What to expect from AH consignments?

[raulus]

Originally Posted by sb1

Ebay is going to cost well more than 10%, 13-14% for higher volume sellers, about 20% for casual sellers once they collect their fees and the payment fees. I have only sold a few hundred dollars on their in the last year and looked at my total sales/tax withheld/payout, etc and their take was 21.2%.

Went back and double checked the rates. Looks like it’s 12.9% for the first $7.5K for any given item you sell on eBay. If the item is over $7.5K, then the percentage declines.

You’re right that PayPal or credit cards charges another 3%, give or take.

Depending on where the buyer lives, they do pay sales tax, although they are going to pay that on any platform or retail venue, except for maybe the BST here. Naturally, some states (like my home state) have zero sales tax. So it’s hard to figure it, although for some buyers it could be as much as 10%.

So more like 16% selling costs on eBay, all-in, ignoring sales tax, which could be nothing, or could be a lot.

[Leon]

Originally Posted by raulus

Went back and double checked the rates. Looks like it’s 12.9% for the first $7.5K for any given item you sell on eBay. If the item is over $7.5K, then the percentage declines.

You’re right that PayPal or credit cards charges another 3%, give or take.

Depending on where the buyer lives, they do pay sales tax, although they are going to pay that on any platform or retail venue, except for maybe the BST here. Naturally, some states (like my home state) have zero sales tax. So it’s hard to figure it, although for some buyers it could be as much as 10%.

So more like 16% selling costs on eBay, all-in, ignoring sales tax, which could be nothing, or could be a lot.

How do you go about ignoring sales tax? Count me in but that is always another 8.25% from me. That is a cost, like it or not, for most collectors.
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[raulus]

Originally Posted by Leon

How do you go about ignoring sales tax? Count me in but that is always another 8.25% from me. That is a cost, like it or not, for most collectors.
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For the seller, does it make a difference?

Plus, don't forget the vault! Seems like everyone has a vault these days, which is a nice end around sales tax.

[Leon]

Originally Posted by raulus

For the seller, does it make a difference?

Plus, don't forget the vault! Seems like everyone has a vault these days, which is a nice end around sales tax.

OF course it matters to the seller. It's a higher price to the buyer. Last I checked that counted in a deal.

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[raulus]

Originally Posted by Leon

OF course it matters to the seller. It's a higher price to the buyer. Last I checked that counted in a deal.

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Fair enough. Perhaps living in a zero sales tax state, I forget that from time to time.

Do you think that other buyers lower the amount they are willing to pay when bidding on items by factoring in the sales tax? I suppose it's certainly possible. But my suspicion is that many buyers don't factor it in. At the same time, I could be entirely wrong!

During the auction: "Bidding $100...that seems about right..."
At checkout: "Now I have to pay $108??!!! Plus an extra $10 for shipping!!!??? Stupid sales tax and shipping..."

And now that I've said that, I guess I've just introduced shipping as another cost to the buyer. Do you think that buyers also factor shipping into their calculus? Or does it get ignored, similar to my contention that sales tax is largely ignored?

[teza11]

Just think about the potential power of this forum. "What if" AH consignors on this board pooled their upcoming consignments and let AH's bid on the opportunity to list. This could be done by type, group, time period, etc. Seller consignment fees would be a thing of the past. The discussion would move from seller fees to to seller credits. Just putting it out there. I know Leon is not looking to take this on.

Jeff

[raulus]

Originally Posted by Leon

OF course it matters to the seller. It's a higher price to the buyer. Last I checked that counted in a deal.

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I guess the other reason why I am inclined to ignore sales tax in this context is that when you're debating which AH to take your item to (the question from the OP), I'm pretty sure that all AHs charge sales tax these days. So taking it to one AH v. another isn't going to change the transaction costs when it comes to the sales tax.

[Leon]

Originally Posted by raulus

I guess the other reason why I am inclined to ignore sales tax in this context is that when you're debating which AH to take your item to (the question from the OP), I'm pretty sure that all AHs charge sales tax these days. So taking it to one AH v. another isn't going to change the transaction costs when it comes to the sales tax.

Again, incorrect. Not all AH's have to charge sales tax. But please keep on going .... I know at least a few of our advertisers that don't, unless you live in their state.
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[raulus]

Originally Posted by Leon

Again, incorrect. Not all AH's have to charge sales tax. But please keep on going .... I know at least a few of our advertisers that don't, unless you live in their state.
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I'm on a roll then!

I guess the OP should also look for AHs that don't charge sales tax, as that will be an added benefit. Not sure who they are, but it sounds like they are out there.

[Rhotchkiss]

Auction Houses are for profit businesses (God Bless them). While some AHs may take a scrape on shipping, insurance and other "soft costs", the vast majority of their revenue is derived though fees. These fees are usually computed as a percentage of the hammer price. It doesn't really matter how its computed and to whom it applies, it ends up being something the buyer pays for and it reduces what the consignor puts in their pocket.

Traditionally, an AH will charge the consignor a Seller's fee -- a percentage of the hammer price -- and will charge a Buyer's Premium - a percentage added to the hammer price that the Buyer must pay to get the item they won. However, regardless of semantics, its all about how much the AH makes, paid for by the Buyer, and reducing what the consignor walks away from.

Two fundamental facts to acknowledge: (1) Since the consignor is the customer with the item, and since the AH makes no money unless it sells consignments, this is all negotiable. And, with most negotiations, he with the leverage has the advantage in negotiations. (2) in general, it is just as much work to list, sell, collect, ship, etc, a $500 card as it is a $50,000. This latter point is important because 10% on a $50k card is $5,000 vs 30% on a $500 card is only $150, but the work is similar while the reward is greatly disproportionate.

Ultimately, it comes down to how motivated is the AH to list a particular consignment; and motivation can be quantified in tangible terms -- how much money do I need to make to do the work here, and intangibly - are there indirect benefits to having certain items in an auction (such as a T206 Wagner, high grade 51 Mantle, or other items that create buzz and generate traffic to the auction). This motivation will of course vary by AH, and that's all part of the negotiation.

To address the OP's initial inquiry: I am not surprised that you are getting offers of a 7.5% - 10% seller's fee and none of the Buyer's premium, on a group of items valued at $100 - $500. Think about it. Suppose you have an item valued at $250; the hammer price would have to be about $200+ so that it sells for $250 with the 20% BP. If the AH takes a 10% seller's fee and a 20% BP, the AH is making $50 to sell this item. That's $50 to receive, list, describe, promote, sell, collect, and ship. Plus, there is customer service time and certain risks, such as someone is unhappy and bashes the AH on net54 or another forum. Whether $50 is worth all of this is the decision the AH must make. Whether the consignor is willing to walk with $200 on a card worth $250 is the a decision the consignor must make.

Anyway, my gut is that you can probably get the seller's fee reduced to less than 5% or eliminated entirely. But that will depend on leverage and motivation of the AH to get your consignment. And, fighting over 2.5%+ may not matter much, as getting 70% of a card that sells for $500 is almost the same as getting 80% of a card that sells for $450 ($10 difference).