Starting a home coin pick-up service. Best or worst idea of all time?

[jamesandsons]

I have to talk through this idea so someone can explain to me why it is a terrible idea.

Coinstar somehow makes money off of people willing to sell their change for 90 or 92 cents on the dollar or whatever their fee is. I'm assuming these people don't have bank accounts, or don't know that they can bring their change jars to the bank, or they are otherwise financially illiterate enough to pay a significant fee to get paper money for their change.

So obviously people like that are out there.

So the business model: buy a high-capacity (but still portable) change sorter, advertise on craigslist or on small-town grocery store bulletin boards, schedule appointments, go to people's homes, count their change, and buy it (for a small service charge).

Pros:

• Cuts the middle-man (banks) out of CRH
• Instant profit via fee percentage (although probably very modest, hopefully enough to cover expenses)
• Experience a unique slice of folksy American culture as you travel the countryside visiting people in their homes. Who knows what else you might run across? It'll be just like American Pickers!

Cons:

• Driving around in the middle of nowhere with large amounts of cash, meeting strangers. What could possibly go wrong?
• No one trusts this weird new service or wants to use it; you bought a $1000 coin machine that now serves no purpose.
• Where do you go for repair service on big honking coin sorting machines when they break down?
• Experience a horrifying slice of American culture as you travel the countryside visiting people in their homes. Who knows what else you might run across? It'll be just like Hoarders!

All kidding aside though - is there enough upside to this idea, once some of the kinks are worked out, to make it worth giving it a try? Or is it just an absolutely horrible idea, and that's why no one is doing it already?

You'd have to figure out the math and find a fee schedule that was enough to cover costs but low enough for people to feel okay paying it. And the "carrying lots of cash" part is rather concerning. Although presumably you'd be meeting people at their homes, and know their names before-hand. Seems less likely they'd rob you that way... but someone could easily ambush you after the fact, once they knew what you were driving.

I have lots more pros-and-cons bouncing around in my head, but the whole point of this post was to see what other people's thoughts were. So... proceed. This ought to be entertaining.

 

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[agme]

I too think it's a cool idea, but unfortunately the financial math
doesn't work out.

At 5% profit, for every $100 in coin you process you get a whopping
$5.00, and if $5.00 isn't enough gas to get you to the next customer,
you just lost money. More importantly, how can you amortize the costs
of the machine, vehicle, insurance, etc. into that 5% when you are
barely making gas costs?

Quick math says you'll need to process (at min.) $5000 in coin each
day in order to have the potential for profit. Think you can do that?

Hate to be the Devil's Advocate, but always better to know upfront what
the challenges are.

Still, it's a cool idea..making it work....well, that might be a bigger challenge.

It would have to be all about finding silver or other valuable coins, maybe you would or maybe not, kind of like CRHing, some boxes are good, some are skunks, but there's still enough to keep us coming back for more.
You would want to focus advertising in elderly communities, hard for them to carry loads of coin to the bank.

 

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[jamesandsons]

This really isn't an idea that I'm anywhere close to pulling the trigger on. I think it would require a LOT of planning, "market research", etc. before jumping in. But I like to take these business models that form in my mind and air them out; run them by like-minded people and see what their thoughts are.

I'm sure the regulatory/licensing situation on a business like this would vary dramatically depending on state and local law.

In my ideal of the concept, I'd test the hell out of my machine and be brutally honest about whether it averaged 99.9% accurate, 98.6% accurate, or whatever. Then let the customer decide if they are comfortable with that. Give an on-the-spot money-back guarantee: We'll run all your change through the machine, and if you don't think the result is sufficiently accurate, you can have it all back.

I do think 5% sounds like the sweet-spot (although I'd want to do a lot more market research and run a lot of figures). Maybe have it regressive; 5% on the first $100 (and a minimum $5 charge to cover the cost of the trip), then 4% on $100 to $300, then 3.5% beyond that. Or something like that, a model that would incentivize larger amounts and discourage smaller amounts.

 

[jamesandsons]

It would have to be all about finding silver or other valuable coins, maybe you would or maybe not, kind of like CRHing, some boxes are good, some are skunks, but there's still enough to keep us coming back for more.
You would want to focus advertising in elderly communities, hard for them to carry loads of coin to the bank.

Yes, elderly and rural. I was in a small town the other day, and saw a bank called "Farmers Savings Bank" or something like that; and got a mental picture of old-timey farmers cashing in their huge jugs of change they've been saving since the 1960s. That's my ideal (and entirely fictional) demographic.

