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Market factors and how they affect prices.

Basic Economics

Lets get away from the gun-porn of the other pages and sites and get to the heart of the matter - get the better price.  

There are several factors that will affect the prices of firearms and accessories. The trick is to know which factors will affect which types of sellers the most and how to use this information to your advantage when choosing a seller and getting the best price. Some sellers may have to go through great difficulty in bringing the merchandise to you, while others may get the merchandise easily enough, but market demands allow them to charge whatever they want for the items if they are in great demand. Here are the major factors to keep in mind when determining the value of a deal, apart from the standard formulas (which will be covered later) for determining the base value of a firearm.

I know this section does not have the catchy pictures that they others have, but the wise buyers will read and reread this section because this covers part of the art of understanding how to set up the better deal.  This is not time for titillating pictures its time to talk turkey with the broad at the door of the whorehouse.  Basic economics baby.

Market Demand: Market demand is the factor that usually determines the base value that the public places on an item. Market demand may or may not be directly linked to the availability of items since some items have only a limited market to begin with.  For example, a seller may have access to a belt fed machine gun in an area where there is great demand for machine guns, but the pool of buyers may be very small and already saturated (they already have most of the guns they want).  This is why most dealers in contraband prefer to deal in illegal narcotics than firearms.   The narcotics market has a built-in demand mechanism because addicts need a renewable supply.  

In the case of more common firearms, demands of certain types may be affected by hunting seasons (demand for good used hunting guns rises as hunting seasons approach and sharply diminishes as they end), region (urban areas have a higher demand for handguns) and ups and downs in the violent crime rate (usually down in the winter).  Public demand for defensive types of firearms, especially handguns and short barrel shotguns, rises with public fears (real or imagined) of violent crime. This public fear may go up if there has been an particularly notorious crime in an area.  This fear, and the accompanying market demand, is greatly increased if the perpetrators of the notorious crime are still at large and are believed to be capable of more violent crime.

The market demand for handguns tends to be a bit stronger and "bearish" at times than that of rifles and shotguns.  I think the main reason is that people who buy guns tend to buy multiple guns and it is easier to keep a fairly numerous collection of handguns in a small space.  That means that over a period of years, a handgun collector can have room to collect more handguns than a rifle or shotgun collector simply as a matter of the storage space available for the collection.  

The price may be forced down if the seller is attempting to get rid of the weapon on the legal market while another pool of buyers, say convicted felons in the narcotics business, represent a market pool that forces prices artificially upward due to their need to protect their operations from other criminals, and the ready availability of cash and valuables among drug traffickers.  Thus places with high populations of ineligible buyers have a demand for black market guns, but the demand for "papered" guns and their associated background checks may be relatively low.   The market demands of drug dealers and gangs raises the price of black market guns in areas where they are most active since weapons are often an important business tool.  This is most frequently evident in scenario one and two situations.

"Panic" buying among the general public also increases market demand and raises prices. This can also be the case when there is an "expected" panic and sellers will stock up and raise their prices in expectation of a panic driven demand. This was the case in early 1994 when we saw high capacity magazine prices skyrocket overnight.  Market demand eventually dwindled because most buyers were simply priced out of the market.  Prices for many types of magazines were eventually reduced to "normal" until they available stocks began to dwindle. The best way to avoid this problem is to buy your weapons and critical accessories well ahead of any event that could trigger panic buying.

Supply of Weapons Available for Sale: Another basic critical factor that determines the value of a gun is the supply of weapons available for sale.  This factor has two basic element from the sellerís viewpoint; first, the number of weapons (or accessory items) that the seller has available for sale, and second; the number of sellers with available items for sale to the same customers.  A seller with a large supply will most likely have lower prices, but this is not always the case. This seller will probably be more negotiable if you can buy in volume or if you represent a group of buyers (a form of collective bargaining). The appeal to the seller is that he (or she) will be able to assure profits in a shorter period of time and make a greater overall profit through volume of sales. A buyer may wish to seek sellers with greater supplies because they have a better selection of items, and the buyer may be able to select an item that is slightly better than the others. This is especially the case with sellers who have a large inventory of used items like surplus rifles. You can pick one with a better bore or tighter sights from the racks rather than taking the only one that a smaller dealer may have in stock. This means that a larger supply of the item usually is good news for the shopper who is looking to get the most for the money. This factor can also be used to lower the price on some item that otherwise may not be lowered, as in this following example:

