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

[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.
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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.

[G1911]

Originally Posted by Pat R

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.

It's not an equivalent example, but I think the claim that it is specific to auction houses is generally true. When I buy a firearm consigned to my dealer by another private owner, I don't pay the dealer a buyers premium because it is a consignment item, as a equivalent example. I've never encountered a 10-20% premium for just doing business in any other sphere of commerce; though I am probably just not aware of something that does also, in fact, follow this practice too.

[sb1]

Art, Real Estate, Cars, Horses, Handbags, Watches, Coins etc... Just a few of the auctions where you will pay a buyers premium and usually a sellers premium as well. 25% on each side is the norm. Sports auctions are usually much lower bp's and little to no sellers premium.

[Fballguy]

Originally Posted by Pat R

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.

Ebay is a better example. Inside The Park Collectibles is another.