Sotheby’s said 90% of clients polled indicated they would bid higher as a consequence of the reduced buyer’s premium.
The revised pricing structure for buyers and sellers at Sotheby’s has taken effect globally. The sales taking place in New York this week are to be the first affected by the new premiums.
Effective from May 20, its buyer’s premium has been reduced to 20% on sales up to $6m/£5m and 10% of the hammer price above this level. Its three-tiered structure has been scrapped in favour of the new two-tiered structure.
Previously Sotheby’s buyer’s premium was 26% up to $1m/£800,000; 20% up to $4.5m/£3.8m, and then 13.9% on the portion of the hammer price beyond those levels. It also charged a 1% ‘overhead’ fee which now has been scrapped.
Meanwhile, its seller’s premium will be set at a fixed rate of 10% on the first $500,000/£500,000 of the hammer price per lot. There will be no seller’s commission on the hammer price above that.
Sotheby’s chief executive officer Charles Stewart said in an email to clients: “These changes are the result of considerable focus on how to make the Sotheby’s client experience transparent, simple and fair to all our buyers and sellers.
“The positive response has been overwhelming. In fact, in anticipation of the transition to the new rates, we polled tens of thousands of clients to see how the changes will affect their bidding – and 90.6% of respondents told us they will bid higher as a consequence of the reduced buyer’s premium.”
Sotheby’s main competitors are yet to follow suit. Christie’s multi-tiered structure starts at 26%, while Bonhams’ starts at 28%.
The new fee structure applies to all auction sales, except car sales, real estate, wine and spirits.
What does the change mean for vendors?
While Sotheby’s will now be taking a lesser cut from buyers, for sellers of high-value items the picture is more mixed. Many sellers have enjoyed little to no commission with the auction house for years and vendors of trophy lots could also negotiate arrangements whereby they receive an additional cut of the buyer’s premium. Consignment deals were made on a case-by-case basis but Sotheby’s appears to be attempting to standardise its pricing structure to a larger degree.
Under the new terms, where the low estimate is above £4.5m, no seller’s commission will be charged. Where it is between $20m-50m/ £18m-45m sellers will also receive 40% of the buyer’s premium in addition to the hammer price. For lots estimated at above $50m/£45m the arrangement is ‘bespoke’.
A ‘success fee’ has also been introduced – whereby the seller will pay a 2% commission on items that exceed the top estimate. Christie’s introduced a similar charge in its vendor’s terms a decade ago.
