AthaBiz

What makes on stamp more valuable than the other?  Why are some stamps literally worth millions of dollars while other similar issues remain available for only a few dollars? 

The simple answer to those questions is, of course, supply and demand.  High demand and limited supply drive prices upward.  Surpluses or scant interest can make prices drop.  That simple economic answer, however, does not really shed a great deal of light on the particulars of stamp collecting.  Let us take a moment to look at the factors that determine the market value of stamps.
The first consideration falls on the “supply” side of the equation.  Collectors call this “rarity” when discussing stamps.  If few existing examples of an older stamp are known, for instance, one can expect prices to be higher than those of similar stamps available in large numbers can.
Rarity is not just a factor for antique issues, however.  It also has a direct influence on how collectible newer stamps are.  For instance, a commemorative stamp slated to be released in a limited number for a limited time will instantly be more interesting to collectors than a definitive stamp that will be printed millions upon millions of time without variation 

One great example of the role played by rarity is found among misprinted or “error” stamps.  Occasionally, a stamp is issued containing an error or variation of some kind that is quickly fixed or altered.  Relatively few of the errors may make it into circulation.  As a result, the market generally awards them a higher price than the subsequent error-free offerings.

Another important factor with respect to price is the condition of a stamp.  This is a “demand” side element of the pricing equation.  Collectors universally prefer well-conditioned stamps to those that are damaged.  They appreciate examples of stamps that look new and unblemished, retaining their vivid colors, unique markings and other details clearly.  They may tolerate a few blemishes in a very old or exceedingly rare offering, but usually find themselves on a quest for the best possible example of the stamp in which they are interested.

Condition plays a huge role in pricing.  A “superb” condition stamp worth several hundred dollars may only be worth a few bucks in “fair” condition.  Well-conditioned stamps are coveted.  Lesser-conditioned versions are often dismissed as “space fillers” and hold no interest for serious collectors.  Of course, condition is also a supply issue, as there are generally fewer “superb’ stamps than there are stamps in lesser grades.

Serious collectors understand the various grades given to stamps and can often quickly ascertain how a single stamp would be categorized based on a quick review.  This understanding of grades and grading is essential because of the highly important role condition plays in setting market values of stamps.

In addition to rarity and condition, other factors can influence price.  Some particularly attractive stamps may fetch a premium simply because of their aesthetic appeal.  Other stamps may experience heightened demand because the originated in countries that no longer exist or because they are indelibly tied to particular historical periods of great interest.  Commemoratives featuring pop culture icons, for instant, have often been more popular with collectors than those featuring historical figures have.  This is not only due to a stronger interest on the part of collectors, but in the rest of the public’s fascination with the stamps’ subjects.  Collectors recognize that many who usually are not a part of the hobby will be in the mix to obtain these stamps.

The generic economic answer regarding the question of stamp value does hold true.  Anything that can have an impact on either the available supply of a particular stamp or on collector, demand for that stamp will influence the artifact’s market value.

Understanding the factors underlying stamp value is only the first step for most collectors, however.  They also need to know what those values actually are.  They need to know about the supply of particular issues and how to assess the demand for the stamps.  There is a variety of techniques and resources one can use to find this information.  Many begin their search with a full-featured guide to the hobby that provides them with the background they need to understand not only how prices are set, but also where they do actually set at any given moment.