I was once at a gun show where a guy had a number of backpacks for sale. He had a fairly large selection of surplus packs, but seemed adamant a getting max price out of them.  I found out through our conversation that he also had more packs of the same type in boxes below the table. He wanted $40 each for the packs. I was already buying some equipment from him and offered him $25 for one of the packs. He was unwilling to go for it until I made the following offer; "Look, Iíll tell you what; if you agree to sell me a pack at $25, Iíll let you pick it out for me. It does not have to be the prettiest one in the bunch, it just has to be serviceable." He spent some time digging through the boxes and came up with one that had some stitching where old holes had been sewn up - a definite cosmetic blemish that did not affect serviceability but would have lowered its value in the eyes of a true collector (which I am not). The deal was done. I got my pack and he got some cash. The illustration is that the sale never would have taken place if he had only a small selection or I had not seen the opportunity to use his large inventory to our advantage. Otherwise, I would have never gotten a pack at that price, and his investment in inventory would have never seen a profit for years. Any seller of merchandise who buys in bulk is almost always going to be willing to get rid of slightly blemished merchandise cheap, even if it is just an imagined or intangible blemish (like a new rifle that is missing the original cardboard carton).

Another spin on the supplier with large inventory is the fear that early buyers will pick through the best items before enough have been sold to make the batch profitable.  Then, the seller is stuck with less desirable merchandise that will be more difficult to sell as later buyers will feel cheated on quality.  This is common with dealers of surplus weapons and equipment.  The general practice with surplus rifles is to sort the batch by condition and charge a small premium for better specimens.  The most common charge is $10 for "hand select".  It has been my experience that the "hand select guns" bought sight unseen (the way most dealers by from distributors) are hardly better than the regular grade pieces except in only the most rudimentary cosmetic sense.  It is still better to select and grade the guns yourself.  

Probably the most influential supply side factor in gun pricing in the North America is the changing mosaic of laws in the US.   This not only affects the US but countries where the people often get their guns from the US.   It used to be fairly common for Americans to trade easily obtained firearms to Mexicans and Columbians for drugs.   When the guns get harder to obtain, the price goes up in relation to the value of the drugs.   

In the case of pre-ban vs. post ban guns that may still be bought sold and traded, the price increases can be staggering.   The limited although large supply of guns that may legally have certain features ads the value of the implied license to these guns.  Thus a Pre-ban Bushmaster CAR-15 clone with a telescoping stock does not cost any more or less to produce than that companies' Dissipator rifle,  but the implied license of the "pre-ban" gun with the telescoping stock adds over $800 in value.   In the case of Class III weapons like the Mp5, the price can be even more dramatic, with the value of a "pre-ban" dealer sample being five times that of a "post-ban" dealer sample with the only difference being the right of the dealer to retain the the more costly gun after quitting the business. 

Convenience to the Seller: This  factor will determine the actual price paid in a particular deal.  Generally speaking, sellers who have the most convenience in closing the deal are usually more willing to settle for a lower price. A good example is found in local want ads. If you are willing to travel a long distance to buy a gun from a seller who does not have to travel, then you are assuming a greater part of the trouble to close the deal and generally are entitled to a better price than the customer who demands that the seller deliver the goods for inspection before the buyer decides to go through with the deal.  This is an important factor when negotiating with private sellers in "gray market guns" (guns that have no paperwork but are otherwise legal, i.e. not stolen or used in a crime) who may not which to assume the risk of contact with a dangerous client or unfriendly regulatory authorities.  In this respect, the buyer is entitled to a lower price if he or she assumes more of the possible risk in completing the deal or relieves the seller of having to assume risks in order to get a higher price for the item(s). An example of the use of this element is as follows:

Seller: "I think that this old rifle is worth several thousand dollars, Joe tells me that I can get two or three grand for it any day of the week down in LA because I have a case of ammo and plenty of spare magazines, not to mention this full auto conversion kit."

