Knowing Your Audience
Numismatic dealers know their audience. They start with nothing, learn want their clients want, then go out and find it. The dealer looks for someone who has the coins his customer requires. He makes an offer to the potential supplier for an amount that will bring the supplier a profit. The dealer then turns around and sells the coin to his customer at a price that makes a profit. However, the dealer makes sure the price is low enough so his customer believes he has purchased the coin at less than it is worth. This gives the dealer the reputation of having low prices and this leads to new customer seeking out the dealer for coins.
Risks to the Numismatic Dealer
One of the ways a dealer lessens the risk to himself or herself is to have hundreds or thousands of coins at their fingertips. These coins are either in their personal collections, there for sale inventory, or available from suppliers. Coins that are considered low risk do not provide much profit for the dealer. They are sold at just a bit above the price the dealer paid. However the dealer has hundreds if not thousands of these coins so they do add up to a tidy profit for the dealer. In addition the dealer has passion on his side. A true coin collector is a fanatic about his or her coin collection. Many, when they have their hearts set on obtaining a certain coin will let desire override common sense. In this case, putting a coin up for auction might yield outrageous results. This is especially true for a coin that is in high demand.
A numismatic dealer is limited in the price he sells a coin for. It is imperative to be able to replace the coin in the dealer inventory. Therefore at base minimum, the dealer cannot sell the coin for less than its replacement value. In addition, with a large inventory and the constant turnover of coins, the dealer is in no hurry to sell a coin. He or she knows that someone will eventually purchase a particular coin for the price demanded.