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What's a buyers prem?

cubfan89cubfan89 Posts: 632 ✭✭✭
in Trading Cards & Memorabilia Forum
Why do auction have these? It seems to me it would just drive bidders away. A gentlemen at work told me he bid on something several years ago for 65,000 but with the buyers prem. the total was 76,000. That's insane.

Comments

  • metalmikemetalmike Posts: 2,152 ✭✭
    On some auction items the buyers prem is the profit for the auction house.
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  • jimq112jimq112 Posts: 3,511 ✭✭✭
    It's a percentage of the winning bid. Somebody has to pay the auction house for their work. Ebay charges seller fees, think of buyer premium as buyers fees.

    Just figure it into your bid and it won't hurt as much image
    image
  • fattymacsfattymacs Posts: 2,581 ✭✭✭
    The old-timers call it "the juice".
  • LeiascardsLeiascards Posts: 3,233
    Many big auction houses charge 20% for their services. Instead of charging it all to the sellers they split the 20% among the buyer and seller.
  • RonBurgundyRonBurgundy Posts: 5,491 ✭✭✭
    It's the price you pay for the "privilege" of bidding through an auction house. Vomit.




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  • cubfan89cubfan89 Posts: 632 ✭✭✭
    You would think the seller would have to pay it, not the buyer.
  • VitoCo1972VitoCo1972 Posts: 6,135 ✭✭✭


    << <i>You would think the seller would have to pay it, not the buyer. >>



    Why, what incentive would the seller have to not go to eBay? eBay will rip you for 10-12% with Paypal and FVF's. If you have to sell at an auction house for 20% fee, eBay is a MUCH better option.
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  • TomGshotputTomGshotput Posts: 1,358


    << <i>You would think the seller would have to pay it, not the buyer. >>



    No matter how it is stated, each party would still make out the same. . .
    Tom
  • WondoWondo Posts: 2,916 ✭✭✭


    << <i>You would think the seller would have to pay it, not the buyer. >>



    The seller does pay it. If a seller has a 0% consignment rate and the house charges a 20% buyer's fee the scenario is like this. The buyer is willing to spend $1200 on an item. He therefore bids $1000 knowing of the additional percentage to be added on. He wins the item for the $1000 hammer price and pays his budgeted $1200. The seller only gets $1000 of the $1200 purchase price.

    I am always amazed that the auction houses have been able to perpetuate the facade of a buyer's fee. The seller takes the hit.
    Wondo

  • jrinckjrinck Posts: 1,321 ✭✭
    Here is the definition of Buyer's Premium from "The Modern MBA. Profit Over Ethics"...

    A so-called "tax" on the buyer of an item, usually at auction, intended to reap extra profit for the seller or consignor. The buyer's premium works most effectively when buyers don't realize it until the end, when it's too late, making it a very effective profit building tactic. See also Seller's Premium.
  • 1123581311235813 Posts: 610
    Wondo,

    I think what you say is true on lower value items (i.e. <$1000), but on higher value items I think the bidders have such deep pockets that the buyers premium does not play into their thinking since money is no object for many of them. If you can afford to spend $1000+ on something, the difference between $1000 and $1200 probably is pretty insignificant to you. They are a lot more likely to think "I've got to have it, price be damned" than we are.

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