Buyer: "Sure, you can find some crack pusher with that kind of cash to give you for it, he might even let you live long enough to get out of his neighborhood alive with all of that cash. Or you might find a fairly honest buyer after a few weeks, but when the word gets out that you have one of these for sale, the BATF will get interested in it too, especially if you are selling the conversion kit with it and you never registered it during the Ď98 amnesty period. I would not have driven over here if I were not serious about buying it, but I canít afford to get reamed every time I buy a used gun from somebody. I am right here right now and Iíll save you all of that trouble and give you $1500.00 on the spot and the deal is done."

Seller: "Yeah, I need the money for a down payment on a jet ski and I want to get it early in the summer, I guess I am better off selling it to you right now."

This element is the most important one to remember. Variations of the above script are the most effective in securing a good price from a private seller, especially if the seller has not openly advertised that the item is for sale (assuming that you became aware of the items for sale through word of mouth or some similar means). It is the "convenience to seller" element is the one most exploited by pawn brokers and second hand dealers when buying items from individuals. Pawn brokers often buy firearms at 1/2 of the wholesale price and take the accessories for free. Sellers go for it because the pawn broker is always willing to offer quick cash for the item.

The general theme of the buyers; talk must contain these messages if the buyer expects to get a lower price:

I am willing to buy now

I understand that you may get more money elsewhere but with more work and grater risk

That work and risk are not worth the potential reward

I am not here to rip you off

I will appreciate the deal that you are giving me

This is an easy deal for you the seller

This is a low risk deal for you the seller

This situation and my offer are the best you have

Sellers who are willing to take steps to deliver items to the buyer are entitled to some consideration for the cost of hauling cargo. A seller who agrees to deliver to the place determined by the buyer deserves some extra compensation for his inconvenience as well as a seller who agrees to deliver at a time of the buyerís choosing.

A seller who is willing to hold and store an item for a particular buyer may be entitled to a higher price (to be determined before the deal is finally struck) if it could be reasonably expected that the seller might have passed up a quicker sale to another buyer if the item had not been held over for the original buyer. While extra charges for lay-away deals are rare, they are common among small dealers who have significant amounts of money tied up in the merchandise that is being held for a buyer. These extra charges are usually included in the price of the item and are not charged extra per se, but sellers who are faced with having to hold an item for a buyer without getting paid for it all up front are usually less likely to lower their asking prices during negotiation (haggling). Larger businesses generally do not charge extra lay-away charges, but they also do not usually have negotiable prices either. Sellers who assume the combined inconvenience of lay away storage and risk that the buyer will not return and complete the deal by paying for the merchandise have a right to expect to keep at least some of the deposited money (usually not more than 10% of the value of the entire package). Thus a 10% deposit is usually the minimum deposit expected by a seller who is offering lay-away time payments.

These factors generally only apply when people are willing to accept them as true.  That meaning there are certain people who remain convinced that only their concerns are important and that they are the ones entitled to the best deals regardless of the circumstances or efforts they require of a seller.  I have found that these stubborn people only succeed in life because they take undue advantage of others and mistake luck for skill in negotiating.  To put it bluntly, nobody likes doing business with a shithead, but we all end up doing it some of the time because we have to, but in the end, people will avoid doing business with a shithead if there are better alternatives and the shitheads will invariably end up at the back of the line where they belong. 

Risk Assumed by Seller: Sellers who assume risks to make merchandise available to customers generally are entitled to be fairly compensated for their risk.  Smugglers and black marketeers have traditionally benefited from the risk element throughout the centuries. The two greatest risks a seller makes are getting ripped off and getting busted.  Even an entirely legal gun shop owner deals with many legal risks as laws and regulatory enforcement become more restrictive and geared toward driving legitimate dealers out of business.  Of course, a shrewd seller will maximize the perception of perceived risk in order to force the prices up.  

As an example of a hapless couple of would-be gun runners who I read about in a Kalifornia newspaper.  A Nevada gun runner who was arrested in Kalifornia with a number of SKS rifles, Tec-9s and a few AR-15s.  He and his partner were canvassing the saloons and gun shops in a rural mountain area known for meth labs and pot gardens and populated by a large contingent of ex-convicts in attempts to sell the guns to anybody with the money.  Of course, the "dealers" expected a premium for their services (doorstep delivery of guns that they had "smuggled" from Nevada). They were unaware, until too late, that they had made several crucial mistakes.  First, they were selling guns that were the same as, or very similar to, those available already through legal channels; Second, they assumed that their target market had enough people with both the desire and the funds to buy the guns; Third, they assumed that all of their aggressive sales activities would go unnoticed by citizens hostile to any gun trade. Fourth, they offended some buyers by treating them like worse criminals than they already were by assuming that all of their potential buyer were ex-convicts and drug dealers.  They were arrested and their merchandise confiscated by the police. 

