Having gotten that out of the way and -- as a dealer and conrunner of long standing along with Gretchen -- I thought I'd try writing my thoughts about what the priorities of a dealers' room at an SF convention should be.
The primary reason for having a dealers' room at an SF convention is to service the members. The secondary reason is to service the dealers, since if they are not, on average, having a pleasant and profitable time, they won't come back, which means that they won't be there to service the members. That said, you will not be able to make all of the members or all of the dealers happy all of the time. The members would be perfectly happy with a room of infinite size containing anything they might want to buy; the dealers will object to having a finite number of dollars spread over an infinite number of dealers, since none of them will make any money that way.
So while there's probably some theoretical optimum solution for the size of your dealers' room based on the number of members (and their level of affluence), in the real world we find that we're most often constrained by the function space available. A convention tends to try to set the price for tables at the market clearing level -- that is to say, having selected an optimum number of tables given the size of your convention and the size of the function space, the concom would like to exactly fill the room, with perhaps an extremely short waiting list to be used in case of cancellations. But this tendency is countered by the desire to have a diverse dealers' room. The higher your table prices are, the more different kinds of merchandise that you'll price out of the room. This is why we no longer tend to see, for example, Joe Fan buying a table to clear out used books from his library, which I've heard numerous folks complain about over the years. (The fact that most rooms are oversubscribed and he wants to get rid of the books now, not some time next year, also helps.)
Conventions generally want a diverse dealers' room -- it makes the members happy. Another tactic that's used to promote diversity is to limit (by jurying or otherwise) or make it more expensive for a dealer to have multiple tables. This is not a problem for the larger, more profitable dealers (in general), but tends to discourage dealers from bringing a third table of junk jewelry (just to pick an example, not that there's anything wrong with jewelry). In general, it's more desirable to have three dealers each with a single table than to have one dealer with three tables.
(However, you increase diversity in the room by giving better book dealers -- for instance -- three tables, because this allows them to bring more different titles, improving the chances that your members will find the book that they're looking for. You may make that table more expensive for them, but they'll decide whether it's paying for itself or not. And to some extent, taking the third table at a higher price is a way of advertising to the members and saying, "Look here! I've got all of these books, so surely I've got the one you want.")
As it turns out, dealers also want a diverse dealers' room. If you have too many new book dealers in a room, none of them tend to do well, because the book buying dollars get spread out among too many different dealers. In an ideal world, then, we'd have exactly one dealer carrying each different item of merchandise in a room and maximum diversity.
This doesn't work, of course, because we're not living in an ideal world. First, the members would like to receive some of the benefits of competition, such as discounting. Second, if Dealer A runs out of a book, Dealer B may still have some. (In fact, just this happened to a friend of mine at WindyCon this year. He was bemoaning the fact that Dealer A was out of the new Karres novel and was unable to obtain more. I suggested asking Dealer B if he had any, despite the fact that my friend had been by his table and hadn't seen the book. It turned out that the book was right there on the table -- my friend just hadn't seen it.) Third, not all book dealers (or filk dealers, or t-shirt dealers, etc.) necessarily carry all of the same merchandise. And finally, there may be enough book-buying money at a given con to support more than one book dealer, so it's rational for a second or third dealer to attempt to enter that market.
(Contrariwise, Gretchen and I don't deal at Chambanacon or Inconjunction, because there's no sense splitting that market with Juanita. Juanita tends not to deal at a number of cons we deal at. We overlap at Marcon and OVFF, because there's enough filk-buying money there to support two filk dealers.)
Ok, we're still feeling our way through the fog here. There's a lot of nice theoretical talk above, but what are the practical things a con can do that would produce a "good" dealers' room?
Start by realizing that you cannot make everyone happy. There will always be some fan who complains that he cannot find something that he desperately wants in your dealers' room; there has never (apparently) been a dealer who has had good sales at any convention. (Despite this, they keep coming back, so I believe that some of the tales of economic disaster are overblown. :) )
You can make most of the fans happy, though. You usually have enough space in your dealers' room to accommodate a wide variety of the most common fannish merchandise. So you need to arrange to mix it up. There are a number of ways to do this, almost all of which involve at least some level of jurying at the marginal table level in order to balance the room.
(This assumes, of course, that you have applications from dealers for each of the desirable lines of merchandise. You may not. If this situation persists, it's time for you to start recruiting dealers, no? Take, for example, the frequent complaint about the absence of button dealers lately. Go to some cons in other cities, find a button dealer, and -- excuse the expression -- button hole them. Tell them what a swell idea it is to come to YourCon. If that doesn't work, see if you have some budding entrepreneurial talent in your home city who you can convince to start up a button making business. It's not like the barriers to entry are huge in this case. There are other dealer categories, like books, filk, or jewelry, where the inventory costs might keep someone new out, but most cons don't have a big problem filling that sort of niche anyway.
I've been recruited by some nice folks at other cons who would like to have a filk dealer, but I've usually had to say "No" just because my schedule is full up. I feel guilty about that, but then I'm not trying to make my living this way.)
I tend to give bonus points to dealers who provide items that aren't easy to find in stores. That would seem to be a minus for book dealers, but then you have to consider that the better dealers carry more titles than you would tend to find even in a store like Borders or Barnes & Noble. And I'm definitely going to give bonus points to SF/Fantasy book dealers as opposed to those who are selling remaindered titles of dubious value to the fannish community.
If my con has a strong programming bent in a particular direction (say filk or anime or costuming), I'm going to try to make sure that I have at least one dealer to service those members.
I'm going to give bonus points to dealers who make at least some of their own products for sale.
I will try to minimize duplication of items in the room. I'm unlikely to need, say, two dealers selling similar (even if not identical) crystals and incense, especially since that market's going to be relatively small as opposed to, say, books.
Minus points go to things which -- even though they might be attractive to some folks -- are not particularly fannish. See the remaindered books discussion above.
And then there are going to be the cases which I just can't solve. If Joe Trufan believes that it just isn't a real SF convention unless there's someone there selling rare old books, he may well be dissatisfied by anything smaller than a Worldcon (or a specialty con that attracts a lot of folks just like Joe Trufan), because I may not be able to find such a dealer who can make enough money at MyCon to make him want to come there. It's likely to be a thin market for that dealer at most regionals, which isn't necessarily a good thing or a bad thing, it's just a thing that exists and we'll have to deal with it.
I want to support the dealers who come back and support the convention year after year. There's a certain value to the members in knowing that they can count on having Dealer X at the con.
And I want to have a certain amount of turnover in the room, because I want the members to find something new and delightful in the room that they've never seen before. (And I want to see that dealer make a lot of money and come back. :) )
And let's give some more bonus points to the dealers who support the con by working on it, or appearing on panels, or even just saying good things about it.
Does this form a scoring system where I can add up all the points and determine definitively that Dealer X should be in the room and Dealer Y should not? Heck no! But it does give me some idea of how to rank the dealers if I need to do so.
When I do that, I'm going to find that there are some dealers who are no-brainers, because I either want them in the room or I don't. If I'm lucky, I find that I've got some tables left after putting all of the no-brainers in the room. (If I'm already oversold at that point, then I've either got to make some really tough decisions or try to find a bigger room.) Now I can start ranking the remaining desirable dealers so I can fill out the room and try to satisfy the maximum number of members, because I've got some decent criteria for trying to do it.
I'll still get down to the last table or two and wish that I had different choices that I could make and that I could squeeze someone else in.
But I'll feel pretty good about it when I'm done, because I've probably got a dealers' room that'll make my members and dealers happy.
And that's the best that I can hope for.