Heritage Buyers Premium

[glchen]

The thing about everyone saying that they'll just adjust their max bids to take into account the extra 2% BP is that pretty much every time folks bid, they just bid the next minimum bid increment. Nobody is adjusting their next bid to be ~2% less. Therefore, in most cases, you will be paying an extra 2% for your winning bids.

[parkplace33]

25 and even 30 percent aren’t far behind. Man, auction houses have all the power these days.

[Rhotchkiss]

Originally Posted by parkplace33

25 and even 30 percent aren’t far behind. Man, auction houses have all the power these days.

Frankly, I think its quite the opposite -- consignors have the power. There are many options for selling stuff - privately, a broker, ebay, social media, and many auction houses to choose from. Its the competition to get consignments that likely has driven Heritage's BP from 20% to 22%.

Once upon a time, auction houses charged the consignor a fee, say 10%, and charged a 20% buyers premium. Today, only an ass clown pays a consignor fee and almost all consignors of anything reasonably material get a portion of the Buyers premium. And, it has become a race to the bottom on how much BP an AH gives up-- what used to be -5% is now -7% and -8% is now -10%; if Heritage wont give me X% of the BP on a $100k item, I can go to one of a half dozen of equally reputable and successful AH's and get that X%.

Therefore, today, AHs are making a smaller percentage of the final all-in price than in then past. The saving grace, however, is that they are selling more stuff and the hammer prices on stuff sold is 2x-4x++ more than it was "back in the day". Thus, AH's are getting a smaller portion of a much larger pie, which portion ends up being more than the larger portion of their smaller, historical pie, but only because prices are much higher.

How will this affect things? I doubt it will have any affect. As a buyer, I wont let 2% impact my decision to buy something. As a consignor, I will now expect more of the BP than before. So if prices don't change and I get more of the BP, this change could actually help consignors who have the leverage to negotiate some of the BP.

[parkplace33]

Originally Posted by Rhotchkiss

Frankly, I think its quite the opposite -- consignors have the power. There are many options for selling stuff - privately, a broker, ebay, social media, and many auction houses to choose from. Its the competition to get consignments that likely has driven Heritage's BP from 20% to 22%.

Once upon a time, auction houses charged the consignor a fee, say 10%, and charged a 20% buyers premium. Today, only an ass clown pays a consignor fee and almost all consignors of anything reasonably material get a portion of the Buyers premium. And, it has become a race to the bottom on how much BP an AH gives up-- what used to be -5% is now -7% and -8% is now -10%; if Heritage wont give me X% of the BP on a $100k item, I can go to one of a half dozen of equally reputable and successful AH's and get that X%.

Therefore, today, AHs are making a smaller percentage of the final all-in price than in then past. The saving grace, however, is that they are selling more stuff and the hammer prices on stuff sold is 2x-4x++ more than it was "back in the day". Thus, AH's are getting a smaller portion of a much larger pie, which portion ends up being more than the larger portion of their smaller, historical pie, but only because prices are much higher.

How will this affect things? I doubt it will have any affect. As a buyer, I wont let 2% impact my decision to buy something. As a consignor, I will now expect more of the BP than before. So if prices don't change and I get more of the BP, this change could actually help consignors who have the leverage to negotiate some of the BP.

It will only be time until higher bps come out. You say consignors hold the power, yet I think ahs hold more power these days. And they will want to make more money, so as long as bidders don’t mind, keep upping the bp.

Trust me, 25 percent isn’t that far in the future.

[Exhibitman]

Originally Posted by glchen

The thing about everyone saying that they'll just adjust their max bids to take into account the extra 2% BP is that pretty much every time folks bid, they just bid the next minimum bid increment. Nobody is adjusting their next bid to be ~2% less. Therefore, in most cases, you will be paying an extra 2% for your winning bids.

Good point; I think what people mean is that they will not make that next bid. Me, personally, I know that is BS. If I really want it for the personal collection, 2% is not a meaningful deterrent, especially at the relatively modest spending levels where I lurk. An extra $50 in context, BFD.