CNG…Roma increases Buyers Premium

[TheTrachyEnjoyer]

American inflation must be hitting the UK hard Richard Beale 👀

[TheTrachyEnjoyer]

 £ + Ridiculous shipping + Ridiculous BP
 

Thats a great combination to ensure I bid with them less 

[rhj959]

Inflation is about 9% in the UK. Everything is costing more, but especially energy.

[Richard Beale]

1 hour ago, TheTrachyEnjoyer said:

American inflation must be hitting the UK hard Richard Beale 👀

Inflation doesn't only affect America. Truflation's newly launched UK index shows CPIH running at 13.8% in the 12 months to 24 July. Inflation in the US is running at 9.1%. 

In any case, since GBP is at record lows against the USD your money goes a great deal further than it did this time last year. 

It's worth noting that most generalist auction houses worldwide operate on 25% BP or more. The numismatic industry has stuck to comparatively low premiums for much longer, ourselves included. 

[Restitutor]

16 minutes ago, Richard Beale said:

Inflation doesn't only affect America. Truflation's newly launched UK index shows CPIH running at 13.8% in the 12 months to 24 July. Inflation in the US is running at 9.1%. 

In any case, since GBP is at record lows against the USD your money goes a great deal further than it did this time last year. 

It's worth noting that most generalist auction houses worldwide operate on 25% BP or more. The numismatic industry has stuck to comparatively low premiums for much longer, ourselves included. 

This is a great point. As painful as it was seeing the nominal increase at first glance, thinking about the favorable FX rate moves over the last months changed my thought process. It is still significantly cheaper to buy from auction houses abroad than it was at the beginning of the year. 
 

Also, let me take this opportunity to welcome you to the forum Richard! Glad to have you here 😃

[Kaleun96]

People would probably be more understanding if ancient coins hadn't been fetching record amounts for the past two years. Once BP goes up, it's never coming down, unlike inflation.  

Not to pick on any auction house in particular here, just speaking generally. 

Good to remember there's always CGB with their 12% BP and €12 DHL shipping.

[Magnus Maximus]

1 hour ago, Kaleun96 said:

Once BP goes up, it's never coming down, unlike inflation.  

Truer words have never been spoken.

[jfp7375]

2 hours ago, TheTrachyEnjoyer said:

American inflation must be hitting the UK hard Richard Beale 👀

Inflation has hit Europe and the Euro (including the UK and GBP) much harder than the US, actually, if you can believe it. 

What makes no sense is specifically citing inflation as a reason for increasing the BP like CNG did. Inflation affects prices for coins and BP is directly proportional, so if inflation boosts coin prices by 10%, your BP also goes up 10%. So it's sort of a nonsense excuse. If you feel you need to raise your BP for competitive reasons then it's better to just say so 😉 at least roma was straight forward about the change... really rubbed me wrong how CNG tried to blame inflation when anyone with even basic economic knowledge can see through that

[Ancient Coin Hunter]

It's an opportune time to hit buyers with additional fees and expenses just because they can get away with it right now.

[akeady]

1 hour ago, Richard Beale said:

Inflation doesn't only affect America. Truflation's newly launched UK index shows CPIH running at 13.8% in the 12 months to 24 July. Inflation in the US is running at 9.1%. 

In any case, since GBP is at record lows against the USD your money goes a great deal further than it did this time last year. 

It's worth noting that most generalist auction houses worldwide operate on 25% BP or more. The numismatic industry has stuck to comparatively low premiums for much longer, ourselves included. 

Actually, @Richard Beale, on a related note, has Roma any plans to follow Naville's lead and import coins to the EU through Belgium, a country with low import taxes (6%)?

I'd bid more often again, if you did as since Brexit, I'm being hit with 23% charges on things from outside the EU, including the UK.   Naville are sending things through NAC's Brussels office, which softens the blow a lot.   This likely applies to other EU collectors too (apart from Belgians!) - I don't know if there's any EU country with a lower import tax rate.

The only downside to the Naville approach is that shipping is very slow.

(I have complained to Irish Customs that I should be paying a 13.5% antiquities rate rather than 23%, but no joy so far)

ATB,

Aidan.

[Richard Beale]

34 minutes ago, akeady said:

Actually, @Richard Beale, on a related note, has Roma any plans to follow Naville's lead and import coins to the EU through Belgium, a country with low import taxes (6%)?

I'd bid more often again, if you did as since Brexit, I'm being hit with 23% charges on things from outside the EU, including the UK.   Naville are sending things through NAC's Brussels office, which softens the blow a lot.   This likely applies to other EU collectors too (apart from Belgians!) - I don't know if there's any EU country with a lower import tax rate.

The only downside to the Naville approach is that shipping is very slow.

(I have complained to Irish Customs that I should be paying a 13.5% antiquities rate rather than 23%, but no joy so far)

ATB,

Aidan.

Hi Aidan, this is one of my ongoing headaches. I sympathise fully; couriers & postal services have not been very good at applying the correct VAT rates and are making life quite difficult for all concerned. We won’t be opening an office in Belgium as the country offers no other potential business value to us at this time. We are actively considering some form of arrangement in Germany or the Netherlands. 

