What is the point of the "Buyer's Premium"?

perezfan · #1 09-21-2022, 12:09 PM

For those who don't understand the BP.... How do you propose the auction house earn any income and have the ability to keep running? They aren't trying to "fool" anyone. The rules are clearly posted, and anyone with the ability to process information should be able to understand them.

The AH's ability to hire staff, pay internet fees and print catalogs is all contingent on the Buyers Premium. Perhaps those of you who are perplexed know of a better way for the AH to generate income and stay in business?

I guess this topic is destined to resurface at least once per year.

Exhibitman · #2 09-21-2022, 12:11 PM

Quote:

Originally Posted by perezfan

... anyone with the ability to process information should be able to understand them

And therein lies the rub. Math.

raulus · #3 09-21-2022, 12:11 PM

Quote:

Originally Posted by perezfan

For those who don't understand the BP.... How do you propose the auction house earn any income and have the ability to keep running? They aren't trying to "fool" anyone. The rules are clearly posted, and anyone with the ability to process information should be able to understand them.

The AH's ability to hire staff, pay internet fees and print catalogs is all contingent on the Buyers Premium. Perhaps those of you who are perplexed know of a better way for the AH to generate income and stay in business?

I guess this topic is destined to resurface at least once per year.

Certainly the AH could take it out of the consignor instead of taking it from the buyer. Our good friends at eBay do just that, and they seem to be staying in business in a reasonably successful fashion.

Peter_Spaeth · #4 09-21-2022, 12:16 PM

Quote:

Originally Posted by raulus

Certainly the AH could take it out of the consignor instead of taking it from the buyer. Our good friends at eBay do just that, and they seem to be staying in business in a reasonably successful fashion.

And ebay final bids don't include tax, do they?

raulus · #5 09-21-2022, 12:17 PM

Quote:

Originally Posted by Peter_Spaeth

And ebay final bids don't include tax, do they?

They do for those of us that live in Oregon.

Peter_Spaeth · #6 09-21-2022, 12:19 PM

Quote:

Originally Posted by raulus

They do for those of us that live in Oregon.

But for most one still has to do a calculation before bidding to know the true price.

raulus · #7 09-21-2022, 12:22 PM

Quote:

Originally Posted by Peter_Spaeth

But for most one still has to do a calculation before bidding to know the true price.

Agreed.

I think the big difference is that's common commercial practice. Most every vendor at every site quotes their prices before tax. You go to Walmart, Burger King, or Shoe Barn, and their prices are all before sales tax.

In the case of eBay, with eBay buyers theoretically being located just about anywhere in the world, quoting the complete price would be a challenge.

Flintboy · #8 09-21-2022, 12:32 PM

Straight money grab- nothing more, nothing less. If you explain it as anything else you probably own an auction house.

steve B · #9 09-22-2022, 09:18 AM

Quote:

Originally Posted by raulus

Agreed.

I think the big difference is that's common commercial practice. Most every vendor at every site quotes their prices before tax. You go to Walmart, Burger King, or Shoe Barn, and their prices are all before sales tax.

In the case of eBay, with eBay buyers theoretically being located just about anywhere in the world, quoting the complete price would be a challenge.

Here in Mass, including the tax as part of the sale price is not allowed. If the tax isn't calculated on the total sale, the store ends up over or under collecting the tax.

Lorewalker · #10 09-21-2022, 12:33 PM

Most AH charge 0% to consignors and in fact many give part of the BP to the consignors in an effort to bring collectors great material. That has become the hobby standard.

The AH needs to make money. They charge a fee at the end which is paid by buyers. Factor it in. If that concept is too hard for some to figure out maybe they should not be bidding. Nobody is paying more or being hoodwinked because of the fee.

If one compares the offerings on eBay auctions to those offered in a catalog type auction, there is no comparison. Fewer sellers are even doing the auction format. Since PWCC is gone there is next to nothing that gets listed in the auction format. So ya get what ya pay for. If ya like eBay better because the price you bid is essentially the price ya pay then shop there.

raulus · #11 09-21-2022, 12:38 PM

Quote:

Originally Posted by Lorewalker

Most AH charge 0% to consignors and in fact many give part of the BP to the consignors in an effort to bring collectors great material. That has become the hobby standard.

