Why Slower PSA Grading Means You Need More Capital
The hidden cost of long PSA turnaround times.
The point of this post is to explain why slowdowns in PSA grading times (and eBay authentication times) require resale businesses to invest more capital to generate the same revenue and profit. It will also explore the nature of an inventory-based business in general, which I find quite interesting.
How Inventory-Based Businesses Work
Inventory businesses require investment upfront to build inventory. They also can be cash flow negative even when profits are positive, assuming that the company is growing and using cash flow to increase their inventory.
A healthy inventory-based business needs to constantly generate more inventory to continue making profit. Take a car company for instance. If Toyota stopped making cars tomorrow, do you think they would make profit 2 years later? The answer is no, probably not. They would run out of cars to sell.
Similarly, in a resell business, you need to constantly be buying inventory if you want consistent profitability. Everything you sell needs to be replaced. We buy new inventory every single day. This is the most important work that I do on a daily basis for my business.
Why Grading Turnaround Times Matter
Specifically for a card grading business like ours, inventory takes time to purchase, grade, and sell. When this process is faster, we can make more money with the same investment. When this process slows down, we make less money with the same amount of investment (or more accurately, we need to invest more in the business).
Let’s look at the lifecycle of inventory, along with our turnaround times for the last few months of 2025. Note that it was faster earlier in the year, but PSA falling behind in the second half of 2025 impacted this a lot.
Turnaround times:
Delivery: 1-2 weeks
Pregrade: 1 week
PSA Grade: 2-4 months
Shipping to Vault: 2 weeks
Selling: 1 week
If you add this up, you’ll see our average inventory turnaround time is about 3-5 months. We’ll say it’s four months on average. Let’s think about how this changes how much inventory we need to hold as this number changes.
A Simple Example
Let’s say we bought $10,000 of inventory every month, and we sold each card exactly four months after purchasing. We would end up with $40,000 in inventory. For four months, we would buy inventory without selling anything. Then starting at month five, we would begin selling at the same rate at which we are buying, and total inventory would remain constant.
If turnaround times increased to 5 months, the same thing would happen, but for the same consistent $10,000 of monthly sales, we would need $50,000 of inventory.
This is exactly what happened to our business in the second half of 2025. PSA turnaround times slowed down, causing us to invest more into inventory without any real improvements in business results.
Market Volatility
Another thing on turnaround times, specifically with cards. While we wait for cards to be graded (and go through the rest of the process), card values can go up or down. Cards are highly volatile and can move around for a variety of reasons, including injuries, player performance, or just general market sentiment.
One of the most interesting examples is Pokémon in 2025. From June to September, everything we bought increased in value. From September to December, this trend reversed and everything we bought decreased in value.
The most important part of our model is being disciplined and using expected value to make decisions. We do not predict market volatility, but we don’t try to avoid it either. Instead we try to be market-neutral, meaning that we don’t know if the market will go up or down. Instead, we view price movements as a random variable that averages out to zero over time. As a result, as long as our buy prices are good and the math works on average, short-term volatility is part of the model.
Service Levels and Turnaround Times
Different service levels have different turnaround times. Higher service levels are great for speeding this up (although sometimes they are still very slow), but they’re also more expensive. From a cost perspective, the higher service levels really only make sense for higher value cards.
While turnaround times can be very hard to predict, there are some patterns that are useful to know.
When markets rise, more cards become profitable to grade, more cards get submitted, and PSA slows down (but with a lag). When markets are falling, cards become less profitable to grade, people submit less stuff, and PSA speeds up (but with a lag).
In mid-2025, PSA reached all-time highs in grading volume due to the TCG boom, mainly from Pokémon card values soaring. Now, with these values normalizing and coming down, I think we will see PSA’s grading value start coming down a bit (although this has not happened yet).
As a result, you need to be prepared for a large range of outcomes when you submit to PSA. Additionally, if you’re running a grading business, you either need to be willing to slow down buying when PSA slows down, or able to invest extra capital.