On the other hand, illicit gun dealers in New York City and the surrounding boroughs enjoy a degree of steady success buying guns in neighboring states and offering their New York customers the convenience of local availability of firearms. New York gunrunners enjoy some of the highest profit margins in the country, primarily due to the risks that they assume, and the availability of cash to their target market.  New York gun runners pick their clientele very carefully to gain better profits and avoid rip-offs.  These gun runners favor upscale buyers who do not have legal access to guns but need them for legitimate self protection.  Many of these dealers enjoy some tolerance from the authorities since they serve a legitimate social purpose that happens to be illegal. 

Sellers (legitimate or otherwise) also assume risk when they set up shop in high crime - low clearance areas. If the seller is risking a robbery in order to make the goods available to the buyer, then the seller has a right to expect a higher price if that risk is not equally assumed by the buyer. A seller who is accustomed to assuming risk (and getting the rewards for it) may be expected to accept a lower price if the buyer offers a low risk transaction even though the seller is willing and able to assume the greater risk. An example would be a buyer in a quiet suburban neighborhood who wishes to conduct business with a gun runner who is used to servicing the hoodlums in the bad part of town. The gunrunner is not risking robbery in the quaint bedroom community and is not entitled to "hazard pay" for servicing the customer.

Sellers who extend credit to buyers also have a right to expect a higher price for the item. This does not apply in the same regards to sellers who arrange for the buyer to get credit from a third party. One should note that gun shops in some areas have limited partnerships with loan companies similar to arrangements between loan companies and used car dealers and appliance / furniture stores.  In cases where the seller arranges for credit to be provided by a third party, the party that is profiting from the interest has the first responsibility to reward the seller, although this consideration is usually built into the itemís selling price anyway. The seller may consider the forms and procedure to be such a burden that it entitles him to a higher price, but this most often comes in the form of a stubborn adherence to the asking price rather than an extra charge, unless the seller operates on an extremely thin profit margin (like most gun wholesalers).

Convenience to Buyer: Most of the time, a buyer who demands extra convenience and services is expected to pay for them in the form of extra charges, or a higher price. Sometimes it is worth paying a little more at the local gun shop than it is to pay at the big sporting goods store in the next town, especially if the local gun shop owner is willing to take a trade-in and maybe offer some kind of creative payment plan (these will be covered later). The local gun shop owner may also be willing to perform simple tuning and repairs of the gun; relieving the buyer of the trouble of sending the gun back to the factory for a simple adjustment or repair.  Convenient repair services earn points in my book for the dealer - especially since so many new guns need some work right out of the box. 

Convenience may also be a factor if you simply do not have the time or resources to check and compare prices with every possible seller, or if you wish to buy an item that is not available on a regular basis (like a used HK rifle from a private seller). In an information age, it can be easy to get estimates as to the availability and price of a gun though the nationwide network of dealers, but people know that time is a factor in the price, the sooner you want it, the more it will cost.  Assume that a price difference of 10% to 20% will exist.  On a cheap gun, it just is not worth jerking around every dealer.  On a $1000 gun it may matter.  Generally speaking, almost any gun can be made available to a licensed dealer within two weeks at the regular wholesale price.  Don't believe it if the dealer tells you prices or availability of new legal) guns will vary from region to region.   For used guns, it may be another matter.  A dealer who is willing to spend long distance phone tolls and hours on the phone negotiating for a rare gun or specific modifications is entitled to a reward. Remember, however, that it is fair to expect any businessperson to work for their profit. Special orders for specific firearms that are normally or easily available are a convenience for the buyer, but the deal is generally accepted to be more of a convenience to the seller, thus entitling the buyer to a lower price unless the seller already has a very similar item in stock. An example would be a buyer who wishes to get a special order discount price of $140 on a Russian SKS when the dealer already has two on the shelf at $180. The dealer will most likely refuse to special order the gun so that they buyer can get the discount price. On the other hand, a buyer who offers to special order a Barrett 82 from a dealer who does not normally stock them is entitled to pay much lower than the $8,500 retail price which includes a $2,000 markup from the wholesale cost.

