Goldealers Blog

Free Gold Packs Uncovered

Goldealers were recently facing a dilemma about whether we should send out free gold packs to our customers. After consideration and research, we decided that sending out Free Gold Packs was completely against everything we stood for. This short story aims to show you why you should never request a free gold pack from any company.

Our fictitious customer James May is looking to sell some gold. He decides to shop online for the best deal to find hundreds of gold buyers wanting to buy his jewellery.

He has found 3 gold buyers which he is interested in possibly selling his gold to. Gold Buyers A and B offer free gold packs, but Company C doesn’t. What company C does have is independent reviews and recommendations from others on the web.
Never request a Free Gold Pack from ANY Company – Goldealers Ltd

James orders his Free Gold Packs from Gold Buyers A and B… the next day, 2 letters arrive in the post containing some quite impressive marketing material – each claiming to pay the ‘Best price’ for his gold and each containing a paid for Special Delivery envelope for James to pop in his gold and take to the Post Office.

James decides that he needs to have a think, because both companies can’t be paying the ‘Best Price’ as they both claim, one needs to offer a better rate than the other.

Gold Buyers A and B are not happy that they have not yet received James’s gold, so they send him an email or two and another Gold Pack in the post to remind him – Company A even calls James to find out why he hasn’t posted his gold in yet.

James is swamped with leaflets, gold packs, marketing material and spam from Companies A and B – he doesn’t really want to sell his gold, but he needs the cash, so he decides to test out two gold buyers.

James posts 10g of 9ct gold to Company A, and 10g of 9ct gold to Company C.

The Price of Free Gold Packs need to be recovered

Gold Buyer A already has incurred massive costs… Designing, producing, printing, and posting out all those free gold packs. Gold Buyer A has also incurred costs creating chaser emails and telephone calls to try and get James to send his gold in. Gold Buyer A, like Gold Buyer B also has customers who order gold packs but decide for whatever reason not to use their services, not to mention all the advertising.

On the other hand, Company C has only incurred advertising costs.

Gold Buyer A: Cash for Gold Offer

Gold Buyer A can refine and sell James’s 10g of 9ct gold for £100. It costs Gold Buyer A approximately £50 to obtain 1 customer after the costs of advertising, posting out gold pack which are not returned, posting out gold packs which are returned, not to mention the cost of the return Special Delivery.

This means that for Gold Buyer A to make a £10 profit on the transaction, the maximum they can pay James for his gold is £40, less than half of the market value.

Gold Buyer C: Cash for Gold Offer

Because Gold Buyer C only has advertising costs, and most of their business is based on recommendation, it only costs £10 to obtain 1 customer’s business.

Assuming Gold Buyer C can also sell James’s gold at £100… This means that in order for Gold Buyer C to make £10 profit on the transaction, it can pay James £80 (80% of the market value).

Free Gold Packs vs More Cash for Gold

Gold Buyer A: Sell Gold @ £100, Acquired customer @ £50, James Receives £40, Profit made £10
Gold Buyer C: Sell Gold @ £100, Acquired customer @ £10, James Receives £80, Profit made £10

So from the above example, we can quite clearly see that James is £30 – £6 postage better off by selling his gold to Gold Buyer C.

What’s more, Gold Buyer C didn’t spam him with reminders to send in his gold, Gold Buyer C simply kept it’s costs low, and passed on these savings on to it’s customers.

What happened to Gold Buyer B?

Gold Buyer B is still spending more money sending out free gold packs and reminders to James despite the fact that he has already sold his gold.

Moral of the Story

If a gold buyer sends out free gold packs, then they need to recover the costs somehow. Request a gold pack and risk receiving junk mail, telephone calls, and spam emails for months on end. Pay your own postage, and the company won’t have your details till you decide you want to sell, and you will probably receive a much better rate for your gold.