Hi Bob:
A few observations:
1) No, I'm not kidding. Yes, as a Northern Italian, I'm full of sarcasm, always looking for a quick joke, and you should rarely take me seriously. Life is too short not to have some fun and find every opportunity to laugh, including frequently laughing at ourselves. I highly recommend it.
But no, I'm not kidding here.
2) I don't dispute that the grading process is rife with the potential for manipulation, self dealing, and other hijinks and chicanery. However, while you seem convinced that TPG fees are contingent fees, I'm not entirely convinced of that fact. Since contingent fees for graders seem to be a favorite hobby horse of yours that you delight in riding hard and putting away wet, it seems like it's worth poking at a bit more.
3) There's no need to cast aspersions at my professional abilities. If you want to disagree with me, then go for it. But implying that I am a poor CPA is unnecessary and unwelcome. So while I appreciate that we share the same profession, I really don't need you to question my capabilities as a fellow professional. Hopefully my desire to hash out the details here doesn't drive you to impugn my credentials and malign me in continued similar fashion.
4) Based on your expansive exposition above, I'm not convinced that you are familiar with the various service levels and current fee schedule for grading, at least not for PSA. I've never submitted to another TPG, so I can't speak to other graders. Based on my interpretation of your comments, since you don't seem to be familiar with even the concept of a service level, or with the various levels of service offered by PSA, allow me to share a link to the current fee schedule, which outlines those levels of service, the turnaround times, the estimated value limits, and pricing for each service level:
https://www.psacard.com/pricing
The process works thusly: if I decide to submit an item to PSA, I first get to estimate the value of my item (valuing it based on the value once it is graded), and then I submit the item at that service level. For example, if I estimate that my item is worth $1,000 based on what I estimate it will grade at (let's say I have an estimated grade of PSA 5), then I submit at the "regular" service level, which currently costs $75. Since I estimate my item is worth more than $499, I cannot submit at a lower service level, such as the "bulk" level, which would only cost $19 per card. Allow me to observe that this is not a contingent fee schedule, at least not yet. In a moment, we'll dig into the details around potential variations, and perhaps there will be an opportunity to get there. Certainly if the fee schedule was: "The fee is X% of what it's worth", or alternatively, "We only get paid if we deliver XXX grade", then that would clearly be a contingent fee schedule. A quick perusal of the current fee schedule demonstrates to even the most casual observer that this is not the case here.
5) Allow me to get on my virtual soap box for a moment and expound on precisely what constitutes a contingent fee. A contingent fee exists in a situation where the service provider only gets paid for a certain outcome. Or where the fee rises and falls based on the outcomes delivered.
In this case, let's say that my valuation was based on my item grading at a PSA 5. If it only grades at a PSA 4, does PSA make less? Hell no. What about if it grades at PSA 3, 2, 1, or A? Still no change to the fees that PSA charges. If it were a truly contingent fee, then PSA would make less if my item grades lower. With many contingent fees, if the desired outcome is not achieved, then the service provider makes nothing. Certainly the lawyers among us will tell you that if they take on a case based on a contingent fee and then lose the case, then they make nothing. Not the case here.
I will grant you that in certain limited circumstances, PSA will not charge for their services. I've experienced this when my item did not meet a certain minimum size requirement. While this might minimally seem to meet the definition of a contingent fee, it seems to be a stretch to me, particularly because it's not something that occurs very often.
[Note to any haters that the minimum size finding was not because I was doctoring my cards. Either I pulled them from the pack cut this size from the factory, or I bought them raw from others, and PSA didn't like them.]
6) Let's examine the opposite case. Let's say that my item grades at PSA 6 instead of my original estimated PSA 5. (Side note: Like that would ever happen). Does PSA make more? Probably not in this case, since the next highest value level doesn't kick in until my item hits a value of $1,500. And even then, as I noted earlier, if it's close, perhaps valued at $1,600 or $1,700, then I've never seen them get cute with me and attempt to bump me up to the higher price.
It is true in this example that if my item were to be grade wildly higher than my original estimate, then I would experience an upcharge. So if my original estimate of a PSA 5 actually turned out to be a PSA 7 or 8, then I might be in a spot where I would end up with an upcharge as I bump up above the $1,500 limit at the "regular" service level, which would currently put me up at the "express" level of $150 for my card. Naturally, most of us would be wildly ecstatic if our item that we expected to grade at PSA 5 comes back at PSA 8.
7) I think there's room to argue here about this somewhat unlikely scenario and whether that constitutes a contingent fee. I grant you that this very specific and narrow fact pattern could seem like it's a contingent fee, simply because the fee to the service provider rises as the value of the item rises. However, I would submit that this outcome is not common, particularly these days where most grades from PSA seem to be coming in lower than expected. I also hasten to observe that the fee does not rise 1:1 as the value of the item rises. Typically in a contingent fee scenario, fees rise commensurate with the increase in added value. In this case, the value of my item could rise at least 50% to $1,500 with no change to the fee schedule. And arguably I could probably get away with it rising even more before PSA attempted to upcharge me. So while the value of my item has risen in a pretty dramatic fashion, as much as 50% (and possibly more), the fee to PSA is unchanged. Still doesn't sound like a contingent fee to me.
Moreover, I suspect that the vast majority of cases where there is an upcharge are not due to the item grading higher than expected. Rather, it is merely the result of the submitter attempting to squeak by at a lower service level. Let's go back to my example of my item being worth $1,000 if it grades at PSA 5. Let's say that I decide to get cute and submit it at the "bulk" level for $19, which has a declared value limit of $499. Maybe I'm just cheap. Or maybe I'm paranoid that my item won't really grade at PSA 5. So I push it a little. When it comes back and it's really a PSA 5, and PSA upcharges me, does that make it a contingent fee? I would argue that I'm merely paying the fee that I should have paid all along, but I tried to get away with paying less, and they caught me.
8) To reiterate, I agree with many/most/virtually all of the comments that highlight how the grading process is inherently flawed, subjective, and inevitably leads to disparate outcomes that drive us completely bananas as participants in this hobby. I'm just not convinced that contingent fees are quite the boogeyman that you assert.
9) If you want to disagree, then that's cool too. We can agree to disagree. That's part of the fun in an online chat board where we are free to express our opinions and debate the merits of any given viewpoint. But if I may be so aggressive as to beg your indulgence: please attempt to be a little more collegial in your disagreement. Even just a little would be peachy.