Some behaviors in this are out of line for the buyer and or the seller.  A dealer who demands full retail for a special order is out of line - unless the buyer refuses to put any money down.  Generally, a special order will mean that the buyer should put down a 10% to 20% non-refundable deposit for the gun.  This is commonly equal to the cost of shipping and any restocking charges form the distributor.  The dealer also has the right to pay the remaining value of the item and keep it for retail.  A buyer does not have the right to demand that the dealer match any lower price on an order simply because the buyer found a lower price later at some other place.  If the buyer backs out of the deal then the deposit is kept.  The dealer does not have the right to sell the gun to another buyer who may happen in and make an offer on the gun when the dealer has it.  Nor does the dealer have the right to cancel the deal and keep the money unless there is a really good reason.  As a dealer, I cancelled deals and kept deposits on two occasions.  The first was at the request of the buyer, who decided that he could not afford me to build a rifle for him.  I had already spent the money on some parts that were not easily refundable since I started fitting them.  In good faith, I gave the guy a crossbow that was worth a little more than half the deposit.  On the other occasion, I had gotten a small deposit on a shotgun from a guy and started the waiting period and transfer paperwork required by California law.  A few days later I saw him assault a man with a baseball bat.  The assault was totally unjustified and I informed him that no way was I ever giving him the shotgun, I was keeping his money (most of it went to the $14 state fees) and he was no longer welcome at my place of business. 

One other time, I was the buyer who placed an order for two AR type receivers.  I was really broke at the time they finally arrived and did not have the money to cover the deal when the dealer got them in.  He gave me a few days to get the money then sold them to a cash buyer for more than what I would have bought them for.  He was happy with the deal and I accepted it since I had put very little money down on the order. 

Orders placed with illicit dealers need to be very clearly understood since there is no written contract.  Everything must function on trust.  Avoid paying much of a deposit unless the seller is known to be trustworthy.  One friend of mine had placed an order with a part time contraband dealer for Glocks at prices that were too good to be true ($150) per copy.  The dealer said that he needed money up front in order to get the guns.   I declined to put money in the deal but promised to pay $200 each for two if I could see them first and they were not listed somewhere as stolen in the US.  The story was that they were some surplus from a large South American distributor who got them at low bulk order prices without import taxes.   Needless to say my friend relayed the story to me about how the truckload of guns was hijacked and lost in Mexico.  Of course he did not blame our "friend" for the rip-off.  I figured he was bullshit from the start when he never showed any of the merchandise he talked about.  The "friend" was later imprisoned for killing two Mexican drug dealers who came to him for a refund on money lost through a similar "I don't have the goods because I got ripped off scheme". 

My experience with contraband dealers and "wise-guys" is that the real ones have merchandise to show and the bulshitters have only talk.  The real deal guy may not have cases of hardware in the back of his van but he will have one or two samples around for potential customers to check out.  I have seen mafia types print out "gun sheets" with pictures and prices.  Usually these are about worthless, but one guy in Chicago used the novel idea of Polaroid photos of the merchandise next to a fairly recent Time Magazine.   The Polaroid photos show that whoever took the photo had direct access to the guns recently.   Modern players will have pictures posted somewhere on the internet and can e-mail pictures of what they have available.   

As mentioned in the Convenience to Buyer section, credit also plays a role in convenience. A buyer who gets an item on credit is expected to pay for the privilege, whether it represents convenience (where the buyer does not have the money in a large lump sum but can and will pay for the item in two or more smaller payments) or risk (where the buyer may take possession of the item and later be unwilling or unable to make any or all of the remaining payments that were agreed upon in negotiation). Credit cards reduce the risk and convenience parties for both parties about equally, although the credit surcharges (2%-5%) charged by the credit card company to a business may be passed on to the buyer. The companies argue that the average cash transaction costs a retailer around 3% due to the costs of supervision and security needed for handling cash.  I think this is probably true, but most people still value cash more than electronic money. 

