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

[raulus]

Originally Posted by Peter_Spaeth

Fine, what's your basis for suspecting what other people think, if you yourself don't think that way?

Never said I didn't think that way. I suspect that I myself at times feel better about bidding $100 (plus 20%) than bidding $120, even though they're the same thing.

[Peter_Spaeth]

Originally Posted by raulus

Never said I didn't think that way. I suspect that I myself at times feel better about bidding $100 (plus 20%) than bidding $120, even though they're the same thing.

But if you know it's the same thing, why on earth would you feel better about it, I really don't follow you.

[raulus]

Originally Posted by Peter_Spaeth

But if you know it's the same thing, why on earth would you feel better about it, I really don't follow you.

It's all in the psychology of being a human. Smaller numbers feel less expensive than bigger numbers, even though they're the same amount in the end.

As mentioned by others earlier, it's no different than why retailers charge $0.99 instead of a dollar. It feels like it's less psychologically, even though we all know that it's really just $1.00.

And no different than why the gas station adds $0.009 to the price of your gas by sneaking it in there at the end of the price with a small 9 that is 3 decimal places out, rather than just rounding up to a full penny.

[steve B]

Originally Posted by raulus

It's all in the psychology of being a human. Smaller numbers feel less expensive than bigger numbers, even though they're the same amount in the end.

As mentioned by others earlier, it's no different than why retailers charge $0.99 instead of a dollar. It feels like it's less psychologically, even though we all know that it's really just $1.00.

And no different than why the gas station adds $0.009 to the price of your gas by sneaking it in there at the end of the price with a small 9 that is 3 decimal places out, rather than just rounding up to a full penny.

From what I've been told, there's also an odd thing where people associate an odd number with a bargain. Supposedly a test was done with identical items placed next to each other. One marked 99 cents, the other marked either 98 or 96 cents. The 99 cent ones always sold out first.

[raulus]

Originally Posted by steve B

From what I've been told, there's also an odd thing where people associate an odd number with a bargain. Supposedly a test was done with identical items placed next to each other. One marked 99 cents, the other marked either 98 or 96 cents. The 99 cent ones always sold out first.

Awesome. Embrace the illogic!

[raulus]

Originally Posted by Peter_Spaeth

But if you know it's the same thing, why on earth would you feel better about it, I really don't follow you.

It's also okay to admit that as humans, we're sometimes irrational. I know it's uncomfortable to admit to it, but it's a feature, not a bug.

[Peter_Spaeth]

OK. I guess for whatever reason I just don't think that way, to me a bid is just a number that generates another number.

[Leon]

Originally Posted by Peter_Spaeth

OK. I guess for whatever reason I just don't think that way, to me a bid is just a number that generates another number.

Whenever I bid I think of the total number, with tax and shipping, I am paying. In most of the big auctions I just multiply by 1. 28.5 and I get my item cost if I win. I never only think of my actual bid as what I am paying ... I might have done that decades ago, erroneously, but not anymore...
.

[MikeGarcia]

[G1911]

It is easer, mentally, to divide a separate fee as 'the cost of doing business' and not really calculate it as part of the cost you are paying for X item. Basically every functioning business knows this. There is a reason my LCS does not raise their price 10.25% on every item, and then put a sign on the door that sales tax is included in the listed price. Separating it as much as possible makes it easier for people to not have to think about, or if they do, to account it differently, even if it's not really rational to do so. I would imagine, though do not know how to prove, this effect is magnified when you've got a minute or two to decide whether to go another bid up. I also suspect, based on the surprisingly large number of jokes in the hobby about drunk bidding, that many are not exactly thinking clearly while inputting their bids on auction night .

Sometimes, I wish man lived to the Aristotelian. For good and for bad, we simply do not. While I don't have a whole lot of personal sympathy for people who don't read the T&C's they signed up for, it does not change what the auction house is doing and why this complication exists in the form that it does. It's a psychological tactic to make a larger number of buyers mentally divorce the fee from their bid, and also to their consignors to not seem like they are giving up X% of the bid, by adding this additional layer. There is a reason this is the norm, and it isn't random chance.

[Ray Van]

I find it interesting that some people were so quick to run to the defense of auction houses, perceiving some sort of accusation on the part of the OP which in fact wasn't there at all. The OP simply asked a logical question that many of us have asked ourselves, and even posited the rationale for it.

I agree the practice seems to be more on the psychological side than anything. Many will not factor the buyer's premium into the price we pay, then accept it if we are the high bidder. Doesn't make it ideal, but we accept it. And since most auction houses charge it, no one is going to drop it. Plus they make more money that way.

Hypothetically asking "how would AH's make money otherwise" is missing the point. Most charge consignment fees so they already make money there. They could up the consignment fees to offset dropping the buyer's premium but that would be bad for business.

I see a parallel to Las Vegas hotels charging an additional $50 a night in "resort fees" (on top of the room rate) for use of wifi and the gym that nobody uses - smart shoppers include this in the cost of a night's stay, while others that didn't check the fine print are upset at the extra charges upon checkout.

It is what it is. An established business practice designed the make the business more money, simple as that.

I also appreciate eBay's policy of not charging a BP (but if I was made CEO tomorrow you can bet I'd implement it and watch the stock price rise).

[Peter_Spaeth]

Originally Posted by Ray Van

I find it interesting that some people were so quick to run to the defense of auction houses, perceiving some sort of accusation on the part of the OP which in fact wasn't there at all. The OP simply asked a logical question that many of us have asked ourselves, and even posited the rationale for it.

I agree the practice seems to be more on the psychological side than anything. Many will not factor the buyer's premium into the price we pay, then accept it if we are the high bidder. Doesn't make it ideal, but we accept it. And since most auction houses charge it, no one is going to drop it. Plus they make more money that way.

