Why Have Auction House Fees Doubled Over The Decades?

Looking at old (UK) auction house catalogues from 30 or so years ago, I see that auction fees -- for both vendors and buyers -- have pretty much doubled in the interim.

Now, a 20% transaction cost on an investment is pretty heavy hit, but 40% (the current norm) is just terrible. Especially for something where the 'real' (inflation-adjusted) value isn't likely to increase.

My question -- why has the cost doubled? It can't be due to vastly increased labour costs.

Any ideas?

Some reasons

Increased rents and utilities
Increased payroll
Increase printing costs
Lower revenues from sales due to market conditions
Having to pay internet costs for many.

And I am sure there are many more

Has the tax burden increased in the UK over the past 30 years?

Greed

And despite the greed, I feel many if not most auction houses provide less added-value than ever before.

The cumulative inflation rate for the last 30 years is 106.5%; in other words what cost $1 in 1987 is now equivalent to $2.07. So if the auction fees have doubled then they really have stayed exactly the same.
Don

But blaming greed is so much more fun!

Just my opinion here, but the way to grow a business reliably in the long term is not by increasing margins. Of course, you increase margins wherever possible but the largest contributor to increased margins is efficiency. And efficiency comes from doing work more productively (e.g all the electronic tools now available that were not available in 1987), and from economies of scale. Grow your business, and economies of scale grow your margins. COGS drops, expenses drop, cost of infrastructure drops, and sales volume increases. Together, these are the factors that a business can RELIABLY effect more so than price (e.g. commission rates).

So are we saying that on average, an identical auction in 2019 would not yield net/net higher total bids than the same one in 1987? Any inflation in the final results of an identical auction must be deducted from the net effect of inflation.

And are we also saying that none of these companies have become more efficient by computerization and the internet? Not to mention, haven't most of these companies grown since 1987, affording themselves the benefits of economies of scale?

I'm skeptical concerning the inflation question and here's why. What was the cumulative rate of inflation for the period 1959-1989? And did philatelic auction houses increase their auction commissions by that same rate during 1959-1989? For Don's model to work, both 30-year periods must show the same results.

Economies of scale have little or no relevance in this case.

I thought the OP was talking about the auction fees, not the 'net' of an auction item. My point about inflation was concerning value of a 'dollar-to-dollar' of auction fees. So if you paid $1 in an auction fee in 1989 than paying $2 for an auction fee today is exactly the same.
Don

I am not aware of any U.S. auction firms that charge 40%, I may be wrong. Do you mean that the auction house collects 20% from the seller and 20% from the buyer for a total of 40%? I know auction fees have gone up in recent years but they (the auction house) do all the work of selling the stamps, the better they market the stamps the more the cosigner makes and the more the auction house makes.
Percentage is still percentage, it has nothing to do with inflation.

Vince

Fees is one thing. Have the value of the goods (stamps in this case) gone up by 100%? In most cases probably not, And have market bids kept up, I dare say not. The dealer wins, never loses, only the guy who buys the stuff usually gets losses in the end. But then again its all for fun and education isn't it? Obiviously it comes at a cost.

"The cumulative inflation rate for the last 30 years is 106.5%; in other words what cost $1 in 1987 is now equivalent to $2.07. So if the auction fees have doubled then they really have stayed exactly the same"

Your example assumes the price realized for the same item has not changed over the same time period.

"Not to mention, haven't most of these companies grown since 1987, affording themselves the benefits of economies of scale?"

Um, some may have gotten bigger, others smaller or completely disappeared. They come and go. They don't all keep growing.

Right. And if they completely disappeared why would we be talking about their fees in 2019? For the ones that grew, can we explain their increase in fees on both sides of the sale by inflation?