I had actually started to consider the time value of money, but decided to actually ignore it on purpose. As a very starting point, what is your cost of capital opportunity cost - CPI, RPI, PPI? Should I instead use my opportunity cost and the 10-20% return my equities portfolio has delivered the last 5 years - it gets really complicated.
If you wanted to build in a fixed 2.5%pa inflation adjuster (or any other reasonable number) into the above that would make sense and would be really easy to add into any max sales price.
My view here is that it’s not perfect, but you’re trying to build a system that doesn’t encourage trading and speculation - hence the suggestion of a price and bottle cap per year (particularly for buying).
I’m absolutely suggesting that the buyer gets “a free lunch”. But you need to remember that you very well may be the buyer in some situations - and so you will win some/lose some.
As I say, I’m proposing a system that provides flexibility for existing members rather than a revenue generator. The realty being that if there is a HUGE profit on a wine, it will most likely simply be withdrawn and sold through traditional channels with a third party auction house making a profit and in many cases the buyer, who may not be a TWS member potentially getting a bargain/free-lunch depending on sales price.
With regards VAT, I agree that would need to be given some more thought, but I suppose it’s not different to a wine selling at an auction at a price below cost. (I am not in the weeds on this one I must admit).
Having thought about the above system on and off for the last few years the conclusions I come to are:
- I have a proportion of reserves I wouldn’t mind selling for a number of reasons.
- Most of these bottles are “average” (to me) rather than rockstar bottles worth a fortune. (e.g. perhaps some of the VCP additions).
- The rockstars I want to keep or at the very worst gift to friends and family.
- I am willing to leave some money on the table for either another member to benefit from or TWS (through giving them first option). As long as I broadly get my money back, on wine that I no longer want, then I’d be pretty happy. Especially if it was an easy system with limited hassle (vs the thoughts of withdrawing reserves, picking an auction house and all the dialogue, going through an auction process and paying commission)*.
*I have actually never sold wine via an auction so don’t actually know how difficult it is in practice. Sounds a right pain tbh.
So what is a system that provides some flexibility?
The question that would add the most context to the above system proposal and any broader discussion is, “what is the average amount of time wine spends in members reserves?” @Kelly @laura is this something you can help with?
Obviously if I was trying to liquidate the 2,000+ bottles in reserves with an average age of 20 years then the above system would not be the ideal route to maximising profit for me. Perhaps I’m reading the room wrong however, but I don’t believe most on here are looking for that option.
A separate discussion, may well be - I have 12 bottles of 2005 Lynch-Bages, I’d like to try other wines from that vintage - does anyone want to swap 6 bottles of L-B for 6 bottles of say Figeac at nil-cost. That swap-shop options DEFINITELY appeals to me but I feel is a different discussion.