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

[luciobar1980]

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.

[Peter_Spaeth]

It has been discussed countless times over the years. The AH has to make money somehow, no?

[G1911]

Originally Posted by luciobar1980

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.
.

That’s exactly what it is, and why it’s kept separate by most of them. Otherwise it would just be your bid and they take X% as their commission as arranged with the seller. It’s not hard to calculate in and lower your bid accordingly, but surely many people don’t and they’ve learned more money is made this way than the other, straightforward way.

[icurnmedic]

Originally Posted by G1911

That’s exactly what it is, and why it’s kept separate by most of them.

That's why I prefer..., gulp, eBay auctions overall. I like to just bid and not worry about calculating the BP. I know it is "easy to calculate" but on higher priced items particularly when the bid increment jumps , it can really add up quick if you don't do your diligence .

[Fballguy]

Originally Posted by G1911

That’s exactly what it is, and why it’s kept separate by most of them. Otherwise it would just be your bid and they take X% as their commission as arranged with the seller. It’s not hard to calculate in and lower your bid accordingly, but surely many people don’t and they’ve learned more money is made this way than the other, straightforward way.

A mechanism instilled to lower bids is so counterintuitive to the auction process and yet it's accepted without question.

[G1911]

Originally Posted by Fballguy

A mechanism instilled to lower bids is so counterintuitive to the auction process and yet it's accepted without question.

And on the occasions where it is questioned, it causes some offense, evidently.

[bobbyw8469]

I think one could make an argument that it's not actually a deceptive tactic if they indeed charged 20% of the hammer price for sold items. But that's not actually the case. Nobody charges 20%. It's usually between 10 to 15% and the consignor gets some portion of the BP back. It's pretty difficult to argue that it is not intended to deceive with that being the case.

No?!?!?!?!? Nobody does?? I wish you would let some of the auctions I deal with realize this.

[darwinbulldog]

Any answer the explains the practice as a requirement for a company to turn a profit is just obfuscating the fact that the practice is specific to auction houses. I don't have to pay a buyer's premium at the grocery store. The amount that buyers pay and that consignors receive and that the house nets doesn't change in the presence of a buyer's premium relative to what it would be without one unless some bidders are failing to properly calculate how much they're committing to paying when they place their bids. The real answer I guess is just a quirk of history. There's no reason to expect that if auctions were invented today that the practice of dividing the price between a bid and a premium is something that would occur to any business.

[Exhibitman]

I got charged a commission once, early on, when I did not know the ins and outs of consignment. Never again in over 30 years.

There are a few AHs that persist in seeking a commission on top of the BP. Huggins & Scott, Hake's and Goldin all requested commissions from me when I tried to consign with them and would not back off. Nancy Reagan'ed that s**t: just said "no" and moved on to the next AH that gave me 100% of the hammer price.

This thing of ours is different than other hobbies, though. Entertainment AHs routinely demand commissions and don't back off them. I even had that experience with Heritage. I've sold with them for zero commission on sports stuff but have had commission demands for entertainment lots that I could not negotiate away. Frankly, I would rather eBay the items than hand an AH 30% or more of the sale price.

[Pat R]

Originally Posted by darwinbulldog

Any answer the explains the practice as a requirement for a company to turn a profit is just obfuscating the fact that the practice is specific to auction houses. I don't have to pay a buyer's premium at the grocery store. The amount that buyers pay and that consignors receive and that the house nets doesn't change in the presence of a buyer's premium relative to what it would be without one unless some bidders are failing to properly calculate how much they're committing to paying when they place their bids. The real answer I guess is just a quirk of history. There's no reason to expect that if auctions were invented today that the practice of dividing the price between a bid and a premium is something that would occur to any business.

There must be a better example than that, the items are already at a set price and they're not selling them for someone else.

[x2drich2000]

From a consignor prospective, would you rather pay 0% of the sale price or 20% of the sale price? Which do you think is going to convince someone to consign an item. AH's still need money to eat either way you slice it.

[Lorewalker]

Personally I really do not care what the house charges me as a buyer or what they are getting, if anything from the consignor. When I am bidding I always consider my bid plus the buyer's premium and sales tax as the cost to me.

Not sure why this is so hard for so many people to grasp.

[Peter_Spaeth]

It's an accounting device. It isn't fooling anyone.

[parkplace33]

It's a moneymaker, no doubt about it. Actually, kinda shocked it hasn't gone up more for major auction houses.

[Exhibitman]

It is just a subterfuge but it works because your average American does not do arithmetic very well.

[frankbmd]

One well-respected auction house used to have a default shipping charge that wasn't changed to the actual shipping charge until hours after the auction closed. Invoices were available for review before the shipping charges were changed.

The default shipping charge for all items was $1000.00. Yikes. That will open your eyes in the middle of the night at 4AM when the auction closed.

My only experience with this practice involved two slabbed cards. The shipping charges were reduced later the same day from $1000.00 to $20.00.

[Peter_Spaeth]

So to be clear, some of you guys are accusing Board members like Scott B, Scott R, Al C and Lee B of trying to deceive buyers into overpaying?

