Buyer's Premium: A Rip Off?


Buyer's Premium

Anyone participating in an online auction should notice this - the buyer's premium - an additional charge levied by the auction house to the successful bidder in addition to the final hammer price. This 'small' charge is paid by the bidder to the auctionhouse but not passed or shared with the vendor.

The majority of the stamps online auction charges this at 15%. Usually this also includes a Value Added Tax (VAT) but some auctionhouse charges separate VAT (eg. Stanley Gibbons), which makes the successful bidder pays more.

It is strange that we have to pay an additional amount just because we have the privilege of buying things from them. If we go shopping in a supermarket and buy a $1.00 pen, this 15% additional tax means we have to pay an extra 15c - but for what? For the pleasure and privilege of shopping in that shop?

A Rip Off?

So what do we get for the additional tax we pay? Certainly nothing because we don't get any extra service apart from the basic email correspondence and we don't get free catalogue either. The auctionhouse charge it only because they can and they'll make more money out of it.

AuctionhouseBuyer's Premium
    Stanley Gibbons    15%
David Feldman15%
Status Int16.5%
Cristoph Gartner19%
Some buyer's premium from common auctionhouse

Surely they should charge the seller (or vendor) more because they are the ones using the service from the auctionhouse. For example if a consignment of stamps is received from a seller, the auctionhouse has to research for the stamps, revalue them, making estimation, take pictures and publicise them in a catalogue and then advertise the upcoming auction in stamp magazines or internet etc. So it is reasonable to charge the vendors a good percentage of the final price, but why charge the buyer?

The only reason I could think of is that they are taking the advantage of the fact that no two collections are the same. Scarcity is the keyword. Buyers would go an extra mile just to get hold of rare and good collections, and some buyers of course wouldn't mind paying a little more as long as they can get their desired items. This simply reflects the basic tenet of supply and demand. In order to get a quality supply, the auctioneer would not overcharge the seller, but because there is a strong demand in philatelic materials, they feel they should make full use of it by charging the buyer as well (and make them 15% richer).

A buyer's premium, as cool as it may sound, is simply a rip off. Nothing else. It is used by many auctionhouse elsewhere and not limited to the stamps business.

The question is, is it legal? Well no one has challenged the practice before so it could be legal. However, because the buyer gets nothing for the 15% charge (or whatever the rate is), it can be considered a "levy" or "tax" or "extortion" which is illegal by the standard of the European law. So maybe somehow someone would bring this matter into the attention of the European court and outlaw this shameful practice. Just my 2 cents...


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