Buyers premium question

[Peter_Spaeth]

Originally Posted by mechanicalman

It's hard to imagine a business model that's predicated primarily on the forgetfulness or irrationality of presumably savvy buyers. Perhaps another explanation for the existence of the BP is that is divides the huge margin that many AHs work off so the burden is shared by both the buyers and the sellers. When looking recently to consign with a couple of the major AHs, I was quoted 15% seller's commission on top of 20% BP. Yes, the commission was negotiable based on total consignment value, and yes, I realize that not all AHs have a seller's commission, but the ones about whom we create threads to show off our winnings do. It's crazy; I don't think any person here would feel good paying any entity a 35% margin for giving us access to cards, but it's happening. I guess as long as we keep getting pretty catalogs, it will continue.

The burden is only on the consignor though, not the buyer. Assuming rational buyers and that buyers' premiums depress hammer price, it's irrelevant to the buyer who just factors it into his total price, and the effect is on the consignor who realizes a lower price.