@Boosibri said:
Greed…
The Heritage US Coin BP raised to 20% in August 2017 I believe. Since that time CPI is up 29%, yet BP holds.
Anyone with a halfway decent consignment is getting 105% of hammer, so a 15% gross margin for HA. After paying overhead and taxes the net profit margin must be single digits.
Where is the greed?
So heritage’s BP policy should automatically increase with inflation?
If the prices of the stuff they’re auctioning off kept up with the cost of inflation, their profits would increase incrementally as well keeping the same BP.
For those claiming greed, wouldn't you expect behaviors that would take a bigger share of the pie (profit margins), not just the same sized slice of an increasing pie?
Some people will view any for-profit business as "greedy" (excepting themselves, of course) just because they seek to make a fair profit. Those same people will happily cherry pick a coin and make 500%, but don't think that represents "greed". But if Heritage or anyone else makes a 10% net margin, they are "greedy".
No doubt I will get schooled here but I don't quite understand. I have been bidding on coins at Heritage since the 1990's. Back then their base fee was 17%. So 17% was safe and sane but a 3% increase 25 years later is patented greed? It is futile to be angry at bidders who are willing to pay more for an item then you are.
I have come across auction houses that charge as litte as the base 10% Great Collections charges to the 25% some auction houses charge. There is even one I recently found that charges an added 5% for "internet" users. Their house ; their rules. All that matters is whether the coins are worth the added costs. anybody can bid or walk away. James
@seatedlib3991 said:
No doubt I will get schooled here but I don't quite understand. I have been bidding on coins at Heritage since the 1990's. Back then their base fee was 17%. So 17% was safe and sane but a 3% increase 25 years later is patented greed? It is futile to be angry at bidders who are willing to pay more for an item then you are.
I have come across auction houses that charge as litte as the base 10% Great Collections charges to the 25% some auction houses charge. There is even one I recently found that charges an added 5% for "internet" users. Their house ; their rules. All that matters is whether the coins are worth the added costs. anybody can bid or walk away. James
Are you factoring in seller's commissions in your analysis?
From an acctg. Point of View the Auction House has to clear enough to offset Opex.
However if the buyers fee greater than 10pct won’t do biz w them anyway. It’s an individual preference for me.
Obviously the auc houses likely have higher overhead than a bourse room dealer who is a competitor. So the AH cost structure and market conditions is going to have an impact on financial strategy in setting fees. Now if bidders get caught up in bid war like a breakaway play that’s in the auc house favor. For me if bidding in auc I am there to buy it right that I have a chance to successfully retail it in the green / so no bid war for me. If my goal win an item at 10 pct back of bid will factor vig in Calc accordingly. Then if lose to some rich bidder well at least I took my shot at bat.
I think a lot of AH bidders don’t really have a concept of setting a bid limit which puts them around bid (or where they want to be) once the juice is added or whatever amount the purchase adds up to. Or these could be wealthy collectors that the cost of the item is chump change to them.
As far as some bidder getting bid up paying more than anybody in the country - that’s on him not the auc house.
@DisneyFan . I am just looking at base buyer fees. All other sundry charges ie; shipping & handling, method of payment, rushed delivery, taxes are each buyers resposibility to be informed on and apply accordingly. I have never sold thru Heritage and have no idea about the fee structure. I have sold thru Great Collections several times and have no complaints. I have always gotten what i paid for buying and selling. James
@seatedlib3991 said: @DisneyFan . I am just looking at base buyer fees. All other sundry charges ie; shipping & handling, method of payment, rushed delivery, taxes are each buyers resposibility to be informed on and apply accordingly. I have never sold thru Heritage and have no idea about the fee structure. I have sold thru Great Collections several times and have no complaints. I have always gotten what i paid for buying and selling. James
Therein lies the problem, and the logic flaw that many in this thread overlook. The 20% “buyers premium” represents the highest gross profit margin (edit- perhaps really low value might have a 5% seller commission, but don’t know how often that happens these days since the bp was raised to 20) but many higher value consignments or from frequent consignors have negotiated backend rates that lower that margin.
Imagine a consignment is a one first time, and probably last time collector with 100 coins that total out to 40,000. They are not getting a better rate, and heritage will gross 8k, or $80 per coin. When you factor in the photography, cataloging, all of the overhead from employees, insurance, marketing etc, their NET margins are likely single digits as @Boosibri suggested.
Now, imagine a consignment from a regular customer with a total value of $200,000….with only 10 coins. Obviously, this is far less labor intensive for them and requires substantially less man hours. Heritage does not need to make $4,000 per coin, so they now have the flexibility to negotiate. Whether they offer the consignor 105%, 107%, 110% or perhaps even more…but the people bidding don’t know that (for many justified reasons).
Stacks operates in a similar fashion, but GC with their fixed 10% found success with a different model by using a more barebones approach with transparent figure, but the tradeoff is that there are no descriptions, physical catalogues, less marketing costs and overhead.
David Lawrence used an approach by calling it a “sellers fee” instead, so while it appears that the bidder is saving money, but as an example. the consignor could be receiving 90% of hammer, instead of 110% of hammer at a traditional auction house. Heritage could do the same thing, but then the “Hammer” price would include the former “BP”. They could also implement a system where there’s a fixed “BP” of 10%, and a variable sellers premium that could be up to 10%.
In any of these scenarios, the CONSIGNOR is the one who’s forfeiting a portion of the FMV in order to use the service.
FMV defined- A static figure, the total amount of money that someone was willing to pay to a acquire a coin, AT THAT GIVEN TIME. If a dealer wins the coin, marks it up 10% and sells it the next day, then that’s the new FMV.
I’m summary, the CONSIGNOR is the one who foots the bill for the services rendered by the auction house…full stop. The rest of it is just marketing and semantics used to present the fee differently, whether or not they’re trying to market towards the people bidding or the people selling. The total paid by the buyer, total distribution to the consignor, and the AH commission could be the exact same no matter what you want to call it. As it stands, HA’s strategy indicates they’re trying to appeal to consignors, whereas DLRC is evidently trying to appeal to bidders.
Imagine a consignment is a one first time, and probably last time collector with 100 coins that total out to 40,000. They are not getting a better rate, and heritage will gross 8k, or $80 per coin. When you factor in the photography, cataloging, all of the overhead from employees, insurance, marketing etc, their NET margins are likely single digits as @Boosibri suggested.
Actually, with a 20% seller's commission and a 20% buyers' commission the house gross would be $16,000 or $160 per coin.
Imagine a consignment is a one first time, and probably last time collector with 100 coins that total out to 40,000. They are not getting a better rate, and heritage will gross 8k, or $80 per coin. When you factor in the photography, cataloging, all of the overhead from employees, insurance, marketing etc, their NET margins are likely single digits as @Boosibri suggested.
