Effective Buyer's Premium - A New Term

[frankbmd]

I would maintain that it would be prudent in the auction game to consider all costs whether buying or selling including hammer price, Buyer's Premium, Auction Site Premium, State Tax, Insurance, Shipping and Handling and consignor fees (for sellers). Only then do you know the true cost of (or return on) your cardboard treasures. All these issues have been discussed before on the Forum, but I bold enough to propose a new term which I will call the Effective Buyer's Premium (EBP), which can result in sticker shock.

Recently I prevailed in an online auction winning two lots for a grand total of $35.00 and here is what happened.

The auction house BP was stated at 15%, so add $5.25.

They also added 3% for Auction Zip fee, so add another $1.05.

They do not ship, but send their lots via the local UPS Store.

The UPS Store's cheapest option added another $20.76. We are talking cards here and less than 100, not a Grecian Urn.

I chose not to insure my $35 gems.

There was no State Tax, whew!

The total cost added to the hammer price was therefore $27.06.

Applying the Effective Buyer's Premium formula

(Cost of added expense / hammer price) * 100 = Effective Buyer's Premium (or EBP) expressed as a percentage of the winning bid.

In the example presented, my EBP was 73%.

We all complain periodically about the Buyer's Premium, but a slightly higher BP to cover shipping and handling and other extras might not be a bad idea.