Thanks for the breakdown. This was really informative. I’m curious if elsewhere you factor ROI for cards that you purchase that don’t end up being candidates for grading? I tend to sell these close to where I bought them at (so about a 15% loss after fees). I think it would ultimately still support your grading thesis of $100-$500 cards but just curious to how it changes the profit numbers
To be honest I’m a little surprised as well that it’s so low. I think I’ll write a full length post about all the topics I touched on above. I’ll look into my numbers and see if I can figure out why we only lose 6% haha
Thanks for the breakdown. This was really informative. I’m curious if elsewhere you factor ROI for cards that you purchase that don’t end up being candidates for grading? I tend to sell these close to where I bought them at (so about a 15% loss after fees). I think it would ultimately still support your grading thesis of $100-$500 cards but just curious to how it changes the profit numbers
That’s a great question, and I have a long answer for you.
So when we do the EV math on a card before purchasing, we target a 25% return on investment. We find a few things to be true.
1. We usually underestimate the gem rate on stuff we submit (i.e. our grading results tend to be better than we expect).
2. Our average submission exceeds 25% ROI — we actually average above 40%.
3. Our ROI loss is not very large on cards we don’t submit — it’s about -6%.
4. We submit > 80% of the cards we buy.
So long story short, I don’t think we explicitly put raw flips into our model, but don’t see any need to change anything for the reasons listed above.
Very helpful. Thanks! Would be interested in strategies you use to limit ROI loss in #3
To be honest I’m a little surprised as well that it’s so low. I think I’ll write a full length post about all the topics I touched on above. I’ll look into my numbers and see if I can figure out why we only lose 6% haha