Actually, with a 20% seller's commission and a 20% buyers' commission the house gross would be $16,000 or $160 per coin.
Only one side would have the 20% premium in that scenario, assuming it was a typical consignment where consignor gets 100% of hammer. The other scenario situating with the 10/10 was just a hypothetical alternate that would amount to the same, but present much differently to bidders.
Though my math is off because I did quick math for 20% vs /1.2, so it should have been closer to a $6700 commission or $67 per coin. I have heard of situations where the consignor might have a 5% fee and only net 95% of hammer if it is a large quantity of inexpensive coins but I doubt there’s many consignors that get less than 100% of hammer since the BP went up to 20%.
@BillJones said:
I think that the buyer's preimiums given the auction houses some flexibility. There are important collectors out there who can negociate deals where they get more than the hammer price. That would not be possible if there were no buyers' premiums.
The auction houses also end up with more money, because there are a few "yahoos" who ignore the buyers' premum. I am not rich enough to do that.
I'm with you. I hate buyer's preimums, and the higher they go, the more I hate them.
There are those who say they make no difference because you simply cut back your bids to reflect them. That's great if you are a dealer who is open to buying a wide variety of material in the auctions. BUT if you are a collector who has an interest in only one or two pieces, running into a "yahoo" can ruin your whole day, or auction.
Yes, there are some yahoo bidders out there, but the real targets are the yahoo consignors - especially inexperienced non-collectors representing estates - who think that the buyer's premiums are irrelevant, and that selling a coin without paying a commission has to be a great deal.
Andy Lustig
Doggedly collecting coins of the Central American Republic.
Visit the Society of US Pattern Collectors at USPatterns.com.
Imagine a consignment is a one first time, and probably last time collector with 100 coins that total out to 40,000. They are not getting a better rate, and heritage will gross 8k, or $80 per coin. When you factor in the photography, cataloging, all of the overhead from employees, insurance, marketing etc, their NET margins are likely single digits as @Boosibri suggested.
Actually, with a 20% seller's commission and a 20% buyers' commission the house gross would be $16,000 or $160 per coin.
Outside the BAY used GC. On GC I fudge down my bids to bump out the buyers fee. If lose to some rich guy so be it. I still manage to win some there. Great retail stock!
Yes, there are some yahoo bidders out there, but the real targets are the yahoo consignors - especially inexperienced non-collectors representing estates - who think that the buyer's premiums are irrelevant, and that selling a coin without paying a commission has to be a great deal.
Andy, you are absolutely correct. For everyone reading this thread, you would be amazed how many collectors keep their holdings a secret from their heirs. So, when the time comes, an inexperienced executor or attorney has to handle things. So, two auction houses come along - one offers, say, 105% of hammer and the other, 100%. Now, the auction house with the lower offer may actually net the consignors more money because of marketing, larger bidder pool, etc. However, the attorney won't care - he just wants to get the deal done and can go back to the heirs and can say he took the higher percentage offer. This happens all the time.
The huge bump in the vigorish during my few years of peak buying and selling is one of the primary reasons I decided to quit the hobby. It really doesn't matter what you call it or who you think pays it. Pretty much every auction house did it more or less simultaneously. If I was a big shareholder in the big auction houses, I'd see it differently, no doubt. The bottom line is that it increases the transaction cost of buying and selling coins. This changed dramatically. It affects everyone too and one way or another it gets passed on to collectors. Dealers with their own websites have to get inventory from somewhere and they need a place to liquidate coins that aren't moving.
It's a great hobby, but I enjoyed the chase and acquisition more than the owning and examining. Doing it that way is fun in a rising market with cheap transaction cots (easy to liquidate mistakes). Pulling 20% of the value out of a coin each time it changes hands makes it much harder. Yeah, I know most auction houses negotiate a percent higher than hammer, at least if you bring a good quantity to auction, but that isn't the only expense. Don't forget shipping, regrades, stickers, and photography. There are other ways to sell, of course, but every other method competes with the auction houses.
It also rubbed me the wrong way that gradeflation made it important to resubmit almost everything (unless in certain desirable plastic) a time or two to avoid leaving money on the table. Figure in the time it takes to fill out forms, package, drive to the PO, sit around for a third of a year to get the coins back, then do it all again for the sticker people. After all of that you send off the stuff and trust the auction house to put it in a favorable auction and to take quality photos.
At the end of the day there are a tremendous number of people working very hard and very smartly to extract money from coin collectors. It's the market, it's legal, and it's part of capitalism, but eventually, it just took some of the fun out of it.
There, I said it, but I'm not sure I was devoid of cynicism. Sorry.
But it’s ok for a dealer to buy a coin at a Stacks or Heritage auction and then turn around and offer it at 25-30% over their buy price even after most serious collectors and dealers have seen it? Do you complain about that? Funny part is that I know a dealer that does that and will still sell the coin off of his list.
Just fudge down your bid to cover the juice wherever.
Or Shop them around the bourse at a show see if you can get at least 10 -20 pct behind CDN bid. Generally I offer 10-20 pct behind bid from my table at shows. That’s cash money too. Picked up a group of about 15 slabbed coins from my table recently.
After you pay all that vigorish, shipping, plus wait time etc (auc houses) where are you vs CDN bid?
As far as auc house fees that is proprietary with their business. Like any other player Opex has to be recovered. You don’t think their site expense, transportation, salary expense, building depr is free do you?
The huge bump in the vigorish during my few years of peak buying and selling is one of the primary reasons I decided to quit the hobby. It really doesn't matter what you call it or who you think pays it. Pretty much every auction house did it more or less simultaneously. If I was a big shareholder in the big auction houses, I'd see it differently, no doubt. The bottom line is that it increases the transaction cost of buying and selling coins. This changed dramatically. It affects everyone too and one way or another it gets passed on to collectors. Dealers with their own websites have to get inventory from somewhere and they need a place to liquidate coins that aren't moving.
It's a great hobby, but I enjoyed the chase and acquisition more than the owning and examining. Doing it that way is fun in a rising market with cheap transaction cots (easy to liquidate mistakes). Pulling 20% of the value out of a coin each time it changes hands makes it much harder. Yeah, I know most auction houses negotiate a percent higher than hammer, at least if you bring a good quantity to auction, but that isn't the only expense. Don't forget shipping, regrades, stickers, and photography. There are other ways to sell, of course, but every other method competes with the auction houses.
It also rubbed me the wrong way that gradeflation made it important to resubmit almost everything (unless in certain desirable plastic) a time or two to avoid leaving money on the table. Figure in the time it takes to fill out forms, package, drive to the PO, sit around for a third of a year to get the coins back, then do it all again for the sticker people. After all of that you send off the stuff and trust the auction house to put it in a favorable auction and to take quality photos.