I must be consigning to the wrong auction houses. Or maybe they don't like my stuff. Because the offers I have gotten are inferior to this. I pay a listing fee, and they keep the BP.

HercDriver · #12 09-21-2022, 12:12 PM

When I go out to eat, I have to add 20% for the tip at the end. I don't feel like I'm being deceived in any way, I just know that's how the waitstaff makes their money. Same with the AH, it's just part of the "night out." I think I'm going to start calling it a "Buyer's Premium" when I go out for dinner, instead of a "tip."

raulus · #13 09-21-2022, 12:16 PM

Quote:

Originally Posted by HercDriver

When I go out to eat, I have to add 20% for the tip at the end. I don't feel like I'm being deceived in any way, I just know that's how the waitstaff makes their money. Same with the AH, it's just part of the "night out." I think I'm going to start calling it a "Buyer's Premium" when I go out for dinner, instead of a "tip."

I guess part of the question might also be how you feel about it when the airlines do it? Do you like buying at one price, and then having to pay to carry on your bag, select your seat, or check your bag?

How about when you go to the hotel nowhere close to a resort, and they charge you resort fees?

Certainly most of the time, these business practices drive people mad. I suspect that the psychological effect here is similar.

Orioles1954 · #14 09-21-2022, 01:11 PM

Quote:

Originally Posted by perezfan

For those who don't understand the BP.... How do you propose the auction house earn any income and have the ability to keep running? They aren't trying to "fool" anyone. The rules are clearly posted, and anyone with the ability to process information should be able to understand them.

The AH's ability to hire staff, pay internet fees and print catalogs is all contingent on the Buyers Premium. Perhaps those of you who are perplexed know of a better way for the AH to generate income and stay in business?

I guess this topic is destined to resurface at least once per year.

And countless other factors that all cost significant $$$. By the way, BP is pretty much universal and it tends to be much lesser than overseas. I participate in English record auctions and 30-35% is pretty much standard.

raulus · #15 09-21-2022, 01:22 PM

Quote:

Originally Posted by Orioles1954

And countless other factors that all cost significant $$$. By the way, BP is pretty much universal and it tends to be much lesser than overseas. I participate in English record auctions and 30-35% is pretty much standard.

I guess we should count our blessings to only get to pay 20%!

Stupe the Second Sacker · #16 09-22-2022, 10:44 AM

Quote:

Originally Posted by perezfan

For those who don't understand the BP.... How do you propose the auction house earn any income and have the ability to keep running? They aren't trying to "fool" anyone. The rules are clearly posted, and anyone with the ability to process information should be able to understand them.

The usual red herring when this topic comes up. "If you don't like the BP, you're too stupid to understand it". Do these same people also think the consignor is too stupid to realize that they're agreeing to have their bids suppressed?

Whether or not we're all stupid, I also repeatedly read this defense, "the AHs don't charge the consignor a commission so how are they supposed to make money?". For all the times this gets repeated, you ever notice that it never gets confirmed? I highly doubt the majority of consignors are gifted zero commissions. If that's wrong, let's see some data.

And as others have pointed out (and it typically gets ignored) ebay with more overhead than any of these auctions houses, manages to keep the lights on just fine.

sb1 · #17 09-22-2022, 11:40 AM

Quote:

Originally Posted by Stupe the Second Sacker

The usual red herring when this topic comes up. "If you don't like the BP, you're too stupid to understand it". Do these same people also think the consignor is too stupid to realize that they're agreeing to have their bids suppressed?

Whether or not we're all stupid, I also repeatedly read this defense, "the AHs don't charge the consignor a commission so how are they supposed to make money?". For all the times this gets repeated, you ever notice that it never gets confirmed? I highly doubt the majority of consignors are gifted zero commissions. If that's wrong, let's see some data.

And as others have pointed out (and it typically gets ignored) ebay with more overhead than any of these auctions houses, manages to keep the lights on just fine.