 

[tokameel]

Sources of coins might be local churches or any small business. Talk to them and see if you can do their coins for less/easier than their current method.

Where would you cash in the counted coins and would they charge for it?

Good Luck!

 

[jamesandsons]

Where would you cash in the counted coins and would they charge for it?

At a dump bank just like any other coins you've sorted through. Except now you've got a legit coin business (as opposed to the imaginary ones some bank tellers evidently think CRHers have

 

[maipenrai]

Yeah, people let the plumber and other trades men, but thats because they have to, otherwise, the plumbing dosent get fixed. These same people might not let salesmen in the house, because they dont have to. As far as being honest, thats nice, but the way you explained it, if it was me, it would really get my suspicions up, so I would be trying to figure out what you were up to.

Yes, older people might be a good customer base, but then again, some people might get the idea, that you had a different motive for concentrating on older people, same as the "we buy your junk gold" people.

What would you say, if a customer said that they had a few jars of old coins, and asked if you would take them? You take a look, and see silver, so what do you do, pay extra for them, or just the same as the other coins? If you pay more, you are cutting the profit, that you were hoping to make, if you just pay out as with the other coins, then at some point in time, they will know they have been ripped off. Not easy! If they are a bit dementia, and they think you ripped them off, then you are in trouble.

 

[agme]

At a dump bank just like any other coins you've sorted through. Except now you've got a legit coin business (as opposed to the imaginary ones some bank tellers evidently think CRHers have

Be careful with that one, they MAY start charging you business fees. Then again you might have to set a business account anyway, if so shop around for low fee or free.

 

[Bad Wolf]

Boy, lots of good ideas above, and I really love your entrepreneurial thinking! My thoughts: 1) Advertise first. When (or if) you get responses, make appointments a few weeks out utill you get that magnetic sign and portable coin counter and Glock, etc. Once you're up and running you can tighten up your schedule. (You may loose a few at customers first, but very little capital out-lay to test the idea and you can explain the delay by saying you're backed-up.) 2) Do it for free. You won't make enough money to cover your expenses anyway, but just think of the opportunities to get your hands on all those old mason jars full of coin! And no problem telling people that's what you're in it for when they ask, as the vast majority won't have the time/interest/ability to sort through them anyway.

Good idea, I say! Good luck and keep us up to date!

 

[agme]

Yeah, people let the plumber and other trades men, but thats because they have to, otherwise, the plumbing dosent get fixed. These same people might not let salesmen in the house, because they dont have to. As far as being honest, thats nice, but the way you explained it, if it was me, it would really get my suspicions up, so I would be trying to figure out what you were up to.

Yes, older people might be a good customer base, but then again, some people might get the idea, that you had a different motive for concentrating on older people, same as the "we buy your junk gold" people.

What would you say, if a customer said that they had a few jars of old coins, and asked if you would take them? You take a look, and see silver, so what do you do, pay extra for them, or just the same as the other coins? If you pay more, you are cutting the profit, that you were hoping to make, if you just pay out as with the other coins, then at some point in time, they will know they have been ripped off. Not easy! If they are a bit dementia, and they think you ripped them off, then you are in trouble.

I don't know, to me, you are doing them favor for a small fee (saving them from having to go to the bank and cash in all those coins and giving them needed folding money), and they are doing you a favor, selling their saved coins to you at face value. Some of them may be worth more then face or not.

 

[agme]

Boy, lots of good ideas above, and I really love your entrepreneurial thinking! My thoughts: 1) Advertise first. When (or if) you get responses, make appointments a few weeks out utill you get that magnetic sign and portable coin counter and Glock, etc. Once you're up and running you can tighten up your schedule. (You may loose a few at customers first, but very little capital out-lay to test the idea and you can explain the delay by saying you're backed-up.) 2) Do it for free. You won't make enough money to cover your expenses anyway, but just think of the opportunities to get your hands on all those old mason jars full of coin! And no problem telling people that's what you're in it for when they ask, as the vast majority won't have the time/interest/ability to sort through them anyway.

Good idea, I say! Good luck and keep us up to date!

Good thinking. But I though about the "do it for free" angle but that may make people suspicious (to good to be true) that something isn't right, you know, that someone would spend money to come exchange your money for free.

 

[jamesandsons]

Yeah, people let the plumber and other trades men, but thats because they have to, otherwise, the plumbing dosent get fixed. These same people might not let salesmen in the house, because they dont have to. As far as being honest, thats nice, but the way you explained it, if it was me, it would really get my suspicions up, so I would be trying to figure out what you were up to.

