Same Item, Different Offers: Inside the Pawn Shop Economy

March 01, 2020 - Pawn Resources

Imagine that you take a gold ring to a pawn shop. You need some cash, and the employee at the register says that he’ll loan you $35 if you pawn it. Should you do it? Or should you try another shop?

Last year, we visited eight Detroit pawn shops with a violin, an iPad, a gold ring, and a diamond ring. Our goal was to answer this question. We wanted to see whether pawn shops offered similar prices, or if people should shop their items around.

We discovered huge disparities. Items that one pawn shop offered hundreds of dollars for were valued under $100 by others, or didn’t even get an offer.

This experience led us to found PawnGuru, a website where people can connect with multiple pawn shops, and we now have data from thousands of pawn shop bids and transactions. It confirms what we experienced during our visits to pawn shops in Detroit: Pawn shops offer wildly different prices. 

Why is that?

How Pawn Shop Prices Differ

When we went around Detroit last year, trying to pawn a few items, we experienced firsthand the different prices that pawn shops offer—even for common items. 

One store offered us $50 for an iPad, even though 5 other stores offered us $100 or more.  

When we tried to pawn a diamond ring, the offers from different stores ranged from $65 to $1,060. 

Detroit Pawn Shops

These pawn shops were offering us loans for pawning items—not trying to buy the items. But they offered the loans at the same interest rates for the same length of time, so that can’t explain the price differences. And these pawn shops were all located within a 15-minute drive from each other.  

Our experience with PawnGuru shows that these price disparities are typical in the industry. 

Since July 2014, when we first drove from pawn shop to pawn shop, we’ve helped about 18,000 people pawn, sell, or buy more than 24,000 items on PawnGuru. On PawnGuru, customers post items they want to sell, pawn, or buy, usually from their phones. Then pawn shops respond to these requests online, so consumers receive multiple offers. We’ve also added a chat window, where the two parties can talk and negotiate.

We can illustrate just how much pawn shop offers differ by looking at a representative dataset from those conversations. This chart uses our data to show how much variance existed over the past 12 months:

Average yearly differenceThe higher the percentage, the bigger the difference between the highest and lowest bids. 

This data includes bids on both pawned items and sold items, which showed about equal variability on a percentage basis. For pawned items, we only included loans with the same interest rate and length of loans, so differences about the loans can’t explain the different amount of cash offered. 

The average spread for 2015 came out to 258%, which is very close to what we saw when we went door to door in Detroit.

But some types of items experience more price variability than others. The below chart shows the variability of prices for different categories: 

Disparity in Pawn Shop Offers

Jewelry has the largest spread, while video game consoles have the smallest spread. But even for video games, the spread is significant: around 50%.

So why do pawn shops offer vastly different amounts of money for exactly the same item?

Why Pawn Shops Differ: Specialization, Margins, and Capital

Early on during the process of building PawnGuru, pawn shops told us they were seeing items that didn’t interest them. So we added item filters.

We also asked them why they didn’t want certain items, and we learned that many pawn shops specialize in specific items. Some cities, for example, have a store or two that move TVs faster than anyone else. 

Specialized stores are often responsible for the highest bids. These pawn shops can move inventory effectively in store, or have an effective presence selling it on eBay. Since their products don’t take up valuable shelf and storage space and tie up their capital, they’ll offer more for those products. They’ll also sell that product at a higher price. 

Specialization also explains low bids or a lack of interest from pawn shops when they see items outside their specialty. Roughly 20% of the pawn shops in our network ignore designer clothes and handbags, and some pawn shops won’t accept smartphones. Or they make very small offers on them, especially iPhones. 

This is both a matter of pawn shops’ ability to quickly and profitably resell items (a store known for jewelry can’t sell electronics as quickly or at as high a price) and a matter of product knowledge. Not everyone knows how to tell whether a Tag Heuer watch is real or not. Preparing a phone to be resold, particularly an iPhone, requires knowing how to remove personalization software like iCloud. Not all pawn shops know how to do it. Or they don’t want to take the time to learn.

Pawn Shops

iPod speakers on display at a pawn shop. Photo by Wesley Fryer

By speaking with many different pawnbrokers, we discovered another reason for disparities in pawn shop offers: They have different desired profit margins.

Pawn shops that seek lower margins generally have lower overhead – they’re leaner businesses. In addition, pawn shops that do a high number of transactions per month can also offer more up front, making up for the smaller profit margin with greater volume. But they all come to the negotiating table with their margins in mind.

The final factor is access to capital. Some pawn shops are self-funded, while others take outside investors. But all of them are constrained by how much money they have to lend. As a pawn shop’s available capital declines, so does its ability to make competitive offers. This can result in fewer offers, smaller offers, or both. So whether a pawn shop offers you a good price for an iPad may depend on whether the shop has lent out most of its capital already.

Why This Matters

According to the National PawnBrokers Association, 30 million Americans routinely rely on pawn shops. Since most pawn shop customers are unbanked or underbanked, pawn shops are one of the few ways they can borrow money. 