Forty-four auctions over the past fourteen years and I have never charged a sellers fee. And, in consigning over twenty-five years I have never paid a consignors fee, except for one time years ago when I paid 5% to a small AH. And further I get points back on nearly all consignments that I give to other AH's. It's not an urban myth, it's reality.

raulus · #18 09-22-2022, 11:47 AM

Quote:

Originally Posted by sb1

Forty-four auctions over the past fourteen years and I have never charged a sellers fee. And, in consigning over twenty-five years I have never paid a consignors fee, except for one time years ago when I paid 5% to a small AH. And further I get points back on nearly all consignments that I give to other AH's. It's not an urban myth, it's reality.

That's some good data.

nolemmings · #19 09-22-2022, 12:35 PM

Quote:

Originally Posted by sb1

Forty-four auctions over the past fourteen years and I have never charged a sellers fee. And, in consigning over twenty-five years I have never paid a consignors fee, except for one time years ago when I paid 5% to a small AH. And further I get points back on nearly all consignments that I give to other AH's. It's not an urban myth, it's reality.

I've only consigned a few times over the years but have never been charged a seller's/consignor's fee, dealing with several different auction houses. It has never even been a subject of negotiation. BTW, my items are modest or low valued cards, hardly anything to get the AH's excited.

I'll bite my tongue a little on this notion of calling people stupid, as a few have suggested, but I must express some wonderment. Many of these auction items go for large dollars to people who I would assume can afford it and who I also assume have incomes or assets that relate to some level of intelligence or sophistication. The most I can fathom is misunderstanding the BP rules or getting caught up in the frenzy ONCE, and that's giving the benefit of the doubt. To suggest that the auction house is engaging in some sort of "trickeration" or subliminal deceptive practice just to line its pockets is stu..., um, far fetched, IMO.

That being said, it would be interesting to see one or more houses advertise and conduct an auction with no BP and then compare results. Of course, the consignor would have to agree to a seller's fee and have the opportunity to opt out or wait until the next auction, and the AH should advertise prominently and often that there is no BP so the "regulars" won't get confused. Any takers?

bobbyw8469 · #20 09-22-2022, 12:38 PM

Lucky you. I have NEVER not been charged a consignment fee. I don't think my stuff is garbage, but maybe the auction houses do?

raulus · #21 09-22-2022, 12:42 PM

Quote:

Originally Posted by bobbyw8469

Lucky you. I have NEVER not been charged a consignment fee. I don't think my stuff is garbage, but maybe the auction houses do?

I'm starting to have a dawning realization that maybe you and I are just taking our stuff to the AHs that charge consignment fees, whereas other posters consign with AHs that don't charge consignment fees.

BobbyStrawberry · #22 09-23-2022, 10:49 AM

Quote:

Originally Posted by nolemmings

Many of these auction items go for large dollars to people who I would assume can afford it and who I also assume have incomes or assets that relate to some level of intelligence or sophistication.

Say what now...?

parkplace33 · #23 09-22-2022, 12:50 PM

Quote:

Originally Posted by sb1

Forty-four auctions over the past fourteen years and I have never charged a sellers fee. And, in consigning over twenty-five years I have never paid a consignors fee, except for one time years ago when I paid 5% to a small AH. And further I get points back on nearly all consignments that I give to other AH's. It's not an urban myth, it's reality.

Thanks, appreciate the info.

For those consigning and paying consigning fees, have you asked for it to be waived? Or maybe go to a different AH?

raulus · #24 09-22-2022, 12:54 PM

Quote:

Originally Posted by parkplace33

Thanks, appreciate the info.

For those consigning and paying consigning fees, have you asked for it to be waived? Or maybe go to a different AH?

"This is the best that we can do"...is the response I always get when they quote me consignment fees and I ask to pay less.

Admittedly, it's been a few years since I last consigned anything. But it sounds like I'll need to do some shopping around the next time I'm ready to take something to auction.

Snapolit1 · #25 09-22-2022, 02:18 PM

Quote:

Originally Posted by raulus

"This is the best that we can do"...is the response I always get when they quote me consignment fees and I ask to pay less.

Admittedly, it's been a few years since I last consigned anything. But it sounds like I'll need to do some shopping around the next time I'm ready to take something to auction.

Someone said that to me once and we never spoke again.

