How do you feel consignment fees should work?
piecesofme
Posts: 6,669 ✭✭✭
I know this would be better suited to be asked on the US coin Forum, but I enjoy this Forum far better, so I will ask it here.
What do you feel would be more fair with you being the person doing the consigning (selling)?
I came up with this and I would consign a heck of alot more if it were the case. What do you think of it?
Here's my example:
Coin gets bid to $150, but the buyer pays 10%, so their actual invoice (less shipping and/or taxes if applicable) would be for $165.
How about if the 5% consignment fee was based off of $150, or $165? My arguement is, the coin only got bid up to $150, not $165 that would be invoiced, therefore I should only be charged 5% of $150, not $165. I know this example only reflects a difference of .75...but let's say I'm selling high $ coins. There would be significant differences in how this is figured then.
The auction house is already making 10% from the bidder...why screw the seller over by charging them what it "realized" vs. what it was actually bid up to? Seems to me like an auction house would make far more profits doing it this way because I think it would sway more people to consign, therefore, more coins would be available to be sold.
I know this is a pipe dream and aint gonna happen due to, well i'll just say it...greed, but why not? Why is this a bad idea if you are an auction house?
What do you feel would be more fair with you being the person doing the consigning (selling)?
I came up with this and I would consign a heck of alot more if it were the case. What do you think of it?
Here's my example:
Coin gets bid to $150, but the buyer pays 10%, so their actual invoice (less shipping and/or taxes if applicable) would be for $165.
How about if the 5% consignment fee was based off of $150, or $165? My arguement is, the coin only got bid up to $150, not $165 that would be invoiced, therefore I should only be charged 5% of $150, not $165. I know this example only reflects a difference of .75...but let's say I'm selling high $ coins. There would be significant differences in how this is figured then.
The auction house is already making 10% from the bidder...why screw the seller over by charging them what it "realized" vs. what it was actually bid up to? Seems to me like an auction house would make far more profits doing it this way because I think it would sway more people to consign, therefore, more coins would be available to be sold.
I know this is a pipe dream and aint gonna happen due to, well i'll just say it...greed, but why not? Why is this a bad idea if you are an auction house?
To forgive is to free a prisoner, and to discover that prisoner was you.
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Worry is the interest you pay on a debt you may not owe.
"Paper money eventually returns to its intrinsic value---zero."----Voltaire
"Everything you say should be true, but not everything true should be said."----Voltaire
For who? The buyer, the seller, or both? Why not both?
Why does an auction house need to make, in effect, 15% on a $10k+ coin? I could see this, on say, up to $1k, but above that should be a lesser % imo.
OR
I still like my idea of only being charged (being the seller) what it was bid up to, not the total realized price after the buyer pays their % premium. Let them make the $ off the buyer. It really boils down to just being greedy and double dipping more than it really needs to be.
<< <i>the % should be lowered as the value of the coin rises.
For who? The buyer, the seller, or both? Why not both?
Why does an auction house need to make, in effect, 15% on a $10k+ coin? I could see this, on say, up to $1k, but above that should be a lesser % imo.
OR
I still like my idea of only being charged (being the seller) what it was bid up to, not the total realized price after the buyer pays their % premium. Let them make the $ off the buyer. It really boils down to just being greedy and double dipping more than it really needs to be. >>
They can typically make 30% off each consignment. They make 15% off of the buyer and up to 15% from the cosigner as well. Obviously, no one is forcing you to use their service. Use the other options available. Also feel free is to start your own action company and charge what you would like. Heck, do it for free.......Knock yourself out. MJ
Fellas, leave the tight pants to the ladies. If I can count the coins in your pockets you better use them to call a tailor. Stay thirsty my friends......
This assumes that consignors don't negotiate their 15% seller's fee. Most auction houses these days will essentially waive the seller's fee on any 5 figure consignment. In many
cases you can start digging into the buyer's fee as well. It's not unusual to get 103-106% of hammer price (ie a buyer's fee of 9-12% / 0% seller's fee) with a fair sized consignment
of desireable material.
