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

[jayshum]

Originally Posted by Fballguy

If anyone is looking for the Cliff's Notes of this 160 post thread, Bob was kind enough to provide.

Unfortunately though Bob, the Buyers Premium is charged to the buyer and I still don't know how the service to the buyer is different at 17.5% auction house than it is at a 23% auction house.

I think you missed Bob's point. If one AH has higher costs than another, they're going to have to charge a higher BP to cover them even if service is exactly the same. A plumber in NYC is going to have to charge more than a plumber somewhere with a lower cost of living even if they are doing the exact same job with the same level of quality.

[BobC]

Originally Posted by jayshum

I think you missed Bob's point. If one AH has higher costs than another, they're going to have to charge a higher BP to cover them even if service is exactly the same. A plumber in NYC is going to have to charge more than a plumber somewhere with a lower cost of living even if they are doing the exact same job with the same level of quality.

Thank you Jay!

I'm biased having been an accountant/CPA since the 70's, and to me, understanding that businesses are all going to have different costs and needs as far as what they have to charge and make to stay in business is like breathing. It is essential, and you don't even think about it.

The fact that even when we try spelling it out for others, and they still don't get it, just has me shaking my head. Oh well, all we can do is try, right?

[raulus]

Originally Posted by jayshum

I think you missed Bob's point. If one AH has higher costs than another, they're going to have to charge a higher BP to cover them even if service is exactly the same. A plumber in NYC is going to have to charge more than a plumber somewhere with a lower cost of living even if they are doing the exact same job with the same level of quality.

I’ll take it one step further. Costs aren’t necessarily the only factor. Target profit margins are another. Even if the costs are the same, if one business aims to be more profitable, then charging more is going to be the way to get there. Assuming that people will pay your higher prices, of course!

[BobC]

Originally Posted by raulus

I’ll take it one step further. Costs aren’t necessarily the only factor. Target profit margins are another. Even if the costs are the same, if one business aims to be more profitable, then charging more is going to be the way to get there. Assuming that people will pay your higher prices, of course!

Exactly right, and exactly what was meant when I also said different AH owners have different wants/needs as far as how much they need to make in their businesses.

A business being able to provide comparable level products or services as good as their competitors is only one facet of being able to operate a successful business. They also have to be able to provide that product or service at what is deemed and perceived by the public as at a competitive cost or fee, or they aren't going to be in business very long no matter how good their product or services actually are.