auction fees and the damage done

[Fballguy]

Originally Posted by x2drich2000

and without a buyers premium, how would you suggest the AH make money for the service they provide?

They need 30+% of every sale to keep the lights on?

[Casey2296]

Originally Posted by Fballguy

They need 30+% of every sale to keep the lights on?

Nobody's getting rich at 20% gross margin before expenses.

[cardsagain74]

Originally Posted by Casey2296

Nobody's getting rich at 20% gross margin before expenses.

This I doubt. In today's virtual world, overhead and other costs aren't nearly the issue that they used to be. And there's also the "service and handling" that goes toward expenses.

So I'd guess that the big AHs are doing quite, quite well lately. Especially with as many auctions as they run (and how much the most valuable lots are worth nowadays). 20% of those numbers is an awful high figure to start out with.

[Casey2296]

Originally Posted by cardsagain74

This I doubt. In today's virtual world, overhead and other costs aren't nearly the issue that they used to be. And there's also the "service and handling" that goes toward expenses.

So I'd guess that the big AHs are doing quite, quite well lately. Especially with as many auctions as they run (and how much the most valuable lots are worth nowadays). 20% of those numbers is an awful high figure to start out with.

I should have prefaced my comment to not include the big AH's like Heritage that auctions everything under the sun. My comment was more for the medium to smaller auction houses. I see how hard these guys work every auction, I also know that 20% margin before expenses in any business is pretty skinny, and they don't always make 20% on the premier offerings. There are AH owners on this sub smarter than me so maybe they can comment on the economics.

[gonefishin]

Regarding auction houses, don't forget the seller also pays a 10-20% fee for the AH to sell the item. Let's say for example an item sells for $100. The AH may get 25% from the buyer and 20% from the seller. Hmmm, high school math tells me that's about 45%. Also, they never owned the item but they did facilitate in getting the item sold; advertising, packaging, shipping, collecting the money, etc. etc.

Auction houses do provide a needed service in a lot of respects that a seller could never accomplish on their own. They also deserve to be compensated for what they provide. I would think the market would determine what type of commissions they receive, but I thought the same thing about grading companies.

Another thought regarding auction houses, don't think just because a large auction house is selling your item you will get a much higher price than selling it on your own. That's not necessarily true. I've sold a few items through an auction house, not a lot but a few. I was very pleased in that once I turned it in, I was done. Everything else was taken care of. I wasn't real thrilled with the prices they sold for.

Just imagine if a real estate agent received that kind of money from selling a house! Sign me up.

[Peter_Spaeth]

Originally Posted by gonefishin

Regarding auction houses, don't forget the seller also pays a 10-20% fee for the AH to sell the item. Let's say for example an item sells for $100. The AH may get 25% from the buyer and 20% from the seller. Hmmm, high school math tells me that's about 45%. Also, they never owned the item but they did facilitate in getting the item sold; advertising, packaging, shipping, collecting the money, etc. etc.

Auction houses do provide a needed service in a lot of respects that a seller could never accomplish on their own. They also deserve to be compensated for what they provide. I would think the market would determine what type of commissions they receive, but I thought the same thing about grading companies.

Another thought regarding auction houses, don't think just because a large auction house is selling your item you will get a much higher price than selling it on your own. That's not necessarily true. I've sold a few items through an auction house, not a lot but a few. I was very pleased in that once I turned it in, I was done. Everything else was taken care of. I wasn't real thrilled with the prices they sold for.

Just imagine if a real estate agent received that kind of money from selling a house! Sign me up.

IF a seller is paying a fee at this point in the history of the world to an auction house that charges a BP, they're with the wrong auction house. No matter how many times we go through this, we have to go through it again apparently.

[Fballguy]

Originally Posted by Peter_Spaeth

IF a seller is paying a fee at this point in the history of the world to an auction house that charges a BP, they're with the wrong auction house. No matter how many times we go through this, we have to go through it again apparently.

What are the right ones?

[Aquarian Sports Cards]

Originally Posted by Casey2296

I should have prefaced my comment to not include the big AH's like Heritage that auctions everything under the sun. My comment was more for the medium to smaller auction houses. I see how hard these guys work every auction, I also know that 20% margin before expenses in any business is pretty skinny, and they don't always make 20% on the premier offerings. There are AH owners on this sub smarter than me so maybe they can comment on the economics.

Our average Gross margin is 28% that's BP and commission (which isn't fixed) combined. I'm not starving, but I'm not driving a Ferrari either.

That 28% -

has to cover rent and utilities, salaries, advertising, the auction software costs, travel and show fees, etc.

Yes if your average sale is making millions 28% is killing it. In another thread someone mentioned Real Estate Agents and Car Dealers as companies that operate on thinner margins, but what is their average transaction? Our average transaction is a little over $100 and that $30 we get out of that has to go a long way in a lot of directions!

[Orioles1954]

If you think BPs are high in the states then try doing business overseas. The record auctions I participate in commonly run anywhere from 27-30%!

[Fballguy]

Originally Posted by cardsagain74

This I doubt. In today's virtual world, overhead and other costs aren't nearly the issue that they used to be. And there's also the "service and handling" that goes toward expenses.

So I'd guess that the big AHs are doing quite, quite well lately. Especially with as many auctions as they run (and how much the most valuable lots are worth nowadays). 20% of those numbers is an awful high figure to start out with.

Ebay has 11,000 employees and can somehow turn a profit without a buyer's premium. Heritage has what? 500?

[Aquarian Sports Cards]

Originally Posted by casey2296

nobody's getting rich at 20% gross margin before expenses.

thank you!

[Snapolit1]

It would be nice next time I ordered a steak at a fancy restaurant if there was a button I could push that told me how much it REALLY costs. Price on the menu is bullshit. There is a tip and tax. Sometimes even a tip for the valet parking guy. How these guy get away with such highway robbery is beyond me. Price on the menu don't mean anything.