Since most bidders these days back off their bids by 15%, in essence that fee comes out of the seller's pocket as well. Most of the coins I've consigned over the past few auctions
netted me between 88-91% of the prices realized. It only matters what you walk away from the auction with. The fees can be confusing at times esp. with them being based on
hammer price. The auction houses can charge a 20% buyer's and 20% seller's fee. But as long as I still walk out with about 90%....I'm happy. The auction house only makes
money off the bidder when the bidder forgets to back off their bids by 15% OR just bids willy nilly to win the coin regardless of perceived market value (ie nuclear bids). In most
scenarios with educated bidders and sellers, it all comes out of the seller's pocket....and it should. Why should a bidder realistically have to pay a 15% entrance fee to walk into an
auction. It's no different than if you as a buyer on the bourse had to pay 15% on top of what a bourse was already charging for a coin. It wouldn't take long before you started
subtracting 15% from quoted prices so that you didn't pay over market. I feel the current auction fee system is done to only confuse both buyers and consignors. And in this way
the auction house benefits at times from that confusion. It certainly helps them when dealing with uneducated consignors who feel they are only being charged a 5-15% seller's fee.
It looks good on paper!.....until they get the final consignor statement where they received only 70-80% of full market value rather than the 85-90% they were expecting.
roadrunner
I know I am not forced to do anything, nor did I force an auction house to start their company and be responsible for the known risks that are involved in doing so. So you see, it's simply a matter of being fair. You can still make $ and be fair, I do it here every transaction on a much smaller scale than a well known auction house could. You don't have to rape folks from both sides (buying & selling), and as I said, I think it would increase the chances of people being willing to consign.
I guess what I'm asking is, at what point does it stop you from buying/selling when the fees are fueled by nothing more than blatant, in your face, take it or leave it GREED?
When dealers try this approach with me at local shows, I make it a point to let other potential customers know that all that dealer cares about it taking the $'s out of your pocket and has no customer service skills whatsoever. Sure, charge whatever the heck you want, but don't be ignorant to the fact that the result of that will be critisism.
Conversely, I spread the word of who is fair and I make it a point to thank the dealer for their fairness, because that means I will be back for more at some point.
POM, whatever. Debating you is fruitless. The world according to POM is not one I would care to live in. Really, nothing personal. Just how I feel. I'd say it to your face so why not here? Knock yourself out with your obsession with greed while totally not taking into effect operating costs and net profits into business models. Instead your test case is always based on greed trying to trigger a knee jerk emotional response by the readers of your diatribes. Companies that tend to be truly greedy usually tend to go out of business under their own momentum. Companies who take the risk and become industry leaders are entitled to profits that sustain growth and reward their shareholders/principals. It's a reward for doing things right. If they eventually get too greedy someone will come along and take their share. Seriously, start your own business and do it your way. In the meantime avoid greedy auction houses.
I took a year off or so from responding directly to one of your threads. I probably will take another year off.
All the best.
MJ
Fellas, leave the tight pants to the ladies. If I can count the coins in your pockets you better use them to call a tailor. Stay thirsty my friends......
So on your example $150 is the price basis for everything. In reality the auction house just pays you off the sum of the buyer's fee + seller's fee
or $150 x (100% - (BF% + SF%)) = net payment to seller. On my own consignment from 2004 it worked out to be = $150 x (100% - (12% + 0%)) = $132.
That 12% commission rate (103/115) works out to be a net walk home rate of 89.6% (or a net commish of 10.4%). Unless the bidders were idiots, that 10.4% came
out of my pocket, not theirs. But I would have been happy if they paid it for me by not backing off bids by 15%.
Since most auction houses are for the most part only making 8-14% on the bulk of their consignments (before expenses) it's not exactly a high margin business.
With expenses factored in it could be as low as 4-6% depending on the sale in question. No doubt that varies quite a bit based on market conditions.
But auctions are a safe and reliable business model if you get the consignments year in and year out like Heritage does. Note that ANR, Stacks, and B&M had to eventually
combine to get more competitive and make money in the auction business. They were getting so "rich" off their sales that they had to combine to survive....lol.