[toppcat]

I just multiply my top bid by 1.3 to see the true cost, or close to it. Accounts for BP, tax and shipping usually doing that.

My bigger issue is eBay has almost nothing I need most days.

[Lorewalker]

For those who cannot seem to keep the BP in mind when bidding, Heritage does the work for you. Each bid you place shows what you pay or will pay with the BP included.

[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.

[BobC]

Originally Posted by luciobar1980

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.

I think you hit the nail on the head. It is sort of a psychological selling trick to make buyers feel like they aren't paying as much as they really are, so they bid a little higher in the heat of the moment. Exact same concept when you go into stores and see items priced at $1.99, $4.95, or $9.99. Why don't they simply round the prices up $0.01 or so to an even dollar amount? They do it so the buyer feels like they are somehow paying less, even though you can see what it costs right on the price tag.

And they say we humans are supposed to be smarter than all the other creatures on Earth. Really makes you wonder some times. LOL

[Fullerton]

The buyer's premium does seem like a psychological "trick", but it is based more on enabling more clear cut record keeping of actual sale price of an item regardless of auction house and its fees. Historical auction records are relied on for appraisals and insurance.

[raulus]

Originally Posted by Fullerton

The buyer's premium does seem like a psychological "trick", but it is based more on enabling more clear cut record keeping of actual sale price of an item regardless of auction house and its fees. Historical auction records are relied on for appraisals and insurance.

Those are some interesting concepts that I hadn't considered.

I figured it was as much about tradition as anything.

[Ray Van]

Originally Posted by Fullerton

The buyer's premium does seem like a psychological "trick", but it is based more on enabling more clear cut record keeping of actual sale price of an item regardless of auction house and its fees. Historical auction records are relied on for appraisals and insurance.

Maybe I misunderstand but I take the opposite view. At best is doesn't make a difference and at worst it actually confuses the issue rather than making it clear cut. Appraisals are based on fair market value and include buyer's premiums. So if no auction houses charged a BP, then we'd have an even playing field. Plus I'm not sure if all AH's post completed prices including BP, so an appraiser might be comparing apples and oranges as they research historical prices to determine FMV.

[brianp-beme]

When I win an auction lot I never pay the Buyer's Premium, just the winning amount and shipping. Surprisingly, and so far without fail, the auction house sends back my money and never ships the card(s). And perhaps coincidentally, my bids are not accepted in future auctions either.

Brian

[brianp-beme]

But seriously, I remember reading an article by Lew Lipset in his Old Judge newsletter from the mid to late 1980's (?) detailing the shift of auction houses from charging a larger seller's commission to charging a buyer's premium, which evidently was not standard for auction houses at the time. I think back in the day auction places were traditionally dealer/collectors that were auctioning their accumulations, and therefore a seller's premium obviously made no sense, but would of course charge you for the privilege of consigning cards. I remember the article identified the shift to following the example of art auction houses, who had established the practice of a charging a Buyer's Premium with less emphasis on Seller's Premium so as to attract the higher value consignments.

I guess it was just a natural progression for sports auction houses to follow this lead, as cards and memorabilia became more of a commodity.

Brian

[brianp-beme]

Originally Posted by brianp-beme

When I win an auction lot I never pay the Buyer's Premium, just the winning amount and shipping. Surprisingly, and so far without fail, the auction house sends back my money and never ships the card(s). And perhaps coincidentally, my bids are not accepted in future auctions either.

Brian

This post was the dumbest post in this dumb thread, in a sneakily dumb smart way.

Brian

[Casey2296]

There's been some great collections built on good whiskey and poor decisions on auction night...

[Golfcollector]

Originally Posted by Casey2296

There's been some great collections built on good whiskey and poor decisions on auction night...

100% Truth!

[frankbmd]

Originally Posted by Casey2296

There's been some great collections built on good whiskey and poor decisions on auction night...

There's been some great collections built on good whiskey and pour decisions on auction night...


Correcting your typo, Phil

[Casey2296]

Originally Posted by frankbmd

There's been some great collections built on good whiskey and pour decisions on auction night...


Correcting your typo, Phil

Baddum Tiss...

[Leon]

Originally Posted by frankbmd

There's been some great collections built on good whiskey and pour decisions on auction night...


Correcting your typo, Phil

There is been? .....
.

[frankbmd]

Originally Posted by Leon

There is been? .....
.

That one is on Casey (Phil) as well Leon. My post was a simple copy and paste with a single letter change.

Good pickup though, y’all are getting better. However when you changed yawl, you changed it to ya’ll not y’all.

Keep up the good work.

[Casey2296]

Originally Posted by frankbmd

That one is on Casey (Phil) as well Leon. My post was a simple copy and paste with a single letter change.

Good pickup though, y’all are getting better. However when you changed yawl, you changed it to ya’ll not y’all.

Keep up the good work.

My Cousin owns an apostrophe factory in Ohio and sends me a big ol' box o' 'em every Christmas so I have to use 'em up whene'er I can.

[tiger8mush]

Originally Posted by Leon

There is been? .....
.

or
"There has been"