The TRUTH About Buyer's Premiums...Math is Math

I have been on some rants in my past about buyer's premiums and as I ran into an auctioneer I have known for years today he told me I was "Stupid" for not charging premiums and am merely costing myself money and will go out of business because of it.  We obviously disagree and he immediately lit me up.  So....I thought I would spell out the entire "myth" surrounding these charges in depth.  If you don't know what a "buyer's premium" is because you have only bought at the Bullseye (we will NEVER have a premium if I am in charge)...a Buyer's Premium is now a common charge that auctions add between 10%-35% to your bill because...well because....hmmmm.....because they want to make more money by jumbling numbers up.   I have long and matter of fact been a hater and advocate that the premiums have made the entire auction world even more shady and most of all are simply unethical.   Blunt and Fact...and in my opinion if you charge buyer's premiums..yes I believe it is unethical and should be illegal.  Not personal... merely business.  Here is the math and why I believe this to be true.  Maybe even some auctions don't know the true math behind the numbers and think they just make 10% extra...LOL.  Maybe when they actually read this they will stop..Who knows...But it is Black and White below...

The auction world is all about numbers and commission to stay in business.  So I will demonstrate the TRUTH and FACT behind buyer's premiums in this basic math equation.  I will show you how a seller is basically getting screwed.  Let's say you take a silver dollar to the auction that has a 10% buyer's premium and it sells for $90.  The buyer would pay $99 at the window.  Lets use common commission numbers in the business right now and say the auction charges 30% commission.

That means as a SELLER your check for your coin would total $63.00 AND Auction Company Profit of $27.00 Commission + $9 Buyer Premium from buyer = $36 made by the auction company

Now...if your coin sold at an auction that did NOT charge a buyer's premium the same coin would sell for $100....Buyer's are VERY smart people contrary to what many give them credit to be so would pay the additional 10%...same total to the buyer.

That means as a SELLER your check for your coin would total $70.00 AND Auction Company Profit of a straight forward $30 for the item

Basically the exact same transaction...but a quite deceptive twist that few seller's realize..Interesting...and quite substantial.  Sell out a $20,000 estate and say goodbye to approx. $1200 off the top in undisclosed buyer's premium fees that there are no laws or forms for...just doesn't seem "right".   AND makes no sense...you charge 10% yet are only truly getting an additional 6%...which means EVERYONE in the transaction is getting hosed...and the auction is charging 10% to make 6%...????

As a buyer you didn't necessarily get screwed...maybe confused and agitated...but the seller is getting completely taken advantage of by a very deceptive mathematical practice.  Even if somehow the auction company that charges the buyer's premium justifies they only charge 25% commission...(which I rarely see or hear about)...it is still only $67.50 realized by the seller...YES..the seller sold their items with 5% less commission for the same item and still received LESS.  Hard to believe.

But this is about far more than me or Bullseye...this is about NOT deceiving a seller that has placed their confidence in you selling their items.  This is about true ethical business practices and looking out for the best interest of a customer as well as your own.  This is wrong....and now has even made a few college business ethics textbooks...(it's not just me...someone pissed of a college professor somewhere with this practice...lol)  There are numerous factors why the auction business is shrinking at an alarming pace...I put Buyer's Premiums at the top of the list.  I learned years ago that customers are MUCH smarter than many business owner's give them credit to be and quickly figure out after they get hosed and just never go back anywhere good or bad.

What is so perplexing to me is that there is NO reason for this charge to be in place or even occur UNLESS you are intentionally trying to deceive the consumer and seller in my opinion.  PERIOD.  Why?  If the extra few percent is necessary for you to complete a sale...then just be up front with a seller and lay it on the table...Completely makes no sense.   And if you some how backasswardsly are going to argue that the seller will pay the same money for an item whether there is a buyer's premium or not than you are attempting to screw the buyer.  Nobody can possibly benefit other than the auction company charging the fee...and according to everything I read that is the definition of a "deceptive business practice".

I will never expose or bad mouth premiums again if ANYONE can truly justify the charge....And in the end no one can...math is math...so I will have my quarterly rants until an auction company somewhere finally pisses off an attorney who puts a forever stop to these...and eventually it will happen.  Until then...I am against more and more regulation but hope somehow...someway...someday...someone makes this practice stop.  It is killing the business I so passionately love...and the auction business doesn't deserve this...It is too rooted in American tradition.  Maybe math will prevail?