Risk to Buyer: Risks assumed by the buyer also entitle the buyer to a lower price and or more goods for the money.  A buyer who assumes risks not posed by the seller is in more of a position to convince the seller to consider this when negotiating the price.  It is a lot like the guy who had ordered the guns from the part time contraband dealer.  The con would not have been realistic if the price had been high, but if the guy still had nothing to show, 

In situations where the seller himself poses the greatest risk to the buyer, the dynamic between the buyer and other potential buyers comes into play. The best example would be a situation where the seller is a particularly fearsome gang member who is known for ripping people off but has offered to sell some items that you or your group really needs. You can easily discourage the other potential buyers from doing business with this character to the point that his target market is reduced to where the only market demand is yours, and you know what you are willing to pay for the item since nobody else will risk doing business with him. You may not even have to discourage anybody else from doing business with the untrustworthy seller, his reputation will do it for him. You, as the risk taking buyer, may go all out and attempt to conduct business in good faith or assume the expense and inconvenience of extra security measures which are paid for through savings on the cost of the items, or assume the risk involved in finding another seller of the hard to get item or quantity of items.  Businesses do this all the time.  Those who deem themselves as stepping down to deal with risky folks demand prices in their favor.  A large part of the negotiating process is where the buyer and seller establish themselves in the pecking order of who is the more legitimate party entitled to a better price.  

Actual affordability of the item:  All the desire in the world is not going to sell an item that a buyer simply cannot afford.  The biggest roadblock to the illegal gun market is the cost of quality firearms.  In my talks with various legal and illegal gun dealers, I have found that the real affordability number of a gun is around $600.  For an impulse purchase, the price needs to be closer to $200.   Part of the issue surrounds whether or not the deal can be made affordable with the use of credit.   New person to person credit card services like PayPal can help, but real gun enthusiasts usually have maxed out credit cards anyway.  That tends to be the breaking point between an "affordable" gun and an "expensive" gun in most people's eyes.  Perhaps that is about the maximum about of money that a man is capable of hiding from his wife.   Either way, like the gun runner attempting to sell $1,000 assault rifles to penniless ex-convicts, a dealer is going to have trouble finding buyers for guns that cost more than a week's income to the casual buyer.  A buyer who "needs" a gun will no doubt pay more, but there is a limit to that too, especially when comparing a costly gun to available cheaper models that offer the same performance.   A good example is the Colt Python which was withdrawn from production because the manufacturer simply could not compete with the price of cheaper guns that offered similar levels of performance.   That has not made the Python worth less money, but it has made it harder to sell.   Thus a seller is going to have some difficulty selling a high priced weapon in an indifferent market regardless of how good the deal is.   

On the other hand, a buyer willing and able to pay top dollar for a premium item is usually able to find someone willing to deliver it.   Thus a motivated buyer who gets the word out that they will pay top dollar for an item usually gets what they want as long as they are willing to pay for it.   

Warranty: Some sellers will warrant their merchandise.  Legitimate retail dealers essentially pass on the manufacturers warranty while most private party sellers make some guarantees as to serviceability.   Demand some guarantee on the gun or a very low price - always.  Even used guns will commonly have some implied warranty since most manufacturers will fix their goods from a public relations and liability concern.  If a Ruger pistol jams repeatedly at a bad time and the user is killed, the word will get out that their gun is junk.  It will not matter if they got it new or what the warranty actually said it would cover.  Word gets out that it is junk and that's that.  So what happens? they never print it, but they essentially put a lifetime warranty on all of their guns but reserve the right to refuse it if they think someone abused or just plain wore out the gun.  Most major manufacturers do the same thing on the commercial legal market.   Note that many AR 15 type rifles that were made from parts have any type of factory warranty.  Same goes for home built 1911 type .45 automatics and guns made by companies now extinct.   No warranty service available means drop the price.  Warranty, written or implied, means higher price.

Some black market dealers and clandestine manufacturers will warrant their work.  Obviously, everything is on the honor system, but honor is all these people have since the law will not protect them.  It is the double edged sword of reputation vs. unwanted publicity in the underworld.   Generally this reputation eventually translates into the seller's place in the food chain.