Selling for 5 times the purchase price - a good route to becoming financially independent!

Like I have said before, I have a small business on the side.  I am basically a trader of used instruments.

So last weekend I managed to pick up what I think was a pretty good deal.

I found a used clarinet that is about 10 years old, but has been well looked after and regularly played.  The pads were in good condition, and I managed to pick it up for just $50.

Servicing will only cost around $25 since it is already in good shape.  Now if I was to sell it privately I could easily get $250 for it.  However I have submitted it to the music store who will sell it on consignment.

Selling on consignment has both benefits & drawbacks.  At first I felt that the drawbacks outweighed the benefits.  After a year of selling some instruments privately, and now some through the music store, I have a different view.  Here are the advantages & disadvantages as I see them.

Advantages

• They do the advertising & marketing
• I do not have to spend any more time on the instrument
• They can sell more instruments than me with their larger client base
• They can sell the instruments at a higher price as trusted local dealers

Disadvantages

• Fees.  20% commission + $20 preparation fee + any repairs
• Don’t get paid until 30-60 days following the sale

An interesting experience I had was with a saxophone.  I had bought it for $450 and was willing to sell privately for $800.  Although a few people came to look, no one made the purchase.  This was very surprising as the horn was in fabulous condition.  After 8 months of not being able to sell, I put it in the music store.  They advised I sell it for $1250.  Within 3 months they had sold the sax.  After their commission was paid along with the preparatino fee, I ended up receiving a cheque for $979 – that is $179 more than I was attempting to sell for on my own!

I have now decided to place most of my instruments in the shop.  The clarinet that I would sell for $250 will be sold at $350 through the store.  Less the 20% commission and the prep / repair fee, I should be receiving $255.  So this deal should work in my favour.

By using the store to handle the sales, my time is freed up to look for the deals.  I can live with that!