But for such a large industry—American pawn shops make nearly $15 billion in revenue each year—there’s very little transparency. For many customers, the difference between the highest and lowest bids we’ve seen for pawned items could be the difference between keeping the lights on and not being able to pay the electric bill. 

It’s increasingly common to use a smartphone or laptop to conduct research before buying or selling an item. Why should the pawn world be any different? 

David Stiebel
David Stiebel

David Stiebel is one of the cofounders of PawnGuru. David was educated at MIT, where he studied Math. He subsequently worked at Bain as a data scientist before starting PawnGuru in 2015. He started PawnGuru to build a better tool for pawn shops and consumers to connect.

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Avatar for Jenaveve


January 19, 2016, 5:26 PM


Avatar for Tiffany


February 9, 2017, 4:20 AM

Informative read, thanks!

Avatar for Diana


June 11, 2017, 5:20 AM

Do all the pawn shops bidding see each other’s offers to the seller?

Avatar for John


August 16, 2017, 2:27 AM

What a good article….. I was curious as to the knowledge of pawnbrokers, so i borrowed a pair 2.15 Ct Diamond stud earrings, that had been certified by GIA, and appraised at over $10,000 dollars, just to see if the “average pawn shop” knew whether or not the diamonds were real…

So that’s exactly what I did, Just walked in and asked “Are these real?” (acting like i had no idea),
4 places I went to, all four said “No”….

And at least 2 of the places had signs that said “JEWELRY, DIAMONDS, ETC….”

I think it’s important for these shop owners to be more regulated, If no one is able to even tell whether or not a diamond is real or fake, they should not be lending money on jewelry ever….

So you have a 100% valid point, if they are low on capital, they can’t lend much, etc…

But anytime someone is dealing with other people’s money, there should be some regulation…

Well written article..

Avatar for Derek Dewitt

Derek Dewitt

October 11, 2017, 2:22 PM

I’ve never used a pawn shop myself, but I can see why someone would use one to find great prices. I can’t believe that you found iPads to be at least $100 cheaper at a pawn shop than some other locations. I might have to check out a local one here next time I need expensive equipment for cheap. Thanks for sharing!

Avatar for Richard


March 4, 2018, 7:11 PM

How do you predict the possibility of failure or success on a new pawn shop opening in a town that already has two other pawn shops and the population is a mere 26,000 people.