Hypothetically asking "how would AH's make money otherwise" is missing the point. Most charge consignment fees so they already make money there. They could up the consignment fees to offset dropping the buyer's premium but that would be bad for business.

I see a parallel to Las Vegas hotels charging an additional $50 a night in "resort fees" (on top of the room rate) for use of wifi and the gym that nobody uses - smart shoppers include this in the cost of a night's stay, while others that didn't check the fine print are upset at the extra charges upon checkout.

It is what it is. An established business practice designed the make the business more money, simple as that.

I also appreciate eBay's policy of not charging a BP (but if I was made CEO tomorrow you can bet I'd implement it and watch the stock price rise).

The OP called it a psychological trick by AHs hoping to get more from an ignorant buyer. That's not an accusation?

[Leon]

Originally Posted by Peter_Spaeth

The OP called it a psychological trick by AHs hoping to get more from an ignorant buyer. That's not an accusation?

“It depends on what the meaning of the word ‘is’ is."

And the buyers premium is to pay the AH for their services.
.
.

[Pat R]

Originally Posted by Peter_Spaeth

The OP called it a psychological trick by AHs hoping to get more from an ignorant buyer. That's not an accusation?

I think this explains why a lot of people have a problem with the BP or at least those that are surprised when it's added on their invoice.

[Snapolit1]

It's no secret (and no "trick") that they are charging a buyer's commission. Having said that, I like the AHs that remind you at the time of bidding very clearly that you are bidding X, but the cost including commission will be Y. A nice reminder in the heat of battle.

As someone said above, for me it's about a 30% bump for commission, taxes and shipping usually.

[Snapolit1]

I could be wrong, but I suspect the practice of an auction house adding a buyer's charge onto the hammer prices of an auction is probably about 2000 years old.

625 AD: Yes, you just bought two lambs for six bushels of hay . . . and now please give something to the auctioneer for making the sale happen.

[Aquarian Sports Cards]

The history of BP is that it was started by Sotheby's and Christie's to give them a competitive edge in obtaining consignments. They could tell the consignor "look Auction A is charging you 40% but we're only charging you 25%" of course neglecting to explain BP.

Since it has become industry standard we're basically forced into charging it or trying to explain (and losing a lot of consignments) to consignors that paying 30% commission is no different than paying 10% with a 20% BP. It's a shell game, plain and simple, but one that you're basically stuck playing at this point.

[Exhibitman]

Originally Posted by Aquarian Sports Cards

The history of BP is that it was started by Sotheby's and Christie's to give them a competitive edge in obtaining consignments. They could tell the consignor "look Auction A is charging you 40% but we're only charging you 25%" of course neglecting to explain BP.

Since it has become industry standard we're basically forced into charging it or trying to explain (and losing a lot of consignments) to consignors that paying 30% commission is no different than paying 10% with a 20% BP. It's a shell game, plain and simple, but one that you're basically stuck playing at this point.

Again, it worked because Americans suck at algebra.

[raulus]

Originally Posted by Aquarian Sports Cards

It's a shell game, plain and simple, but one that you're basically stuck playing at this point.

Thanks for being willing to admit it, even if others seem less convinced on this point.

[Aquarian Sports Cards]

Originally Posted by raulus

Thanks for being willing to admit it, even if others seem less convinced on this point.

It's literally just moving the money we collect from one party to another. Doesn't seem any rational way to deny it.

[Orioles1954]

.

[Orioles1954]

In the heat of competition many bidders, the majority of whom are intelligent and successful people, lose a sense of boundaries and proportion.

[raulus]

Originally Posted by Aquarian Sports Cards

It's literally just moving the money we collect from one party to another. Doesn't seem any rational way to deny it.

Exactly!

For those who aren’t fans, I think the bigger issue is that we want to pay less for our items. And the premium means that we’re paying more, not less. It’s less about the premium and more just complaining that we have to pay so much period, and the premium happens to be a convenient scapegoat.

And I guess those who defend it want to think the best of their fellow men, their motives and approach to conducting business. And I certainly applaud their approach.

My own feeling is I’ve given up caring. It’s there, and it’s there for a reason, some of which are benign, some less so, and the only way around it is to opt out of bidding in these auctions altogether. Since all of the nicest stuff ends up in these auctions, that’s a fairly poor option. I’m not convinced that ascribing pejorative motives to the auction houses helps me to feel any better about it, although maybe there’s some cathartic effect to expressing a disdain for it in general.

[Keith H. Thompson]

I've been around a long time and have won items in many auctions including a 5K item in the last Lelands Auction. I'm a professional statistician and know as well as the next guy that I'm going to be paying another K as BP. But, I'm with raulus . Keith H Thompson

[Republicaninmass]

The real kicker is the shipping charges with most auctions houses. You think an extra 1.50 on ebay is bad...sheesh

[G1911]

Originally Posted by Republicaninmass

The real kicker is the shipping charges with most auctions houses. You think an extra 1.50 on ebay is bad...sheesh

I object much more to the usually unstated and often egregious (far more than it costs me, a private individual without a business account with a shipper, to ship the same way) “shipping” charges than the BP trick.

[tiger8mush]

Originally Posted by Republicaninmass

The real kicker is the shipping charges with most auctions houses. You think an extra 1.50 on ebay is bad...sheesh

My only real shipping miscalculation is with Hunt. $24.15 s/h charged on a single $400 card, and $19.15 charged on a single $200 card (after juice). They use Fedex. Would be less than $9 to ship either card via USPS Priority, even cheaper USPS First Class in a bubble mailer.

So I now have to be aware to calculate $20 shipping charge in my bids with them in case I only win one item.