Pricing your stuff when trying to sell...

[Fat Bob]

It's a small point but....VAT is 20% which the dealer pays to HMRC...therefore whatever you see in store or on a website means that the dealer/trader is actually selling for 20% less than that....OK, so we've established that principal.....

So when folks are trying to sell secondhand/used gear on here why do they try and sell for 10-15% less than list price and claim it's a good deal....?.....in reality they are trying to make more money than than the dealer did......

Now I understand about supply and demand...but I can go into a lot of dealers with pound notes and they are happy to call it a demo and forget about VAT.....look at Soundslive in their 'bargain' section....these are ex-demo, i.e. minus VAT...quirk of the law...

Please tell me why folks think they can buy gear, use it for a few months and then make more money than the dealer did...in the present economic climate.....

As I said, I'm an arse.........sorry for the rant....

[Fat Bob]

I can't even spell 'probably' properly....

[LukeFRC]

? in my experience over many years secondhand stuff on here is 25-30% cheaper than a dealer... for secondhand stuff.... at the moment you can pick up a USA fender for about £500 - tell me where there is a dealer selling new ones for 10% more than that!

[spinynorman]

[quote name='Fat Bob' timestamp='1348526458' post='1814935']
It's a small point but....VAT is 20% which the dealer pays to HMRC...therefore whatever you see in store or on a website means that the dealer/trader is actually selling for 20% less than that....OK, so we've established that principal.....

So when folks are trying to sell secondhand/used gear on here why do they try and sell for 10-15% less than list price and claim it's a good deal....?.....in reality they are trying to make more money than than the dealer did......

Now I understand about supply and demand...but I can go into a lot of dealers with pound notes and they are happy to call it a demo and forget about VAT.....look at Soundslive in their 'bargain' section....these are ex-demo, i.e. minus VAT...quirk of the law...

Please tell me why folks think they can buy gear, use it for a few months and then make more money than the dealer did...in the present economic climate.....

As I said, I'm an arse.........sorry for the rant....
[/quote]

Where do you get the idea ex-demo stock is ex-VAT? I thought a business that is registered for VAT has to charge it on anything they sell that is liable, even if it's second-hand.

[Fat Bob]

I apologise for the confusion.....very simply what the manufacturer does is reduce his trade price by 20% to give the vendor pseudo VAT relief on demo kit....however the vendor may choose to exploit that by using a good deal of his stock as 'demo' and gain more relief/market advantage from the manufacturer...brinkmanship I thnk they call it...you get the idea when the vendor says 'limited stock offer only'.....'to you my friend, a very special price...' etc etc

As I say, can be confusing......not that I know anything about retail markets and VAT......by theway, VAT is not applicable on secondhand gear as the HMRC take the view that it's been liable for VAT once and so has paid it's dues, i.e. when new....if you've been told secondhand gear is plus VAT then you've been ripped..stitches in the arse time...if in doubt look at BassDirect's second hand prices...no VAT is applicable.....phone Mark if you have an issue....not me obviously...

[Musky]

No, VAT is payable on all liable goods by VAT registered businesses. Perhaps you're getting confused because much s/h gear is bought privately and so has no VAT invoice - i.e. no input VAT. VAT is still payable on the profit though.

Perhaps Bass Direct haven't reached the VAT threshold and so aren't registered?

[Mick Kahn't]

[size=5][sup]If someone VAT registered sells something new then they charge VAT at 20% - and the customer pays it.

If a shops buys something in, then sells it on (at a profit) there is a VAT element - but the VAT element they have to pay to HMRC is only the percentage (20%) on the profit they make - not the final selling price. Just as they only pay that on the mark up on the NEW item as well ...

If some gear is s/hand, there is still an element of VTA in the sale - it is NOT a VAT-free sale (if the shop is registered). There would be little point a music shop with a fairly healthy turnover (under the threshold) not being registered for VAT as they would be unable to claim back the VAT they are charged whgen they buy the equipment in. [/sup][/size]

[Ashwood1985]

[quote name='Mick Kahn't' timestamp='1348531989' post='1814989']
[size=5][sup]If someone VAT registered sells something new then they charge VAT at 20% - and the customer pays it.

If a shops buys something in, then sells it on (at a profit) there is a VAT element - but the VAT element they have to pay to HMRC is only the percentage (20%) on the profit they make - not the final selling price. Just as they only pay that on the mark up on the NEW item as well ...

If some gear is s/hand, there is still an element of VTA in the sale - it is NOT a VAT-free sale (if the shop is registered). There would be little point a music shop with a fairly healthy turnover (under the threshold) not being registered for VAT as they would be unable to claim back the VAT they are charged whgen they buy the equipment in. [/sup][/size]
[/quote]

...[i]word...[/i]

[XB26354]

If you take the example of a Fender, then the vast majority sold on here are nowhere near £500, and a lot of the cheaper ones are 10-15 years old. The American Standard series could be had for about £800 when it first came out. they now go for close to £1200 - a price hike of 50% in 4 years. This means that people that bought them in 2008 can now flog them for the same or more than they paid for them, because Fender have hiked the new price up by so much.
I've not seen this happening with most other brands on here, though. There are always people that have bought something new and decided that they don't like it, but advertise a very high used price because they hate the thought of losing so much money on a newish bass. It's understandable but it's also a buyer's market, and unless it's particularly desirable the thread gets little interest, other than "that's a great bass", and "I'd buy it in a shot if I wasn't skint"

[karlfer]

Must admit OP has more than a point. When you see Millers up for £700, more than they actually cost 4/5 years ago!!! Same with Aerodynes.
I put my Glaub out at £550, last ones universally available were just over £900, but most importantly, USA Precisions are going in the £600/£650 region.
In my eyes it's at least as good if not better, but that's what it needs to compete against in a private market.
As OP points out you need to price to the market. It's a better bass than nearly every P I've ever had, it's much lighter, but it has to be priced to sell.
Karl.