Avatar for Tyler


July 21, 2018, 3:47 AM

This is something I’ve been looking at for years. Pawnshops treat everyone like their a junky just trying to get money for drugs. Not for a moment considering that this person may have kids and their just trying to keep the heat on during winter, or the electricity bill, food, rent, gas, etc. For people with little or no credit or people that may have made some bad choices in life and are trying to get back on their feet, a pawnshop may be their only option for any type of loan. I feel that this is completely wrong to take advantage of anyone that is genuinely trying to do whatever they can from being homeless and on the street (which people should keep in mind… Do you think CPS is going to let you keep your kid”s” if your homeless and can’t provide for them?), hell no!
If your stats are correct and 30 million people are needing to go to a pawnshop to sell or loan, you can bet that they had no other choice. Yes some are going to be drug addicts but how do you justify that being a reason to rip people off. We all know pawnshops are going to rip us off but we still may have to pawn something because… We have no other choice.
The fact that pawnshops know that and use that to profit off of is exactly what’s wrong with the USA! Capitalism… it’s the American way… who cares about the hungry, the poor, the unfortunate, the homeless, or low income family’s, who cares about the kids that will suffer, who cares about the dogs/cats that won’t be able to eat… I could keep on listing but I think you get my point.
Don’t get me wrong, I believe in small business, I believe every store should be able to make a profit. But come on, really? Does everyone believe that pawnshops as a whole give people reasonable prices for their stuff? Where is the profit margin that’s too much for an ethically moral store allowed to make in a business that is designed for people in desperate situations? Pawnshops are a predatory business. They prey on Us American citizens that have nowhere else to turn.
I have been through a lot in my life. I have had to use the pawnshops way more than I would have liked. And every time I had no choice what good is anything in my house if I don’t have a house, right? And when I pawn something (this being the reason I came across this blog… the legality of a pawnshops straight lying to you about how much your item is worth and how much they are going to be able to sell it for). I’ve had to pawn 3 bikes over the years that were $1,000+ bikes that they offer $180 or less for saying they won’t be able to get enough out of it. Then turn around and tag it at $650.
I’m sorry but 3X what they paid for it? Is that OK with America? (supposedly the best place to live on earth) Where the rich get richer and the poor get ground down until people no longer see them as people and more as a nuisance.
Here’s a perfect example… my last bike, I bought it from the pawnshop, tagged at $450 but I told them I would give them $350 for it because the gears were messed up, the wheel was flat and wouldn’t hold air, and the rim was bent. I then spent another $300 in a quality repair shop which I had receipts for (the rim was $110 alone), which is fine I was breaking about even as to the used value of the bike. Here’s the thing I started going to college again and needed some extra money to get me through the quarter. I brought that bike back to the same pawnshop (I’ll add I bought this bike during the cold part of the year when bikes are usually cheaper and pawned it when they would be able to sell it at the beginning of summer where they sell for more and quicker). I had to twist his arm to get $180 on a loan or $180 to sell. I said I bought the bike from you for $350 and here’s the receipt for the $300 I had to put in to it to make it ride like it was supposed to (what do you think they paid for the bike originally in the condition I bought it?). I needed $250 for the rest of rent. When I explained the condition that the bike was when I got it and what I paid etc. His reply was well that’s what happens to bikes when we have to store them and why we can’t pay more for them. So he was telling me that because they are competent enough to store a bike without bending the rim the sprocket being bad and a chain that was stretched out… Who are they trying to fool they bought it that way originally.
I would love to know is that legal for them to do. To knowingly lie to the customer to extend their profit margin? And doing so because they know the situation your in and know you don’t really have much of a choice besides a home or a bike. And if it is….WHY? Think about being a patriot the all american citizen if this is an OK way to treat your citizens what’s to be patriotic for? A country that takes advantage of the weak? the poor or low income? We are supposed to be the most powerful nation in the world! But feel the need to bully those in our own country in need. Because that shows the world we are powerful right?
Let’s think of a fight. If you take the #1 fighter and he stay’s at #1 because he only takes the weakest opponents on. Do you still think that fighter deserves the title #1 or would think that the #1 should be able to beat anyone from #2 on down? If he is #1 then he should be protecting #3 down from #2 if need be because their the only one that can. (I know it’s a that’s not the clearest idea) I’m just saying If we want to be the greatest nation in the world than we need to use that power to better our own nation not to exploit the people of it.
We hold car dealers responsible when they sell us a car for it to be the same as the one advertised (bait and switch). I’ve run my own business and one thing I’ve known and watched many others fail is that you can’t penalize your customers because you made stupid choices and aren’t turning enough profit to keep your business running. If I screw up a product I can’t sell it to someone at the normal price just because I need to break even.
Unlike pawnshops most businesses will just lose customers. People will just go somewhere else. But pawnshops know they are already a last resort and use that to their advantage which screws up to 30 million people a year and everyone seems to be OK with that.
I’ve got my own ideas as to solutions some of which I won’t share because I have been putting in a lot of time trying to work it in to reality. But here’s an idea that I haven’t looked anything into but what about limiting the profit margin on types of products or taxing the profit margin which could relieve us from other taxes?
I don’t know my problem is with the unchecked power that pawnshops hold on Americans in need of help. And with a growing system that rely’s on credit. That without it, you may not be able to get some jobs,a house or even an apartment, or even a decent quality a life. Pawnshops are supposed to be the place you can turn to, just like a mortgage, you put your property up as collateral so that they can ensure that they can get their money back and make money on the interest + a little for their troubles. You shouldn’t walk into a pawnshop and see the thing they bought from you for nothing being sold for 2X-10x what they paid for it depending on the item. Some items yes I can understand 2X-3X (small things). I feel they should be held accountable for what they say. In a day that you can find out everything you need to know in an instant there’s no excuse. But for them to actually look the item up right then and there and tell you that this is what their selling for on eBay and you get home and look it up and you check completed items that sold and the lowest one is still 2X what they told you it was that’s a lie. And these are the people that should be in jail, the unethical, unmoral, unchristian, un(most religions) predators of our country. However and whatever you believe… The way that things are now, are not what the constitution was trying to protect and it’s not they the way they we were taught in schools to believe America is. There’s a reason the stigma of pawnshops is the way it is because it is so widely known yet nothing has been done about it, probably never looked into by most, and not cared about by many. But for those that have been in a situation that they needed help and to have to knowingly pawn something, sometimes things that are very special to them, and to treated and almost insulted as though you don’t know the value of your item, or that they simply just don’t give a f*c* that they’re purposely and in a passive aggressive way ripping you off. Hoping that you won’t be able to pay them back so that they can exceed 100% profits.
Sorry for the long rant this is just an issue I’ve been concerned with for over 15 years now. I remember being a teenager and my stepdad telling me the Bellingham Pawn straight told him that they were in the business of ripping people off. They’ve talked to me in almost the same tone. As for the experiences I was talking about above… That’s not a small privately owned pawnshop…. It’s Cash America on the busiest road in whatcom county besides maybe the freeway. They have AMERICA in their name yet the way they operate is a predatory version of capitalism. Kind of the same way some people would say drug dealers are, only with drug dealers at least their price stay pretty consistent throughout an area. All I’m saying is that pawnshops are kind of in an area of their own. We put rules and regulations on bank loans and against predatory loans. How is a pawnshop different and not held to those same standards. Or even more so knowing that the people needing to go to a pawnshop are already in a position that makes them prey and easily taken advantage of.
I would love to hear anyone’s response especially if you truly understand the legal aspects as to how a pawnshop runs and what they can or can’t say when trying to buy or sell items. And to share this with anyone and everyone because this potentially can effect everyone in some way or another whether you pawn things or not. If America is ever to be “Great Again” then people need to understand all the implications that an issue like this could have on a community as a whole. It’s at least something worth talking about, maybe theirs a better way for things to be done.

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