I recall back in the late 1980's before the fees got much trickier, my typical net payment would be at best 87%. In some cases it was as low as 82% when I had
common items consigned. So getting 88-91% these days is an improvement imo. The fees on the antiques side are higher. I believe it's either Sotheby's or another
major house who has a 20-25% seller's or buyer's fee. But that doesn't mean you as a consignor can't negotiate into both the seller's and/or buyer's fees.
If one starts talking about putting material on consignment with a bourse floor dealer or B&M shop that works a bit different. And it's much easier to take advantage of
customers unless you have terms nailed down (time, fees, asking price, etc.). The auction houses do such a great job on low margins that they have cut deeply into
the bourse and retail markets....in many cases forcing those dealers to reduce margins as well. But in the process it appears to be forcing less profitable dealers out of
business.
roadrunner
<< <i>the % should be lowered as the value of the coin rises.
For who? The buyer, the seller, or both? Why not both?
Why does an auction house need to make, in effect, 15% on a $10k+ coin? I could see this, on say, up to $1k, but above that should be a lesser % imo.
OR
I still like my idea of only being charged (being the seller) what it was bid up to, not the total realized price after the buyer pays their % premium. Let them make the $ off the buyer. It really boils down to just being greedy and double dipping more than it really needs to be. >>
I was talking about giving a trusted dealer a coin on consignment to sell for you where he would take a % of the sale price as his fee for selling your coin.
Worry is the interest you pay on a debt you may not owe.
"Paper money eventually returns to its intrinsic value---zero."----Voltaire
"Everything you say should be true, but not everything true should be said."----Voltaire
God forbid we have a civil conversation without your knee jerk reaction being, what's pom complaining about this time, and it dripping in sarcasm, right?
All it was was an idea, I think i said in the very first post that I knew it aint gonna happen. But I guess that translates as me complaining in your eyes.
Oh, I get it now. You can have an idea/topic for civil discussion, but I can't. My ideas are only subject to being picked apart when yours are more thought out and therefore have to be more seriously considered. I get it now, thanks for making it so clear.
On the other hand, if you offer Dealer A x% of the selling price to list it in his newsletter, or throw it in his case at his B&M or show table, that is a big difference. His overhead should be orders of magnitude smaller than a big auction house.
And as you referenced, you would probably get a lot more responses on the USCF, which seems to be populated by many more dealers and auction mavens.
If you look on Heritage's website, they do not list sellers' commissions but invite you to call or email to discuss. That, to me, means it is all negotiable and will probably be driven by the quality, type and dollar amount of the consignment.
My $0.02
That's what Ian is doing with his new site and he seems to be doing well. He has a fairly large volume of inventory. If he can do it, why cant eBay, Heritage, Teletrade just to name a few? I know the answer, but I'll keep it to myself because some will think that I'm trying to stir the pot when all I'm doing is pointing out that it can be done and still be profitable.
<< <i>I don't know of many businesses that could survive on gross margins of 15% (if I am following your example properly: 5% seller + 10% bidder).
That's what Ian is doing with his new site and he seems to be doing well. He has a fairly large volume of inventory. If he can do it, why can't eBay, Heritage, Teletrade just to name a few? I know the answer, but I'll keep it to myself because some will think that I'm trying to stir the pot when all I'm doing is pointing out that it can be done and still be profitable. >>
Assuming the house is not flexible with those terms, then the consignor is still ultimately paying 15% which is about on par with the big auctions houses. To compare Ian's relatively new
and much smaller operation to those bohemoths above is unreasonable. For one the customer base and total exposure for one's coins is much larger with those bigger guys. That "should" result in stronger prices....if one is willing to wait the several months needed from consignment to payment.
To get the same national exposure that say a Heritage can get for you including days of viewing at a major show, that costs huge money for catalogs, Brinks, hotels, insurance, temp workers, etc. There is a cost to pulling in potentially up to 700,000 internet bidders. I don't know how many cats that Heritage mails out per major auction but it must come to a small fortune. As much as we'd all like auction houses to pay us 95% of the final price realized, it's not happening anytime soon.
roadrunner