Lorewalker · #26 09-22-2022, 02:43 PM

Quote:

Originally Posted by raulus

"This is the best that we can do"...is the response I always get when they quote me consignment fees and I ask to pay less.

Admittedly, it's been a few years since I last consigned anything. But it sounds like I'll need to do some shopping around the next time I'm ready to take something to auction.

As I replied to you yesterday, I have no idea what you are offering as a consignment or to which houses but but only 1 time I was told there would be a fee and I knew that house was not for me. I took what ended up being a 75K consignment elsewhere.

raulus · #27 09-22-2022, 02:56 PM

Quote:

Originally Posted by Lorewalker

As I replied to you yesterday, I have no idea what you are offering as a consignment or to which houses but but only 1 time I was told there would be a fee and I knew that house was not for me. I took what ended up being a 75K consignment elsewhere.

Awesome. I haven�t ever consigned anything that valuable before, so maybe that�s my issue.

Orioles1954 · #28 09-22-2022, 12:55 PM

So no one wants to pay a consignment fee or buyer's premium. Seems like a winning business formula

raulus · #29 09-22-2022, 01:03 PM

Quote:

Originally Posted by Orioles1954

So no one wants to pay a consignment fee or buyer's premium. Seems like a winning business formula

If you could guarantee that my item will double the previous high, that would be great.

And oh, BTW, I�d also like to borrow 100% up-front�

G1911 · #30 09-22-2022, 01:34 PM

Unless I�ve misread, I don�t think anyone is objecting to the auction house getting their cut. The question is to the formatting of it, splitting your actual bid into two parts to try and mask or lose focus on one of those parts. The BP isn�t even the auction houses cut, as many here are talking about, a lot of times part of it is given to the seller too.

Auction house can charge a consignment fee or sellers premium, a buyers premium, and the final bid, or it could simply take X% of the final bid. If nobody ever forgets about any of the fees or they are not a psychological trick designed around how people think, everyone would raise their bid accordingly and the auction house would make the some amount of money with a much simpler and direct system for everyone. The only reason not to use a simpler system with the same $$$ at the end of it, is psychology and what people respond to.

They don�t do this because it is a physiological trick that works. Consigners don�t want to hear they have to give up 25% of the hammer price or whatever it is, having separate fees looks better even if it�s the same dollars at the end of the day. And buyers have an easier time raising those bids when the BP is kept separate, not having to really input their actual total spend. It works.

To recognize it works this way and why is not to say auction houses should work as a charity and not make any money.

perezfan · #31 09-22-2022, 01:40 PM

Quote:

Originally Posted by Stupe the Second Sacker

The usual red herring when this topic comes up. "If you don't like the BP, you're too stupid to understand it". Do these same people also think the consignor is too stupid to realize that they're agreeing to have their bids suppressed?

Whether or not we're all stupid, I also repeatedly read this defense, "the AHs don't charge the consignor a commission so how are they supposed to make money?". For all the times this gets repeated, you ever notice that it never gets confirmed? I highly doubt the majority of consignors are gifted zero commissions. If that's wrong, let's see some data.

And as others have pointed out (and it typically gets ignored) ebay with more overhead than any of these auctions houses, manages to keep the lights on just fine.

I was responding to the original post, which read as follows�

�So I get it, you have to think about the Buyer's Premium and take it into account and bid accordingly. But what is the actual point? The only possible motive I can come up with is that's a psychological tactic by the auction house to make you feel like you're paying less than you actually are, or even worse, hoping for ignorance on the part of the buyer.

Sorry if this has been discussed.�

There is no �trickery�� sorry to disappoint all of you conspiracy types. I suppose if you ran a business such as an auction house, you�d do it as a courtesy with zero fees. Very generous� Good for you!

But how do you propose paying the employees, the server host, the printing company, the photographer, the description writers, the shipping/packaging personnel, the consignment director, and the social media specialist? I guess they�ll all work for free as well. Got it.

Orioles1954 · #32 09-22-2022, 01:59 PM

Quote:

Originally Posted by perezfan

But how do you propose paying the employees, the server host, the printing company, the photographer, the description writers, the shipping/packaging personnel, the consignment director, and the social media specialist? I guess they’ll all work for free as well. Got it.

And that's just the half of it!

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