At the end of the day there are a tremendous number of people working very hard and very smartly to extract money from coin collectors. It's the market, it's legal, and it's part of capitalism, but eventually, it just took some of the fun out of it.
There, I said it, but I'm not sure I was devoid of cynicism. Sorry.
They provide a service. You don’t think they should get paid for that service? A single digit net margin is hardly excessive.
Imagine a consignment is a one first time, and probably last time collector with 100 coins that total out to 40,000. They are not getting a better rate, and heritage will gross 8k, or $80 per coin. When you factor in the photography, cataloging, all of the overhead from employees, insurance, marketing etc, their NET margins are likely single digits as @Boosibri suggested.
Actually, with a 20% seller's commission and a 20% buyers' commission the house gross would be $16,000 or $160 per coin.
Who has that fee structure?
You need to check with each auction house as some auction houses no longer publish their consignor fees.
Thinking about this... how offend had you look at a piece to bid on and you find it has been in auctions 3 or 4 times in the recent past ( say in the last 5 - 7 years). The net result is that the auction houses fees have now approach 100% of value of the coin.
OMG ... My Mother was Right about Everything!
I wake up with a Good Attitude Every Day. Then … Idiots Happen!
The huge bump in the vigorish during my few years of peak buying and selling is one of the primary reasons I decided to quit the hobby. It really doesn't matter what you call it or who you think pays it. Pretty much every auction house did it more or less simultaneously. If I was a big shareholder in the big auction houses, I'd see it differently, no doubt. The bottom line is that it increases the transaction cost of buying and selling coins. This changed dramatically. It affects everyone too and one way or another it gets passed on to collectors. Dealers with their own websites have to get inventory from somewhere and they need a place to liquidate coins that aren't moving.
It's a great hobby, but I enjoyed the chase and acquisition more than the owning and examining. Doing it that way is fun in a rising market with cheap transaction cots (easy to liquidate mistakes). Pulling 20% of the value out of a coin each time it changes hands makes it much harder. Yeah, I know most auction houses negotiate a percent higher than hammer, at least if you bring a good quantity to auction, but that isn't the only expense. Don't forget shipping, regrades, stickers, and photography. There are other ways to sell, of course, but every other method competes with the auction houses.
It also rubbed me the wrong way that gradeflation made it important to resubmit almost everything (unless in certain desirable plastic) a time or two to avoid leaving money on the table. Figure in the time it takes to fill out forms, package, drive to the PO, sit around for a third of a year to get the coins back, then do it all again for the sticker people. After all of that you send off the stuff and trust the auction house to put it in a favorable auction and to take quality photos.
At the end of the day there are a tremendous number of people working very hard and very smartly to extract money from coin collectors. It's the market, it's legal, and it's part of capitalism, but eventually, it just took some of the fun out of it.
There, I said it, but I'm not sure I was devoid of cynicism. Sorry.
They provide a service. You don’t think they should get paid for that service? A single digit net margin is hardly excessive.
Do you actually know that they have a single digit net margin? I would like to know where to go to see the financials of Stacks, Heritage, GC, and the others. It not like they have to actually buy anything they are auctioning.
I assume by “they” you are referring to the auction houses??
Yes, they provide a service. They’re allowed to charge whatever they want. Their entire purpose (as with all businesses) is to make a profit. They’re even allowed to be greedy, if they want.
They were able to run successful businesses for many years with the juice at a lower percentage. The big firms all raised those rates in lockstep with each other.
That rubbed me wrong, and I voted with my feet. That’s all. I’m not mad at them. I know next to nothing about their internal business structure, and frankly their net margin isn’t my concern. They are correct to act in their own best interest. The change is just one of a few things that made the hobby slightly less fun for me……. Taken all together, it was time for me to go, or take a long break, at the least.
The TPGs provide a crucial service, at least the way the hobby exists today. I think it has eliminated much of the nonsense and outright fraud that existed in the pre-TPG world. Still, I think they’re also very adept at finding ways to generate perpetual grading events. Paying them more to see if they’ll change their mind…… I know of nothing else like it in the appraisal world, which, in a sense, is really what grading is.
The huge bump in the vigorish during my few years of peak buying and selling is one of the primary reasons I decided to quit the hobby. It really doesn't matter what you call it or who you think pays it. Pretty much every auction house did it more or less simultaneously. If I was a big shareholder in the big auction houses, I'd see it differently, no doubt. The bottom line is that it increases the transaction cost of buying and selling coins. This changed dramatically. It affects everyone too and one way or another it gets passed on to collectors. Dealers with their own websites have to get inventory from somewhere and they need a place to liquidate coins that aren't moving.
It's a great hobby, but I enjoyed the chase and acquisition more than the owning and examining. Doing it that way is fun in a rising market with cheap transaction cots (easy to liquidate mistakes). Pulling 20% of the value out of a coin each time it changes hands makes it much harder. Yeah, I know most auction houses negotiate a percent higher than hammer, at least if you bring a good quantity to auction, but that isn't the only expense. Don't forget shipping, regrades, stickers, and photography. There are other ways to sell, of course, but every other method competes with the auction houses.
It also rubbed me the wrong way that gradeflation made it important to resubmit almost everything (unless in certain desirable plastic) a time or two to avoid leaving money on the table. Figure in the time it takes to fill out forms, package, drive to the PO, sit around for a third of a year to get the coins back, then do it all again for the sticker people. After all of that you send off the stuff and trust the auction house to put it in a favorable auction and to take quality photos.
At the end of the day there are a tremendous number of people working very hard and very smartly to extract money from coin collectors. It's the market, it's legal, and it's part of capitalism, but eventually, it just took some of the fun out of it.
There, I said it, but I'm not sure I was devoid of cynicism. Sorry.
They provide a service. You don’t think they should get paid for that service? A single digit net margin is hardly excessive.
Do you actually know that they have a single digit net margin? I would like to know where to go to see the financials of Stacks, Heritage, GC, and the others. It not like they have to actually buy anything they are auctioning.
I assume by “they” you are referring to the auction houses??
Yes, they provide a service. They’re allowed to charge whatever they want. Their entire purpose (as with all businesses) is to make a profit. They’re even allowed to be greedy, if they want.
They were able to run successful businesses for many years with the juice at a lower percentage. The big firms all raised those rates in lockstep with each other.
That rubbed me wrong, and I voted with my feet. That’s all. I’m not mad at them. I know next to nothing about their internal business structure, and frankly their net margin isn’t my concern. They are correct to act in their own best interest. The change is just one of a few things that made the hobby slightly less fun for me……. Taken all together, it was time for me to go, or take a long break, at the least.
