Thursday, September 22, 2011

Watch Valuation the Hard Way

You want to sell a watch but you're not sure what to ask for it. Too high - it may not sell; too low - you lose out. If you have the time, here's a scientific way to figure a market value.

First go to your country's eBay and do a search for the same model as your watch. Then, staying in that search, click on the checkbox that says "completed listing only" or words to that effect. Now start writing down all the prices where the watch actually sold (at auction, not buy-it-now). You might like to weed out prices for watches that are not your actual model or are not in a similar condition as yours. But a little diversity can be beneficial, for example when there are only a few watches of your exact model, dial color, etc. Something like 20 prices should do it, more if you have the patience. Less than 6 prices would only give you a rough idea.

Now you select some price ranges, somewhere between 10 and 20% of the total range of the prices that you found. For example, if the "spread" (max minus min) is 600-100 = $500 and you found a good few sold items then your ranges could be 500/10 = $50, i.e. 100 to 149, 150 to 199, and so on up to 600-649 (just in case a watch was actually $600, if not - the last range would be 550-599).

Next you count up the prices that fall within each range and list them with an "X" for each watch found:
You can see that the 'X's form a horizontal bar chart which shows quite clearly that the range with the most sales is the $400-449 range. The other ranges indicate either worse or better condition, if the market***  is to be believed. So, if you consider your watch to be in average condition, a selling price in the $400-449 range would give you a reasonable chance of a sale. The higher ranges would be appropriate for a better condition and vice-versa. The shape of this particular  bar chart tells you more about the model of watch. The majority of the 'X's are at the higher end of the total price, indicating a sought-after model for whatever reason - quality, name, rarity, etc.

***Remember, "the market" in this example is eBay in the country or countries where you intend to sell. If instead you had researched prices obtained by Retailers in the open market, prices would be higher and less realizable in a different market.

Here's some results from a search for Luminox "Navy Seals". About 20 results were found, of which 6 were rejected for various reasons - like, one item was a Luminox box but no watch.

Column A shows the prices found on eBay, sold recently, and searched for as Luminox "Navy Seals". The average of the 14 prices is shown in row 16. At $119, this value falls into price range 3 (100-129) but the chart shows that the average is quite a bit higher than price range 2 (70-99) which has the highest count. This is because the chart values are "skewed" toward the lower end of the total price range, indicating a much less well-regarded watch than our other example above, The chart is telling you that, for a watch in average condition, a selling price selected from price range 2 would have a better chance of selling. It is also implying that simply taking the average of the prices as the sole criterion for your sales price would have put you too high. Worse, had you been selling an expensive, high quality watch, your price could have been 10-20% too low.

Row 17 shows a price of $110 as the "median" a word much-loved by statisticians and much avoided by the rest of us. However, this median value is a lot closer to price range 2 than the average is, so there must be something to it. Having said that, the median is not easy to figure out unless you use a spreadsheet function like in the above. Simplistically, it's a value which is in the "middle" of an ascending range of prices. With the 14 prices as shown above, it lies somewhere between the 7th and 8th price, i.e. the median value is between $95 and $125, QED.

In conclusion, it's worth at least picking some ranges and filling in the 'X's. Picking the longest bar gets you closer to establish a good criterion by which you can judge and price your own watch for the market. Simply figuring the average from the prices can throw you off quite a bit, either way. Doing a spread-sheet is fun for geeks but is quite un-necessary.

Best regards, xpatUSA

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