Recently, I have been getting several questions about our variable buyer's premium and how it nets more money for consignors. If 3 people had that question in the past couple of days, more probably do as well.
Regarding the variable buyer's premium (or vig)...
If you are like me, you calculate the total amount you are willing to bid on an item (including the vig). Let's say that someone was willing to spend $15k on a particular lot. With an auction house that had a 20% vig, they would bid $12,500 + 20% = $15,000. The consignor would net $12,500.
With an auction house that has a lower bidding increment such as 15% at that level, the bidder could bid $13,000 + 15% = $14,950 and the consignor would net $13,000. In other words, the consignor gets a larger percentage of the total dollars being spent on the item. (In this example, the consignor nets an additional $500 even with the bidder writing a slightly smaller check.)
In the drop down menu for bidding, we list not only the hammer, but also show the vig for that level and the total amount of the bid. I have personally been told by a bidder that he went to the next bidding increment higher than what he was planning simply because he saw that the vig went down... giving him more bang for the buck at that bidding increment. In other words, the variable vig not only nets a higher percentage for the consignor, but it also has been shown to encourage stronger bidding too.
In addition to our interest free cash advances (where you name the amount), we feel that the variable buyer's premium is a win-win. Hopefully, this provides additional insight into the rationale behind our variable buyer's premium structure (which drops down to as low as 12.5%).
Brian Terjung
(844) 2-BID-2-WIN (844)-224-3294
http://www.BST-auctions.com