The TPGs provide a crucial service, at least the way the hobby exists today. I think it has eliminated much of the nonsense and outright fraud that existed in the pre-TPG world. Still, I think they’re also very adept at finding ways to generate perpetual grading events. Paying them more to see if they’ll change their mind…… I know of nothing else like it in the appraisal world, which, in a sense, is really what grading is.
They may start breaking out SB's individual performance, rather than high level gross information, next quarter after the recent acquisition.
@BryceM said:
Greed.
It also rubbed me the wrong way that gradeflation made it important to resubmit almost everything (unless in certain desirable plastic) a time or two to avoid leaving money on the table. Figure in the time it takes to fill out forms, package, drive to the PO, sit around for a third of a year to get the coins back, then do it all again for the sticker people. After all of that you send off the stuff and trust the auction house to put it in a favorable auction and to take quality photos.
I've got the tale to tell you about that!
I found a coin on an auction website which showed three versions of the coin - a picture of the coin itself, a slab picture, and a TrueView with a different number than the slab picture. PCGS price guide is $2,500. The three coins didn't seem to match so I e-mailed the auction house and they were extremely slow to respond. Finally the auction house shared that the coin had be reholdered and the TV had the previous number. Neither the slab picture or the TV seemed the same as the coin picture. CAC listed both numbers as having a CAC.
After researching past sales on the various websites, I discovered the coin originally sold for $2,700 in 2021. Then $2,100 in 2024. I won the coin and confirmed the auction house picture was accurate when I received it. My cost was $1,600. All that work by the last seller for nothing!
I bid at all of the auction houses but I also buy from a select group of dealers and always keep a close eye on getting a good price, but above all I like to get the coins that I really want, if they cost a little more so be it.
I haven't found much recently at HA and the bids are running pretty high on the nice stuff I want at GC so it seems lately that the best prices for me on nice coins has been through the dealers. But I really have no gripes about any of them, they all do a good job and everyone has the option of not using something if they don't want to.
What happens is I discount my bids / offers accordingly or just don’t do business with them period. Or on the sales end just markup the item cost plus.
Some people will view any for-profit business as "greedy" (excepting themselves, of course) just because they seek to make a fair profit. Those same people will happily cherry pick a coin and make 500%, but don't think that represents "greed". But if Heritage or anyone else makes a 10% net margin, they are "greedy".
"Heritage handles over 40 varieties of collectibles and every department works a little differently. In XXXXXX we have a 15% consignor’s fee. It amounts to 15% of whatever the hammer price is...Our profit is made off of the buyer’s fee, which in XXXXXX is 20% added to the hammer price. "
I thought about a PM, but then, sometimes (very rarely) a public airing of thoughts is appropriate, regardless of the snark . . .
BryceM constructed one of the most salient pieces of numismatic assessment for an advanced hobbyist or collector. Simply beautiful post . . .and it is unfortunate that we don't dig deeper into his meaning or philosophy behind his decision. He makes a solid point on (in part) why he decided to pull back, but the guts of what he said rockets overhead at warp factor 6 while we explore the weeds . . . .
@BAJJERFAN said:
Do they still charge a commission on top of the juice?
Who?
Any of the major auction houses. IIRC Heritage used to have a 10% commish, but I can't even find a suitable search function on their site to search for fees. Maybe they've all graduated to a juice only fee policy.
@BAJJERFAN said:
Do they still charge a commission on top of the juice?
Who?
Any of the major auction houses. IIRC Heritage used to have a 10% ommish, but I can't even find a suitable search function on their site to search for fees. Maybe they've all graduated to a juice only fee policy.
At some auction houses little is published and much is negotiated these days.
@Cougar1978 said:
What happens is I discount my bids / offers accordingly or just don’t do business with them period. Or on the sales end just markup the item cost plus.
That's really all you can do if you're buying to resell. Common sense.
I've never been a fan of buyer's fees on traditional auctions because I'm being charged for the privilege of spending my money. We'll obviously still do it if warranted though, and yes, it impacts what we bid because it has to.
A buyer's fee is not like paying an entry fee or early bird fee at a show...those I like because they tend to shake out the tire kickers who waste valuable time. They hurt auctions though because unlike show attendees, auction buyers are actually committing to potentially owning the item by bidding. The obvious exceptions where buyer fees aren't hurting bids would be hyper rarities and unique/top pop/low pop items that don't come up often, for obvious reasons. I don't know if anyone has done extensive analysis on this-someone likely has- but after pulling out the exceptions above, I always wondered how well the "nice for the grade but not rare" group has done in relation to normal retail market at traditional houses like HA/SB before the buyer juice. Not as well as some think, I'd wager. jmho
With gold premiums collapsing....with the cost of many items reduced in the digitial era....with online costs less than physical B&M auctions.....and now with 3 competitive firms (SB, GC, HA) excluding generalists like Ebay....I am surprised that the BP hasn't fallen a bit more overall or at least closer to the low-priced auctioner, sort of like how ETF and MF companies need to keep an eye on Vanguard's pricing.
I acknowledge that the auction houses do alot of work. HA's archives have tremendous coin information and descriptions over the decades -- invaluable, and I am grateful they are available for free online.
I personally think that a 20% BP on purchases other than low-priced items is a bit rich. You would think it would fall closer to the 10-12% range as costs have fallen today vs. pre-Internet.
@GoldFinger1969 . I could be mistaken, but I think the internet has required an increase in fees. To the best of my knowledge, when I first started getting coins from Heritage in the mid 1990's the buyers fee was 17%. At first Heritage had Tuesday and Thursday online auctions. I think the added cost of maintaining such an expansive web site compelled them to raise fees. I have always felt the quality of both the site and the coins offered made fees acceptable for all but the cheapest coins. James
@Clackamas1 said:
The 20% from heritage is just usury at this level. It affects my bid for sure.
In what way does it affect your bid?
You decide what you are willing to pay for the item and divide by 1.2. it lowers your bid. If you are going up against of person who don't care about the buyers' fee, it means that you are behind the 8 ball by 20%. In that case it's time to shop elsewhere.
No it doesn’t. You pay the same regardless. There’s no one who “doesn’t care” about the buyer’s fee. No one pays 20% more for a coin just because an auction house is selling it.
I have run into to people who have the same view as I do. But you are entitled to your opinion.
At a recent political items auctions, where the buyers' fee is 25%, a collector, who specializes in a particular candidate, told me that he had passed on the same item at $12,500 at show which sold at auction for $40,000. This collector is also a dealer who has had many years of of experience.
Sometimes people go crazy at auctons. You could plop the same item in front of them at a show, and they won't buy it for less. It's the "If someone else is bidding, it must be good," concept.
