Auction House Commissions
The auction house makes money by charging a commission on each sale. The ingenious thing is that it charges both the seller and the buyer so it gains twice from each lot. So they’re double winners on the sale. It might seem ridiculous for buyers (after all, you’ve just paid for the item), but historically, that’s the way auctions have operated in this country.
How It Works
As a seller, you’ll pay the auction house a commission, called the vendor’s commission, that’s based on the final selling price of your item. The commission the buyer pays, known as the buyer’s premium, is also charged on that price. To make matters worse, you’re also charged VAT at 17.5% on the commission (but generally speaking, not on the price paid at auction).These sums are payable when you pay for the item (or in the case of the seller, it’s automatically deducted from the amount paid to you by the auction house).Commission Rates
When you’re planning to sell an item through an auction house, you’d do well to ask about their vendor commission rates. These can vary greatly. In some cases the rate can be as low as 8%, going all the way up to 20% - which can take a hefty chunk out of your profits, especially when you include VAT. Shopping around can save you a lot of money, as long as you use an auction house that deals in the kind of item you’re selling. This is an important caveat, if you’re going to realise a proper price for your item at auction. Auction houses also charge a fee to put your item in the auction.The buyer’s premium usually runs around 10%, so it’s worth factoring in that figure when you’re calculating how high you can bid on a specific item; there’s far less variance in the buyer’s premium from auction house to auction house.
eBay And Commission
Like other auction houses, eBay charges a commission, but only to sellers, and it’s on a sliding scale. Up to £29.99, it’s 5.25% of the winning bid. From £30.00 to £599.99, it’s 5.25% of the first £29.99, then 3.25% of the balance. Over £600.00 it becomes more complex still, with 5.25% of the first £29.99, 3.25% of £30.00-£599.99, and then 1.75% of the remainder.There’s also a listing fee, which ranges from 15p for items with a starting price of 99p or under, going up to £2.00 if the item’s starting price is more than £100.00. Note that with eBay, as transactions are directly between buyer and seller, you pay your commission and listing fees by credit card (you give the number when you register as a seller with eBay).You’ll also find specific commission fees for certain types of products (electronics, mobile, phones, books, media products, etc.). However, buyers do much better on eBay, as they only have to pay postage and handling.
Simply put, there’s no way to avoid paying a commission when you sell (and usually when you buy) at auction. It’s a grin and bear it situation. However, by being careful where you sell, you can at least minimise the pain.
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