of work takes more time.

I could see a system where the person submitting a stamp checked off what they wanted certified (and the certificate would specify what what checked). Each item on the list has a price attached. Do you want to know if you have a OG NH stamp, it should be a set price. Do you want to know if it is sound? Another set price. Do you want the stamp graded? The price should be the same if you are submitting a copy of Scott #230 or Scott #245, because the work is the same.

Problem with all this is it is not a profitable venture in the long run. Expertizing most stamps average of 30-75$ a pop is a stupid business plan. Shark tank would throw this out the door. These expertizing firms are using expensive equipment and have super qualified, well educated, experienced experts looking at this stuff. APS expertizing revenue for year of 140,000$!! Nothing. Even if they have 3 full time expertizers... do the math. High school janitors make way more! (Not to belittle a janitor)

My guess is that what makes this possible are the expertizers willing to do this because it's fun, it's a hobby! They do it to promote hobby.

If expertizer was charging 30-40$ per hour for his work, it's all break even at best. If APS had to send stamps out or wait for expert or have multiple experts review. My god the true cost is crazy. Why would an expertizer make 20 bucks an hour? Because they enjoy it, not because they want to make a huge amount of money.

That's why nonprofit foundations will be only survivor in 10-20 yrs from now. PSE and PSAG may be gone unless they can find different business model to add to revenue. That brings up entire ethical problem of grading stamps and then trying to peddle them in house. Most of us subconsciously stay away from expertizing firms that also sell stamps.

Regardless, did anyone ever consider that PSE could go belly up in next few years? Then what? What happens to your 98J with a certificate from company that no longer exists. Does premium for PSE graded cert disappear ?? Perhaps not completely but may drive that premium down that many are paying today for at auction. Nothing lasts forever

"What would make more sense to me is a service based on the amount of work to be done. Some stamps the expertizing services are just looking at condition issues: short perfs, thins re-perfs, etc. Other stamps require detailed examination, looking for alterations of the design, fake cancellations, fake or pressed out grills, etc. this kind of work takes more time."

Stamps are not examined this way. They are examined in total each time. Obviously if they don't have a grill there is no need to check one, but all stamps are looked at thoroughly for both condition and alterations. The stamps that take longer tend to be specialty areas where comparisons and/or checking the literature might be required, for example: flat plate coils, vending coils, newspaper and postage due stamps, some possessions, certain revenues, and certain covers.
Again, while catalog value plays a role, it is not at all true that more expensive stamps are more difficult or take longer to expertise. They might or might not depending on exactly what they are. An R133 is usually easier to examine then many first issue part perfs that catalog only a tiny percentage of $17,500.

Don't think about the amount of work or nature of the work, think about the post-issuance value of the certificate to the owner of the stamp. Expertizing certificates are based on stamp catalog value because in the marketplace, the value added by a certificate stating that a $25,000 stamp is genuine is far higher than the value added by a certificate stating the same thing for a $500 stamp. The PF or other certifying agency wants to be paid more for a cert on a high-dollar stamp because their cert transfers far higher value to the stamp owner than a cert on a low-dollar stamp.

It's all about perceived conveyed value to the stamp owner and has nothing to do with the amount or nature of the expert's work.