Why Have Auction House Fees Doubled Over The Decades?

They are not all equal in stature but run together for the most part when it comes to fees. Siegel had sales of about 30 million last year but they also spend a lot on outstanding catalogs, PowerSearch, a Manhattan HQ and so on. I do not believe that the rates are usury in any sense because buyers keep buying and in the case of dealers they make money off of the purchases. Ultimately who cares what the fees are. If they did not work for purchasers the House would close. The market can bear them and there you have it.

I made it clear I was talking about percentage terms. It is auctions, after all.

I was talking about the transaction cost -- so, yes, you add the buyer and the seller fees together. If the buyer pays $120 for an item, the seller only gets $80 or so -- half of the fee paid by the buyer, half by the seller.

In this case, wouldn't the buyer receive $96? ($120 - 20%). The buyer would actually pay $144 plus shipping, handling, packing, administrative, water cooler fee, tongs fee, environmental fees for disposal of hazardous glassine waste, Ronsonal, dippage, mileage to the post office, tape, paper clips and rubber bands.

Ok, just to make it crystal clear for people without auction experience.

I bid $100 for an item at auction, the hammer goes down. What I actually pay, with the 17.5% premium plus VAT, is $120, plus or minus a few pennies.

What the seller gets is $100 minus the auction house commission, plus lotting fee, or about $80. In the UK all major (and most minor?) auctions are like this, and so are general auctions. The fees in PERCENTAGE terms (ignoring inflation) have pretty much doubled in the past 30 years or so.

ie if the hammer price at auction in 1985 was $100, you paid $110, and the vendor got about $90.

So would this increase be due to labour costs? I dont think so -- that would mean labour costs had doubled in REAL TERMS during this time.

I suspect that neither can go much higher. I suppose the comparison for auction houses in terms of buyer's fees is selling direct on ebay @10% plus Paypal fees and selling on ebay via a third party, which is, I imagine closer to 30%. An auctioneer will also value and break up the lot for sale. Having sold a few things at auction, I doubt that I'd bother again unless it were the best stuff from my collection.

As a buyer, I know one small UK auctioneer (not, in general, of stamps) who operates a 25% buyer's premium - I find an additional and deterring bite there, which puts me off using him unless I really, really want something.

It would be interesting to have the views of someone from an auction firm.

See the post of "dutchman1948" early in this thread. Doesn't anyone here presently own and operate a business with employees, with a history of a couple of decades? The answer is yes, costs have increased in real terms. Depending on the jurisdiction, business taxes, employment taxes, health insurance premiums, commercial lease rates, energy costs, other miscellaneous local, state and federal fees and regulatory costs, and on and on - all have increased in real terms, often well out-pacing inflation. During the Obama years my firm's health insurance premiums increased over 10% per year, multiple years in a row, in years when inflation was 2%. Business owners will not accept shrinking margins, so these costs inevitably are passed on to the consumer. For any of these costs that have not outpaced inflation, "rogdcam" had the simple answer - the auction houses are charging what the market will bear. As society has become more prosperous and overall standards of living have increased, there are more upper-middle class to affluent collectors who will pay these fees.

I recently helped organize and evaluate a very nice collection of Hong Kong and British Aden stamps and Postal History in the UK.
When it was ready I contacted auction houses and the one chosen reduced their fees to 10% (from the usual 15%).
I am talking about one of the UK's top Philatelic Auction houses. Their conduct at the viewing was excellent.

Londonbus1

Whatever the cause, I think it has a very bad impact on the investment side of the hobby, which I think then has a knock-on effect on other aspects.

High transaction costs will inevitably drive down values, and if its driving down the top values, all the other stamps will inevitably follow suit.

I don't see any harm to the "investment side" of the hobby. Just check recent Siegel or Harmer realizations.



I think everyone who has posted has experience with auctions, just by their comments.
To be clear I have "auction experience". I use an agent when I bid, just another cost of doing business.

Agreed Vinman. Realizations are strong for quality stamps and covers and competition for nice large lots is stiff. I see nothing in decline with the exception of the normal trends of collectibles. If anything ebay and other online venues have stoked the demand of resellers for material.

Vinman- there are any number of comments in the forum I choose to ignore.

from the auctioneer side of the story.

when someone wants to sell something, it may require a lot of work to split up, then things has to be pricechecked, quality checked, scanned, written into a computer system, put into a showcard, into a binder and back on the shelve.

if it's within a persons area of expertice it takes about 5 mins to do all these things pr lot.

when I worked at an auction house, we spend 9 out of 10 workdays every 2 weeks preparing, scanning and so on for each auction. it's ALOT of work.

then if we did our job well, proper description, proper price, good scan - the object would be sold.

at the end of every auction you have to find all the lots in the binders, boxes collections, and handle every invoice, put them in an envelope/wrapper/box and carefully pack so nothing gets damaged. Put on stamps and drive to the nearest drop off.

3 people spent an entire work day packing things for shipping, and only the paid invoices that is. So continuously we were shipping things when they got paid.

for this we charge the person with the stamp anywhere from 0-15% depending on the material and amount they bring.
we charge the buyer 25%.

so if a fee was 10% X years ago, the stamp would cost 1000, and the action house would make 200 from performing the sale.. Now that fee has gone up to 20% the OP claims... the said stamp now doesn't cost more than 500, because the value of stamps has gone down, and the action house makes 200 still.

there's just as much work performing the auction, BUT living expenses/tax/rent and everything else has gone up thanks to inflation and a higher living standard.

so the net of it all is that it's a very hard life as an auction house and most disappear.


now, when the fee was 10% (i'm a new collector and in my 8 years of collecting/dealing they've stayed the same) what was the fee of a carpenter, a mason, a lawyer?
i'd imagine they've gone up with A LOT more in percentage in the same period?

on a side note:

are people willing to pay more? YES for some things, but mostly not.
the fee could be 50% it would just mean that people place lower bids because most factor in the fee and place their bid accordingly.

as a professionel I don't understand the problem, as a collector - I STILL don't.