•    The following is Gary D. Townsend's personal opinion and thoughts about what the Auction industry calls "Buyers Premium".

•     As you may know some Auctioneers now charge what they call a "Buyers Premium". What this is referring to is an additional charge that the "Buyer" pays on top of his bid.

• In other words if you attend an Auction which charges a "Buyers Premium" and you purchase an item for $100. You will end up paying $110 if there is a 10% 
  "Buyers Premium"

If this sounds reasonable to you, then read the following.

• Auctioneers which use this "Buyers Premium"
  usually work it as follows.
  

Mr. Seller contacts Mr. Buyers_Premium to sell his 
items at public auction.
Mr. Seller and Mr. Buyers_Premium negotiate the deal as follows.

Mr. Buyers_Premium tells Mr. Seller that he will charge a
"Buyers Premium" of 10% (or other percentage) and save 
Mr. Seller that amount by charging it to the Buyer.

Usually, this percentage is reduced from the higher
percentage that Mr. Seller must pay Mr. Buyers_Premium.
In other words, Mr. Buyers_Premium says that he needs
25% (or other percentage) but he will reduce that 
percentage by the 10% that he charges the Buyer.
Thereby only charging Mr. Seller 15% and charging Mr. Buyer 
the additional 10% to make Mr. Buyers_Premium the total 25%.

If this sounds reasonable to you, then read the following.

• Mr. Seller not being knowledgeable as to how the auction business works decides to be prudent he will talk with another Auctioneer.

Mr. Seller contacts Mr. No_Premium another Auctioneer which does business in his community.
Mr. No_Premium after discussing the items to be sold
tells Mr. Seller that he would charge him 20% to sell his items.

 ~~~~~ Conclusion made by Mr. Seller ~~~~~

• Mr. Buyers_Premium charges 25% 
  but, this is reduced by 10% "Buyers Premium"
  Which leaves the 15% that Mr. Seller will pay.

• Mr. No_Premium charges a straight 20%.

Thereby, Mr. Seller chooses Mr. Buyers_Premium.
Mr. Buyers_Premium must be a better businessman
he is trying to save money for his seller.
Mr. No_Premium will not get the business.

If this sounds reasonable to you, then read the following.

• Now it's Auction Day.
  Mr. Buyers_Premium puts up an item.
  Mr. Buyer being prudent has done his homework and checked out the item. 
  He has decided that he is willing to pay $100 for the item. 

But, he also knows that there is a 10% "Buyers Premium" 
which will be added to his bill.
Therefore, he reduces his $100 bid by 10% and decides that he will only bid $90.
The bidding progresses and Mr. Bidder is the high bidder at his top bid of $90.
It appears Mr. Buyers_Premium is doing a good job for Mr. Seller.

• Now, its settlement time.
  Mr. Buyers_Premium pays Mr. Seller for his item.
  

 Item Sold For $90.00
Mr. Buyers_Premium commission of 15% equals $13.50
Mr. Seller receives $76.50 for his item.

If this sounds reasonable to you, then read the following.

• Lets assume that Mr. Seller choose to hire
  Mr. No_Premium because he was a family friend even 
  though he charged a little more. 

 Now its Auction day again.
Same Mr. Buyer same item but no "Buyers Premium".
The bidding progresses and Mr. Bidder is the high bidder at his top bid of $100.

Again its Settlement time.
Mr. No_Premium pays Mr. Seller for his item.

Item sold for $100.
Mr. No_Premiums commission of 20% equals $20.
Mr. Seller receives $80.00 for his item.

It appears that Mr. No_Premium was a family friend. 

~~~~ Final Conclusion ~~~~

Mr. Buyers_Premium received 
"Buyers Premium" of $9.00
and commission of $13.50
for a total of $22.50

Mr. No_Premium receives
his commission of $20.00

It seems to me that a "Buyers Premium" is only 
a way to get the seller to pay more money.

Also, the only winner is the Auctioneer who charges the 
"Buyers Premium". So who is he looking out for?

Therefore, is it a "Buyers Premium" or a 

???????   "Sellers Premium"   ???????

I Do Not charge a "Buyers Premium" !

Remember, usually all you have to do is follow the Money !

Also, in my opinion an Auctioneer should charge a 
straight percentage, not a percentage and charges
for setup, advertising, etc.

But, that's another topic. 

Press Here for printable copy of
"Buyers Premium"