[meteorite-list] Auction Questions

From: MexicoDoug <mexicodoug_at_meteoritecentral.com>
Date: Sat, 4 Aug 2012 13:23:16 -0400 (EDT)
Message-ID: <8CF407CF825624D-1408-265A5_at_webmail-d159.sysops.aol.com>

Not exactly the same Adam -

As you know better than anyone, in this business the profit is in the
margin for the seller.

The 15/10 scheme is not as bad as the straight 25%. As a buyer, I'd
rather pay the 10% buyer's commission in the example you gave than no
buyer commission and having the seller pay the entire 25% since that is
more money. So what you propose would actually add another 3% to the
total cost grabbed by the auctioneer.

For a Total price of 100:

25% seller scheme:
Hammer price is 100 , the auction house take 25, seller get 75.

15%/10%:Seller/Buyer scheme:
Hammer price is 90.91, buyer pays 9.09 but the seller pays only 13.64
yet nets 77.27.

The concept of two-side financing of the auction probably started
innocently enough when some Dutch guys in wigs had to rent the
facilities and thought it fair that everyone chipped in, sellers by a
commission and buyers by an entry fee. You know, like mall parking
lots started at a flat $0.25 entry fee to pay the attendant.

Then, everyone complained that they needed their wives and husbands
there to agree to ask permission, or their employees to help cart it
away. Also there were people who claimed they were there to help, but
really did nothing and avoided the entrance fee. Then the auctioneer
said "screw this, we'll just put a minor buyer's commission on the
sales, and in any case the bigger the crowd the more likely bidders are
likely to lose their head in the commotion with showboat bidding.

Phase three was when a change of business model miraculously occurred
and plain greed took over: and the buyer's % fee was suddenly viewed as
a source of income, and as you say has the benefit to obscure the bill
so careless buyers paid more than they thought and could only grumble
that the drinks at the bar weren't so cheap after all.

So my thought is that as long as the auctioneer is not gouging anyone
it's ok. Buyers are smart enough to add the buyer's commission if they
are bidding responsibly and seriously. The example is implemented no
differently from a cooperative tax as you point out. If you go to a
restaurant, you wouldn't complain that tax was added to your bill, as
long as the tax rate is reasonable.

In Mexico, where sales taxes are higher than the US, btw, all prices
are quoted inclusive of tax, so WYSIWYG on the bill and customers are
happy since they don't have to count what's in their wallet while
figuring in taxesto see ifthey have enough after taxes. It make for
interesting accounting as it pushes the burden to the vendor to back
out the tax. So if something is 99.80 MXN pesos the accountant sets up
a spreadsheet and determines 86.79 is the income and 13.01 is the tax
due. So everyone is running around with calculators all the time
dividing everything by 1.15 to back out the 15% VAT. It gets to be a
real pain in the arse.

Kindest wishes
Doug






-----Original Message-----
From: Adam Hupe <raremeteorites at yahoo.com>
To: Adam <meteorite-list at meteoritecentral.com>
Sent: Sat, Aug 4, 2012 9:53 am
Subject: Re: [meteorite-list] Auction Questions




Hi Michael and List,

I think that 25% is a reasonable commission to charge the seller and
see no need
whatsoever for a buyers premium.? The seller will still realize the
same amount
at the end of the day.? 15% plus 10% still equals 25% of the selling
price going
to the party throwing the auction meaning the seller will still realize
75%.? I
think 25% is reasonable considering the value added but playing games
with
numbers only serves to confuse me. I commend you on be open about the
real costs
and not hiding the buyers premium in small lettering on some obscure
part of a
website.

A buyers premium feels like a tax to me.? I cannot understand why
anybody would
pay 20% for the privilege of buying.?? Imagine if gas stations added
20% to the
advertised? pump price only to have buyers shocked when they realized
how much
they really paid when it comes time to settle up the bill.? It is like
advertising fuel at $3.00/gallon when you are really paying
$3.60/gallon.

I need to think about why this concept even exists.

Kind Regards,

Adam




Hi Adam and all,

? ? ? ? The short answer is it is increasingly costly to manage an
Auction - and sellers won't place items if the consignment fee
Is too high. Personally, I believe a 20% buyers' premium is far
Too high and I am determined to never go beyond 10%. However,
If auctions (not just mine) are to survive the MUST have sellers
Consigning items and, as I said, there is a limit to what a seller
Will be willing to sacrifice as a consignment fee.

? ? ? ? I am not really suggesting this - but just AS AN EXAMPLE,
if you wanted To place 20 items with me I would happily allow
you to pay me 10% MORE for your listing fee and let the buyers
bid on your items with No buyers premium..... How would that
work for you? Not so good, eh? Not to worry, I really don't need
ANOTHER element to juggle at the Auction, so, please do not
"hear" this as something directed at you, Personally or some
ridiculous challenge for you to do that - I really don't want that
additional confusion I just think if you look at it from the consignor's
viewpoint it will be easier to understand.

? ? ? ? Also, by the way, for years I have actually had several people
SUGGEST I raise the buyers' premium to 10% so it would be easier
for them to calculate when bidding....

? ? ? ? Again, I am very lucky to have had the Auction Nymphs SO on
top of things this last auction when I was so ill I could barely sit up.
They are a terrific crew and very sharp - and on top of that, very nice
People. While I managed to call the auction I can't imagine if I had
Tried to add peoples totals after the auction.

? ? ? ? I have always tried to keep both the premium and consignment
Fees as low as possible - and I still do. Overhead has drastically risen
in the last 14 years while my fees & premium have increased minimally
In comparison. I think the Tucson Meteorite Auction is a hoot, I just
Have to be sure it doesn't COST me to put it on.

? ? ? ? By the way, I still haven't arranged for a speaker this year
and if
Any list members are one or know one who would present a casual
45 minutes or so presentation, please do let me know. We have had some
Very interesting presenters in the past (I am told - I am always far too
Busy to catch even a few minutes of any of the presentations).

? ? ? ? While we are at it, I want to again thank Twink for her
wonderful
Gold Basin cakes. I think this year she is considering an additional
Frankonia cake.... She is really something. The meteorite community is
Very lucky to have such a giving person.

? ? ? ? Hope I answered your question satisfactorily, Adam. If not,
please
Do feel free to give me a call & we'll jaw about it.

? ? ? ? Best to all, Michael
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Received on Sat 04 Aug 2012 01:23:16 PM PDT