I'm with Bill on this. On all of his comments. I back the buyer's premium out of my bid. If someone wants to pay more for it, it's his / her coin. Most coins are not rare; you can find one similar to enough to said auction coin if you look and are patient enough more often than not.
He's right re some people bumping up auction bids to feed their egos. They think there is some sort of ego boost in buying said coin. I was looking at a nice Large Cent that was sold with the Nafziger (sp) collection, and someone paid an additional $8K more for a coin that I would have liked to get it. So be it.
"Vou invadir o Nordeste, "Seu cabra da peste, "Sou Mangueira......."
@Clackamas1 said:
The 20% from heritage is just usury at this level. It affects my bid for sure.
In what way does it affect your bid?
You decide what you are willing to pay for the item and divide by 1.2. it lowers your bid. If you are going up against of person who don't care about the buyers' fee, it means that you are behind the 8 ball by 20%. In that case it's time to shop elsewhere.
No it doesn’t. You pay the same regardless. There’s no one who “doesn’t care” about the buyer’s fee. No one pays 20% more for a coin just because an auction house is selling it.
I have run into to people who have the same view as I do. But you are entitled to your opinion.
At a recent political items auctions, where the buyers' fee is 25%, a collector, who specializes in a particular candidate, told me that he had passed on the same item at $12,500 at show which sold at auction for $40,000. This collector is also a dealer who has had many years of of experience.
Sometimes people go crazy at auctons. You could plop the same item in front of them at a show, and they won't buy it for less. It's the "If someone else is bidding, it must be good," concept.
He's right re some people bumping up auction bids to feed their egos. They think there is some sort of ego boost in buying said coin. I was looking at a nice Large Cent that was sold with the Nafziger (sp) collection, and someone paid an additional $8K more for a coin that I would have liked to get it. So be it.
None of that has anything to do with not factoring in a buyer's premium. Everyone factors in a buyer's premium in their bid, because they have to pay it. They may desire to pay more than you for a coin or get caught up in a bidding war, but unless they have no understanding of how an auction works they are not ignoring the fact that they must pay 20% on top of their bid.
None of that has anything to do with not factoring in a buyer's premium. Everyone factors in a buyer's premium in their bid, because they have to pay it. They may desire to pay more than you for a coin or get caught up in a bidding war, but unless they have no understanding of how an auction works they are not ignoring the fact that they must pay 20% on top of their bid.
It has everything to do with it. Getting caught up in a bidding war is a form of an ego thing to get the coin, where price doesn't matter. Rational people will set a ceiling on what they will spend for a coin.
However, some people want a coin, especially an expensive coin, and if they can get their hands on the money to buy it; it's a big ego thing for them to get it. I think it was Bill Jones gave an excellent example of a political token that went for $40K, while earlier, in another venue, there were no bids for it at $12,500.
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None of that has anything to do with not factoring in a buyer's premium. Everyone factors in a buyer's premium in their bid, because they have to pay it. They may desire to pay more than you for a coin or get caught up in a bidding war, but unless they have no understanding of how an auction works they are not ignoring the fact that they must pay 20% on top of their bid.
It has everything to do with it. Getting caught up in a bidding war is a form of an ego thing to get the coin, where price doesn't matter. Rational people will set a ceiling on what they will spend for a coin.
However, some people want a coin, especially an expensive coin, and if they can get their hands on the money to buy it; it's a big ego thing for them to get it. I think it was Bill Jones gave an excellent example of a political token that went for $40K, while earlier, in another venue, there were no bids for it at $12,500.
None of that is relevant to the conversation about buyer’s premium and I don’t think you understand the point I am making, but I’ll drop it.
Some people will view any for-profit business as "greedy" (excepting themselves, of course) just because they seek to make a fair profit. Those same people will happily cherry pick a coin and make 500%, but don't think that represents "greed". But if Heritage or anyone else makes a 10% net margin, they are "greedy".
"Heritage handles over 40 varieties of collectibles and every department works a little differently. In XXXXXX we have a 15% consignor’s fee. It amounts to 15% of whatever the hammer price is...Our profit is made off of the buyer’s fee, which in XXXXXX is 20% added to the hammer price. "
10% net margin?
Net is not gross. On some lots where they are paying 105% of hammer even their gross margin is only 15%, sometimes even less.
Some people will view any for-profit business as "greedy" (excepting themselves, of course) just because they seek to make a fair profit. Those same people will happily cherry pick a coin and make 500%, but don't think that represents "greed". But if Heritage or anyone else makes a 10% net margin, they are "greedy".
"Heritage handles over 40 varieties of collectibles and every department works a little differently. In XXXXXX we have a 15% consignor’s fee. It amounts to 15% of whatever the hammer price is...Our profit is made off of the buyer’s fee, which in XXXXXX is 20% added to the hammer price. "
10% net margin?
Net is not gross. On some lots where they are paying 105% of hammer even their gross margin is only 15%, sometimes even less.
I know dealers who get 110%, as long as they keep their quota
Some people will view any for-profit business as "greedy" (excepting themselves, of course) just because they seek to make a fair profit. Those same people will happily cherry pick a coin and make 500%, but don't think that represents "greed". But if Heritage or anyone else makes a 10% net margin, they are "greedy".
"Heritage handles over 40 varieties of collectibles and every department works a little differently. In XXXXXX we have a 15% consignor’s fee. It amounts to 15% of whatever the hammer price is...Our profit is made off of the buyer’s fee, which in XXXXXX is 20% added to the hammer price. "
10% net margin?
Net is not gross. On some lots where they are paying 105% of hammer even their gross margin is only 15%, sometimes even less.
I know dealers who get 110%, as long as they keep their quota
I don't want to overstate the obvious, but you should always know what your "all in" costs of a coin is as a buyer. Sellers negotiate whatever they negotiate with the auction house, so it doesn't matter whether the buyer is paying the auction house or the owner of the coin. Your total cost is your total cost.
I don't have any problems with the auction house formats as they are currently set with bp%. I look at it quite simply as an auction house is simply providing the service of connecting seller with buyer for a transaction, which includes processing, imagery, research at times, objective(?) description, and marketing material to as broad a group of potential buyers as they can muster. They take a cut of the sales transaction, be it from buyer, or seller, or both to one degree or another. I like to think the competition to secure material keeps auction houses in line with their fee structures for both participants.
As a buyer or a seller, one can take a different path than auctions, and those too have some pitfalls.
I've never understood this issue when purchasing. If my limit is 1k (net I am willing to pay) it's elementary school math to determine my bid. On the buy side it makes no difference if the vig is 10% 20% or 50%.
I look at coins as strictly a hobby, not an investment, but I do like to determine how deep of a hole I'm in with a purchase by seeing if I sold the same coin at the same venue for the same net price how much I'd be down. Makes you reasonable how much appreciation would be needed to break even, not even considering opportunity cost.