[bobpalt]

[b]if in doubt look at BassDirect's second hand prices...no VAT is applicable.....phone Mark if you have an issue....not me obviously...[/b]


I think the reason is that Mark sells second hand basses on commission, i.e., he isnt the owner and merely sells them on the owners behalf as an agent, so he will only pay vat on the 15% fee he charges (which is charged plus vat to the seller), through his usual business accounting processes.

Edited September 25, 2012 by bobpalt

[Lozz196]

I suppose it all depends on the specific circumstances of the item being sold.

A f`rinstance, if lets say you`ve bought a new Precision, at £1200, two weeks ago, and for whatever reason, you`re going to have to get rid. The shop won`t take it back, so you decide to sell a, for all intents & purposes, virtually brand new precision. If you put it up at 10% off the new price, someone who was wanting to buy a new Precision for £1200 suddenly can have one for £1080.

Providing receipts can be shown, to prove the date of purchase, I wouldn`t have a problem with that if I`d been looking to buy new.

[spinynorman]

The most interesting thing about this thread is how confused people are about VAT. The rules are on the HMRC web site, which is a bit more reliable than guessing based on what a particular shop appears to be doing.

[LukeFRC]

[quote name='Fat Bob' timestamp='1348526458' post='1814935']

Please tell me why folks think they can buy gear, use it for a few months and then make more money than the dealer did...in the present economic climate.....

[/quote]

Because the most important thing for the dealer is the difference between the price they buy it in at and the price they sell it at before the VAT is added.
the whole thing about something being 'demo' to lower their price isn't the issue- a shop can lower their prices (and profit margins) anytime they like. Most of the big distributers though (I hear) don't like their stuff advertised for less than the list so put pressure on shops not too.
Now someone working in music retail will correct me on the margins- but based on someone who told me a while back, if a bass costs a shop £400 they will sell it for £1000 or so. 20% of that is VAT and then the rest if profit.

What it goes for secondhand is immaterial but the idea that buying something and then selling it for less is more than the dealers profit margins is daft.

Anyway- the way the price of instruments has gone up you're as cheap to get a custom made in the UK as go through a shop to buy a fender. We should all buy ACGs!

[gelfin]

VAT works like this.

Dealer buys product for £100 from manufacturer. Added to this is VAT @20%. Total cost to dealer is £120.00.

Dealer sells product to retail customer for £200. Added to this is VAT @ 20%. Total cost to retail customer is £240.00

Dealer has a VAT input of £20 this is offset by the output VAT of £40. HMRC gets £20.

Dealer makes a profit of £100

[BassTractor]

[quote name='gelfin' timestamp='1348655985' post='1816445']
Dealer makes a profit of £100
[/quote]

Dealer has a [i]contribution margin[/i] of £100, but surely that's what you meant.

best,
bert

[Johngh]

[quote name='Fat Bob' timestamp='1348526458' post='1814935']
Please tell me why folks think they can buy gear, use it for a few months and then make more money than the dealer did...in the present economic climate....
[/quote]

A guy once offered me a wedge of money for a very nice Status I had that was mint. He was going to get one made, but figured even if he paid me over the odds, he was still getting a mint an new bass for about £700 less then he'd pay new.

On the other hand I paid maybe over the odds for another Status from Bass Direct that was being sold on comission. 18 months later I still have it, and it's a keeper, so money well spent

Horses for courses innit

[oggiesnr]

[quote name='Fat Bob' timestamp='1348526458' post='1814935']
It's a small point but....VAT is 20% which the dealer pays to HMRC...therefore whatever you see in store or on a website means that the dealer/trader is actually selling for 20% less than that....OK, so we've established that principal.....

[/quote]

Nope this is the fatal flaw in your argument, what the dealer gets is irrelevant to the price the punter paid in the first place. If I pay £1200 for a bass it matters not what the breakdown of who gets the money is, I've still laid £1200. That is my investment in the bass. If I choose to sell it for £1000 a few months later, again it don't matter what the split on my £1200 was, I'm still £200 out of pocket.

As far as invoicing private individuals is concerned, there is no requirement to separate out VAT unless that individual is VAT registered, the amount is over a set limit (used to be £50) and is going to claim it as input Tax (ie offset it against their VAT bill). Some companies separate it out automatically on the till receipt because they deal with a mix of customers (B&Q or a petrol station for example) but if you buy from many shops all you'll get is a generic reciept showing the total, that doesn't mean that VAT hasn't been paid, it's just that the vendor hasn't shown the split.

VAT is also a pain in the ass if you make stuff, eg you turn wood into something valuable, and sell it direct to the public because you end up owing a large percentage of your turnover to HMRC as you don't have large inputs to offset your liability, your input is your skill and labour which has no monetary value for VAT purposes. At one point I was paying over 10% NET to the taxman and that was when VAT was 15%. That was in addition to income tax etc etc.

Steve

Edited for typos

Edited September 26, 2012 by oggiesnr