Yes, older people might be a good customer base, but then again, some people might get the idea, that you had a different motive for concentrating on older people, same as the "we buy your junk gold" people.

What would you say, if a customer said that they had a few jars of old coins, and asked if you would take them? You take a look, and see silver, so what do you do, pay extra for them, or just the same as the other coins? If you pay more, you are cutting the profit, that you were hoping to make, if you just pay out as with the other coins, then at some point in time, they will know they have been ripped off. Not easy! If they are a bit dementia, and they think you ripped them off, then you are in trouble.

I think the suspicions/trying to figure out what you were up to question is answered by the business model: advertisement-driven, they contact you if they are interested. I could see this feeling creepy and predatory if the coin collector was cold-calling people, showing up at their door uninvited; especially older more vulnerable people. That's not what this would be about at all.

As for looking and seeing silver, I think the key would be to avoid making any sort of assessment of the contents of the coins until after you've left. I'd say yes, be honest if asked, tell them you search for more valuable coins in your spare time (no need to necessarily specify silver) - but if they ask you to "tell them what they've got", that isn't the business model. This isn't a coin dealer business, making offers based on the estimated melt or numismatic values of people's collections - it is a straight-forward cash-in-your-change business. It could get really tricky if that line got crossed. Anyone who decides maybe their change is worth more than face value is free to not do business with you.

 

[maipenrai]

Dont people go to the bank anyway? So they arent making special trips to cash in their coins.

It will be interesting to see how this works out, but I can just hear the kids, when they come for Christmas, "You did what, with those silver coins!!" Some guy came around and wanted to help you cash them in?

 

[N4VA]

Thought of doing something like this myself, as am near retirement and will have lots of free time. When I run the numbers though, I keep getting back to what I think is a fact: I could work part time, earn money to buy silver with and come out way ahead. It's just too time consuming and expensive to search out a few coins that might come along. On the other hand - it is "THE SEARCH," isn't it? I think most of us that are into this are treasure hunters at heart. It's not that we're going to get rich hunting for old coins, it's the thrill of each and every find.

 

[jeff of pa]

Good thinking. But I though about the "do it for free" angle but that may make people suspicious (to good to be true) that something isn't right, you know, that someone would spend money to come exchange your money for free.

yep your absolutely right on this, everybody is suspicious of a free deal

 

[agme]

Dont people go to the bank anyway? So they arent making special trips to cash in their coins.

It will be interesting to see how this works out, but I can just hear the kids, when they come for Christmas, "You did what, with those silver coins!!" Some guy came around and wanted to help you cash them in?

Some of them do go to the bank and cash in their coins, that's we we find them in rolls. It's the ones that don't make it to the bank that I want to find.

 

[jamesandsons]

Thought of doing something like this myself, as am near retirement and will have lots of free time. When I run the numbers though, I keep getting back to what I think is a fact: I could work part time, earn money to buy silver with and come out way ahead. It's just too time consuming and expensive to search out a few coins that might come along. On the other hand - it is "THE SEARCH," isn't it? I think most of us that are into this are treasure hunters at heart. It's not that we're going to get rich hunting for old coins, it's the thrill of each and every find.

Yep - and I'm pretty sure the same is true for straight-up coin roll hunting. Even the most hard-core CRHers would probably come out ahead financially if they spent their CRH time working a wage job and put the proceeds toward buying silver or whatever coinage they are in to. It is all about "the search", and this business model would probably prove to basically be the same.

 

[maipenrai]

Never turn a hobby into a business. You will find out that now you dont have a hobby anymore, and not much of a business!

 

[greengold]

I think your overhead would be too high. Bond, gas, machine repairs. Not to mention all your time spent driving and dealing with people. I think the coinstar business model works because they have so many machines on a route. They are not dealing directly with people, and the customer essentially brings the coins to them with there established routes. I suppose you could figure out how many coins you would have to process to cover expenses and make a profit. The "silver lining" would be the silver, excuse the pun. Just my two cents, pun intended.

 

[jeff of pa]

I do believe a Mom & pop store or Gas station in a struggling Neighborhood
(Maybe even a Tobacco Shop) would be the best
location, IF you can get permission to set up there.

especially if it's a free service to store customers

 

[Bad Wolf]

Good thinking. But I though about the "do it for free" angle but that may make people suspicious (to good to be true) that something isn't right, you know, that someone would spend money to come exchange your money for free.

You do have a point there...