I do procure inventory from auc houses occasionally.
The auc houses have to recover Opex like any other business. I may adjust down my bids to offset the juice. Just analyze the math to compare purchasing venues.
My concern is more if some rich competing bidder. I have auc house wins where I scored some super pickups which have led to some good margins sales wise.
With the buyer's premium provided in dollar terms right in front of your face as you consider an another bid, I don't see the issue. It's a free market. If you can't afford it, you don't bid again.
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@jmlanzaf, you keep talking about gross and net margin as if the auction houses buy the products they are auctioning. They don’t incur any cost to own the coin. They don’t own the coins. The consignor does until the buyer pays and assumes ownership. Am I missing something here?
@BryceM said: @jmlanzaf, you keep talking about gross and net margin as if the auction houses buy the products they are auctioning. They don’t incur any cost to own the coin. They don’t own the coins. The consignor does until the buyer pays and assumes ownership. Am I missing something here?
Just a little "well actually". Many of the auction houses own a significant percentage of the coins they auction. Not just the little fly by night houses either.
Oh, sure. I’m aware of that. They probably own a lot more of the coins at auction than people realize. But, to this point, the topic of this thread has pertained to coins consigned to auction, and buyer fees associated with those.
It’s amazing to me how many here begrudge dealers and auction houses from making a profit for services rendered. If there’s a better model then the market will find it and disrupt.
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Some people will view any for-profit business as "greedy" (excepting themselves, of course) just because they seek to make a fair profit. Those same people will happily cherry pick a coin and make 500%, but don't think that represents "greed". But if Heritage or anyone else makes a 10% net margin, they are "greedy".
No doubt I will get schooled here but I don't quite understand. I have been bidding on coins at Heritage since the 1990's. Back then their base fee was 17%. So 17% was safe and sane but a 3% increase 25 years later is patented greed? It is futile to be angry at bidders who are willing to pay more for an item then you are.
I have come across auction houses that charge as litte as the base 10% Great Collections charges to the 25% some auction houses charge. There is even one I recently found that charges an added 5% for "internet" users. Their house ; their rules. All that matters is whether the coins are worth the added costs. anybody can bid or walk away. James
Are you factoring in seller's commissions in your analysis?
From an acctg. Point of View the Auction House has to clear enough to offset Opex.
However if the buyers fee greater than 10pct won’t do biz w them anyway. It’s an individual preference for me.
Obviously the auc houses likely have higher overhead than a bourse room dealer who is a competitor. So the AH cost structure and market conditions is going to have an impact on financial strategy in setting fees. Now if bidders get caught up in bid war like a breakaway play that’s in the auc house favor. For me if bidding in auc I am there to buy it right that I have a chance to successfully retail it in the green / so no bid war for me. If my goal win an item at 10 pct back of bid will factor vig in Calc accordingly. Then if lose to some rich bidder well at least I took my shot at bat.
I think a lot of AH bidders don’t really have a concept of setting a bid limit which puts them around bid (or where they want to be) once the juice is added or whatever amount the purchase adds up to. Or these could be wealthy collectors that the cost of the item is chump change to them.
As far as some bidder getting bid up paying more than anybody in the country - that’s on him not the auc house.
@DisneyFan . I am just looking at base buyer fees. All other sundry charges ie; shipping & handling, method of payment, rushed delivery, taxes are each buyers resposibility to be informed on and apply accordingly. I have never sold thru Heritage and have no idea about the fee structure. I have sold thru Great Collections several times and have no complaints. I have always gotten what i paid for buying and selling. James
Therein lies the problem, and the logic flaw that many in this thread overlook. The 20% “buyers premium” represents the highest gross profit margin (edit- perhaps really low value might have a 5% seller commission, but don’t know how often that happens these days since the bp was raised to 20) but many higher value consignments or from frequent consignors have negotiated backend rates that lower that margin.
Imagine a consignment is a one first time, and probably last time collector with 100 coins that total out to 40,000. They are not getting a better rate, and heritage will gross 8k, or $80 per coin. When you factor in the photography, cataloging, all of the overhead from employees, insurance, marketing etc, their NET margins are likely single digits as @Boosibri suggested.
Now, imagine a consignment from a regular customer with a total value of $200,000….with only 10 coins. Obviously, this is far less labor intensive for them and requires substantially less man hours. Heritage does not need to make $4,000 per coin, so they now have the flexibility to negotiate. Whether they offer the consignor 105%, 107%, 110% or perhaps even more…but the people bidding don’t know that (for many justified reasons).
Stacks operates in a similar fashion, but GC with their fixed 10% found success with a different model by using a more barebones approach with transparent figure, but the tradeoff is that there are no descriptions, physical catalogues, less marketing costs and overhead.
David Lawrence used an approach by calling it a “sellers fee” instead, so while it appears that the bidder is saving money, but as an example. the consignor could be receiving 90% of hammer, instead of 110% of hammer at a traditional auction house. Heritage could do the same thing, but then the “Hammer” price would include the former “BP”. They could also implement a system where there’s a fixed “BP” of 10%, and a variable sellers premium that could be up to 10%.
In any of these scenarios, the CONSIGNOR is the one who’s forfeiting a portion of the FMV in order to use the service.
FMV defined- A static figure, the total amount of money that someone was willing to pay to a acquire a coin, AT THAT GIVEN TIME. If a dealer wins the coin, marks it up 10% and sells it the next day, then that’s the new FMV.
I’m summary, the CONSIGNOR is the one who foots the bill for the services rendered by the auction house…full stop. The rest of it is just marketing and semantics used to present the fee differently, whether or not they’re trying to market towards the people bidding or the people selling. The total paid by the buyer, total distribution to the consignor, and the AH commission could be the exact same no matter what you want to call it. As it stands, HA’s strategy indicates they’re trying to appeal to consignors, whereas DLRC is evidently trying to appeal to bidders.
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Actually, with a 20% seller's commission and a 20% buyers' commission the house gross would be $16,000 or $160 per coin.
Only one side would have the 20% premium in that scenario, assuming it was a typical consignment where consignor gets 100% of hammer. The other scenario situating with the 10/10 was just a hypothetical alternate that would amount to the same, but present much differently to bidders.
Though my math is off because I did quick math for 20% vs /1.2, so it should have been closer to a $6700 commission or $67 per coin. I have heard of situations where the consignor might have a 5% fee and only net 95% of hammer if it is a large quantity of inexpensive coins but I doubt there’s many consignors that get less than 100% of hammer since the BP went up to 20%.
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Yes, there are some yahoo bidders out there, but the real targets are the yahoo consignors - especially inexperienced non-collectors representing estates - who think that the buyer's premiums are irrelevant, and that selling a coin without paying a commission has to be a great deal.
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?What percentage of expenses go to printed catalogs? Maybe time to ditch them. …..
Who has that fee structure?
Outside the BAY used GC. On GC I fudge down my bids to bump out the buyers fee. If lose to some rich guy so be it. I still manage to win some there. Great retail stock!
Yes, there are some yahoo bidders out there, but the real targets are the yahoo consignors - especially inexperienced non-collectors representing estates - who think that the buyer's premiums are irrelevant, and that selling a coin without paying a commission has to be a great deal.
Andy, you are absolutely correct. For everyone reading this thread, you would be amazed how many collectors keep their holdings a secret from their heirs. So, when the time comes, an inexperienced executor or attorney has to handle things. So, two auction houses come along - one offers, say, 105% of hammer and the other, 100%. Now, the auction house with the lower offer may actually net the consignors more money because of marketing, larger bidder pool, etc. However, the attorney won't care - he just wants to get the deal done and can go back to the heirs and can say he took the higher percentage offer. This happens all the time.
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Greed.
The huge bump in the vigorish during my few years of peak buying and selling is one of the primary reasons I decided to quit the hobby. It really doesn't matter what you call it or who you think pays it. Pretty much every auction house did it more or less simultaneously. If I was a big shareholder in the big auction houses, I'd see it differently, no doubt. The bottom line is that it increases the transaction cost of buying and selling coins. This changed dramatically. It affects everyone too and one way or another it gets passed on to collectors. Dealers with their own websites have to get inventory from somewhere and they need a place to liquidate coins that aren't moving.
It's a great hobby, but I enjoyed the chase and acquisition more than the owning and examining. Doing it that way is fun in a rising market with cheap transaction cots (easy to liquidate mistakes). Pulling 20% of the value out of a coin each time it changes hands makes it much harder. Yeah, I know most auction houses negotiate a percent higher than hammer, at least if you bring a good quantity to auction, but that isn't the only expense. Don't forget shipping, regrades, stickers, and photography. There are other ways to sell, of course, but every other method competes with the auction houses.
It also rubbed me the wrong way that gradeflation made it important to resubmit almost everything (unless in certain desirable plastic) a time or two to avoid leaving money on the table. Figure in the time it takes to fill out forms, package, drive to the PO, sit around for a third of a year to get the coins back, then do it all again for the sticker people. After all of that you send off the stuff and trust the auction house to put it in a favorable auction and to take quality photos.
At the end of the day there are a tremendous number of people working very hard and very smartly to extract money from coin collectors. It's the market, it's legal, and it's part of capitalism, but eventually, it just took some of the fun out of it.
There, I said it, but I'm not sure I was devoid of cynicism. Sorry.
But it’s ok for a dealer to buy a coin at a Stacks or Heritage auction and then turn around and offer it at 25-30% over their buy price even after most serious collectors and dealers have seen it? Do you complain about that? Funny part is that I know a dealer that does that and will still sell the coin off of his list.
Just fudge down your bid to cover the juice wherever.
Or Shop them around the bourse at a show see if you can get at least 10 -20 pct behind CDN bid. Generally I offer 10-20 pct behind bid from my table at shows. That’s cash money too. Picked up a group of about 15 slabbed coins from my table recently.
After you pay all that vigorish, shipping, plus wait time etc (auc houses) where are you vs CDN bid?
As far as auc house fees that is proprietary with their business. Like any other player Opex has to be recovered. You don’t think their site expense, transportation, salary expense, building depr is free do you?
They provide a service. You don’t think they should get paid for that service? A single digit net margin is hardly excessive.
You need to check with each auction house as some auction houses no longer publish their consignor fees.
Thinking about this... how offend had you look at a piece to bid on and you find it has been in auctions 3 or 4 times in the recent past ( say in the last 5 - 7 years). The net result is that the auction houses fees have now approach 100% of value of the coin.
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Do you actually know that they have a single digit net margin? I would like to know where to go to see the financials of Stacks, Heritage, GC, and the others. It not like they have to actually buy anything they are auctioning.
I assume by “they” you are referring to the auction houses??
Yes, they provide a service. They’re allowed to charge whatever they want. Their entire purpose (as with all businesses) is to make a profit. They’re even allowed to be greedy, if they want.
They were able to run successful businesses for many years with the juice at a lower percentage. The big firms all raised those rates in lockstep with each other.
That rubbed me wrong, and I voted with my feet. That’s all. I’m not mad at them. I know next to nothing about their internal business structure, and frankly their net margin isn’t my concern. They are correct to act in their own best interest. The change is just one of a few things that made the hobby slightly less fun for me……. Taken all together, it was time for me to go, or take a long break, at the least.
The TPGs provide a crucial service, at least the way the hobby exists today. I think it has eliminated much of the nonsense and outright fraud that existed in the pre-TPG world. Still, I think they’re also very adept at finding ways to generate perpetual grading events. Paying them more to see if they’ll change their mind…… I know of nothing else like it in the appraisal world, which, in a sense, is really what grading is.
They may start breaking out SB's individual performance, rather than high level gross information, next quarter after the recent acquisition.
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I've got the tale to tell you about that!
I found a coin on an auction website which showed three versions of the coin - a picture of the coin itself, a slab picture, and a TrueView with a different number than the slab picture. PCGS price guide is $2,500. The three coins didn't seem to match so I e-mailed the auction house and they were extremely slow to respond. Finally the auction house shared that the coin had be reholdered and the TV had the previous number. Neither the slab picture or the TV seemed the same as the coin picture. CAC listed both numbers as having a CAC.
After researching past sales on the various websites, I discovered the coin originally sold for $2,700 in 2021. Then $2,100 in 2024. I won the coin and confirmed the auction house picture was accurate when I received it. My cost was $1,600. All that work by the last seller for nothing!
I bid at all of the auction houses but I also buy from a select group of dealers and always keep a close eye on getting a good price, but above all I like to get the coins that I really want, if they cost a little more so be it.
I haven't found much recently at HA and the bids are running pretty high on the nice stuff I want at GC so it seems lately that the best prices for me on nice coins has been through the dealers. But I really have no gripes about any of them, they all do a good job and everyone has the option of not using something if they don't want to.
What happens is I discount my bids / offers accordingly or just don’t do business with them period. Or on the sales end just markup the item cost plus.
"Heritage handles over 40 varieties of collectibles and every department works a little differently. In XXXXXX we have a 15% consignor’s fee. It amounts to 15% of whatever the hammer price is...Our profit is made off of the buyer’s fee, which in XXXXXX is 20% added to the hammer price. "
10% net margin?
I thought about a PM, but then, sometimes (very rarely) a public airing of thoughts is appropriate, regardless of the snark . . .
BryceM constructed one of the most salient pieces of numismatic assessment for an advanced hobbyist or collector. Simply beautiful post . . .and it is unfortunate that we don't dig deeper into his meaning or philosophy behind his decision. He makes a solid point on (in part) why he decided to pull back, but the guts of what he said rockets overhead at warp factor 6 while we explore the weeds . . . .
Nice reply above BryceM . . . . . .
Drunner
Do they still charge a commission on top of the juice?
Who?
Any of the major auction houses. IIRC Heritage used to have a 10% commish, but I can't even find a suitable search function on their site to search for fees. Maybe they've all graduated to a juice only fee policy.
At some auction houses little is published and much is negotiated these days.
That's really all you can do if you're buying to resell. Common sense.
I've never been a fan of buyer's fees on traditional auctions because I'm being charged for the privilege of spending my money. We'll obviously still do it if warranted though, and yes, it impacts what we bid because it has to.
A buyer's fee is not like paying an entry fee or early bird fee at a show...those I like because they tend to shake out the tire kickers who waste valuable time. They hurt auctions though because unlike show attendees, auction buyers are actually committing to potentially owning the item by bidding. The obvious exceptions where buyer fees aren't hurting bids would be hyper rarities and unique/top pop/low pop items that don't come up often, for obvious reasons. I don't know if anyone has done extensive analysis on this-someone likely has- but after pulling out the exceptions above, I always wondered how well the "nice for the grade but not rare" group has done in relation to normal retail market at traditional houses like HA/SB before the buyer juice. Not as well as some think, I'd wager. jmho
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With gold premiums collapsing....with the cost of many items reduced in the digitial era....with online costs less than physical B&M auctions.....and now with 3 competitive firms (SB, GC, HA) excluding generalists like Ebay....I am surprised that the BP hasn't fallen a bit more overall or at least closer to the low-priced auctioner, sort of like how ETF and MF companies need to keep an eye on Vanguard's pricing.
I acknowledge that the auction houses do alot of work. HA's archives have tremendous coin information and descriptions over the decades -- invaluable, and I am grateful they are available for free online.
I personally think that a 20% BP on purchases other than low-priced items is a bit rich. You would think it would fall closer to the 10-12% range as costs have fallen today vs. pre-Internet.
@GoldFinger1969 . I could be mistaken, but I think the internet has required an increase in fees. To the best of my knowledge, when I first started getting coins from Heritage in the mid 1990's the buyers fee was 17%. At first Heritage had Tuesday and Thursday online auctions. I think the added cost of maintaining such an expansive web site compelled them to raise fees. I have always felt the quality of both the site and the coins offered made fees acceptable for all but the cheapest coins. James
I'm with Bill on this. On all of his comments. I back the buyer's premium out of my bid. If someone wants to pay more for it, it's his / her coin. Most coins are not rare; you can find one similar to enough to said auction coin if you look and are patient enough more often than not.
He's right re some people bumping up auction bids to feed their egos. They think there is some sort of ego boost in buying said coin. I was looking at a nice Large Cent that was sold with the Nafziger (sp) collection, and someone paid an additional $8K more for a coin that I would have liked to get it. So be it.
"Seu cabra da peste,
"Sou Mangueira......."
None of that has anything to do with not factoring in a buyer's premium. Everyone factors in a buyer's premium in their bid, because they have to pay it. They may desire to pay more than you for a coin or get caught up in a bidding war, but unless they have no understanding of how an auction works they are not ignoring the fact that they must pay 20% on top of their bid.
It has everything to do with it. Getting caught up in a bidding war is a form of an ego thing to get the coin, where price doesn't matter. Rational people will set a ceiling on what they will spend for a coin.
However, some people want a coin, especially an expensive coin, and if they can get their hands on the money to buy it; it's a big ego thing for them to get it. I think it was Bill Jones gave an excellent example of a political token that went for $40K, while earlier, in another venue, there were no bids for it at $12,500.
"Seu cabra da peste,
"Sou Mangueira......."
None of that is relevant to the conversation about buyer’s premium and I don’t think you understand the point I am making, but I’ll drop it.
Net is not gross. On some lots where they are paying 105% of hammer even their gross margin is only 15%, sometimes even less.
I know dealers who get 110%, as long as they keep their quota
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"quota?"
I don't want to overstate the obvious, but you should always know what your "all in" costs of a coin is as a buyer. Sellers negotiate whatever they negotiate with the auction house, so it doesn't matter whether the buyer is paying the auction house or the owner of the coin. Your total cost is your total cost.
I don't have any problems with the auction house formats as they are currently set with bp%. I look at it quite simply as an auction house is simply providing the service of connecting seller with buyer for a transaction, which includes processing, imagery, research at times, objective(?) description, and marketing material to as broad a group of potential buyers as they can muster. They take a cut of the sales transaction, be it from buyer, or seller, or both to one degree or another. I like to think the competition to secure material keeps auction houses in line with their fee structures for both participants.
As a buyer or a seller, one can take a different path than auctions, and those too have some pitfalls.
I've never understood this issue when purchasing. If my limit is 1k (net I am willing to pay) it's elementary school math to determine my bid. On the buy side it makes no difference if the vig is 10% 20% or 50%.
I look at coins as strictly a hobby, not an investment, but I do like to determine how deep of a hole I'm in with a purchase by seeing if I sold the same coin at the same venue for the same net price how much I'd be down. Makes you reasonable how much appreciation would be needed to break even, not even considering opportunity cost.
I do procure inventory from auc houses occasionally.
The auc houses have to recover Opex like any other business. I may adjust down my bids to offset the juice. Just analyze the math to compare purchasing venues.
My concern is more if some rich competing bidder. I have auc house wins where I scored some super pickups which have led to some good margins sales wise.
With the buyer's premium provided in dollar terms right in front of your face as you consider an another bid, I don't see the issue. It's a free market. If you can't afford it, you don't bid again.
"Got a flaming heart, can't get my fill"
@jmlanzaf, you keep talking about gross and net margin as if the auction houses buy the products they are auctioning. They don’t incur any cost to own the coin. They don’t own the coins. The consignor does until the buyer pays and assumes ownership. Am I missing something here?
Just a little "well actually". Many of the auction houses own a significant percentage of the coins they auction. Not just the little fly by night houses either.
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Oh, sure. I’m aware of that. They probably own a lot more of the coins at auction than people realize. But, to this point, the topic of this thread has pertained to coins consigned to auction, and buyer fees associated with those.
It’s amazing to me how many here begrudge dealers and auction houses from making a profit for services rendered. If there’s a better model then the market will find it and disrupt.
Latin American Collection