[LouisvilleKYShop]

Just from a dealers perspective, I have never changed the $2 USA shipping for probably nearly 20 years and all coins start at $1 with no reserve.  Are ancient coins now going higher?  If so it is only the buyers pushing it up only in my world.  You could potentially explain this as I have so many new buyers with the old on eBay who first wonder how ancient coins could still be around but become steady collectors in a few months.  So maybe the pool of potential buyers and collectors has just increased?  Truth is no matter what shipping cost, you can't have free shipping as people pay for each auction separately and the 10 inch bubble envelope and $4 shipping the dealer often pays gets too high on single auctions, and you want a number that is close to zero but enough to get people to combine wins over a few days and $2 does the trick with free for additional auctions in the same envelope.  So there is nothing to gain by a dealer raising shipping and of course nothing good about having "free" shipping unless you want to carry countless envelopes to the post office each day instead of just a few.  By the way, why the 10 inch x 5 inch larger envelope even for single coins?  Anything smaller I had too many get lost by USPS.

Edited July 29, 2022 by LouisvilleKYShop

[Severus Alexander]

Buyer’s premiums should be irrelevant. You decide your max for the coin in whatever currency you operate in, then calculate your max bid by factoring in exchange, premium, any taxes, and shipping. The only thing the premium affects is the proportion of the total that goes to the auction house as opposed to the consignor.

For AMCC I operated on a BP of 16% and I can tell you that certainly doesn’t repay the work on lower value consigned coins, nowhere near it. It was a labour of love. 😍

[Curtisimo]

Even though I respect the posters above (and in the other recent thread) who have said that the buyers premium is irrelevant and that it only effects people who don’t do the math I am going to have to disagree. (You guys are still awesome though 🙄 🙂)

If it was truly irrelevant then auction houses would include the premium in the hammer price and just note that whatever % of that amount goes to the auction house. Auction houses don’t do that. They put an additive percentage in the fine print and for the most part only show the hammer and not the hammer +premium when you place a bid (props to Heritage that does show both). They wouldn’t do that if it was irrelevant. The simple reason is that human nature being what it is, people are prone to bid higher if the full amount is not displayed right in their face. There is also the dynamic of emotional buyers bidding higher than they planned and losing mental track in the moment. On top of that there will be some inexperienced people who don’t read the full terms and assume one auction house is the same as all the others.

If enough people bid higher because of this practice then it effects everyone through higher prices.

Don’t get me wrong. I’m not ragging on CNG or Roma. They are both great auction houses and I don’t begrudge them doing what they think is in the best interest of their company.  I hope they both stay in business a long time to come. That doesn’t mean I have to feel good that auction premiums are going up or pretend that it won’t effect me as a buyer long term. 

Edited July 30, 2022 by Curtisimo

[Severus Alexander]

18 minutes ago, Curtisimo said:

Even though I respect the posters above who have said that the buyers premium is irrelevant and that it only effects people who don’t do the math I am going to have to disagree. (You guys are still awesome though 🙄 🙂)

Thanks for that proviso, @Curtisimo. You are awesome too. 😄

Note that I said "should be irrelevant," italics in the original.  Precisely because I don't want to deny the is-ought gap you're identifying here!

I'm sure most people in this forum are perfectly rational, though, right?  🙃 So the only effect on us will be that we lose a few coins to the bidders who act irrationally as you describe.  That's certainly still a cost!

Wouldn't it be great if the aggregators like acsearch built in the buyer's premium just like they do the exchange rate?

Edited July 30, 2022 by Severus Alexander

[Curtisimo]

14 hours ago, Severus Alexander said:

Wouldn't it be great if the aggregators like acsearch built in the buyer's premium just like they do the exchange rate?

This is actually a brilliant idea. I would add biddr to that category as well. 

14 hours ago, Severus Alexander said:

Note that I said "should be irrelevant," italics in the original.  Precisely because I don't want to deny the is-ought gap you're identifying here!

Indeed! I figured that you included the should for this reason. My comment wasn’t pointed at you or anyone in particular my friend.  (I just realized there are two threads on this topic so part of my response was meant for the other thread). I just wanted to point out that I think we can’t assume just because we intend to fully reflect the changes into our calculations, that means the changes won’t effect us.

CNG and Roma are flagship auction houses so I’m sure this will have an effect on premiums elsewhere too. I do hope the trend doesn’t pick up much steam.

14 hours ago, Severus Alexander said:

I'm sure most people in this forum are perfectly rational, though, right?

My wife might argue that me buying so many coins to begin with is irrational... of course that is another discussion all together. 🤦‍♂️🤠 

Edited July 30, 2022 by Curtisimo

[Severus Alexander]

21 minutes ago, Curtisimo said:

I would add biddr to that category as well. 

Not gonna happen for precisely the reasons you outlined.  The auction houses wouldn't like it.

It could happen, at least in principle, at acsearch.  However it would involve a large time investment that I know they aren't able to commit for the foreseeable future. 😞 Unless... I wonder if NumisForums could somehow partner with them to make this available to our members somehow?  Hmm....

[robinjojo]

10 hours ago, jfp7375 said:

Inflation has hit Europe and the Euro (including the UK and GBP) much harder than the US, actually, if you can believe it. 

What makes no sense is specifically citing inflation as a reason for increasing the BP like CNG did. Inflation affects prices for coins and BP is directly proportional, so if inflation boosts coin prices by 10%, your BP also goes up 10%. So it's sort of a nonsense excuse. If you feel you need to raise your BP for competitive reasons then it's better to just say so 😉 at least roma was straight forward about the change... really rubbed me wrong how CNG tried to blame inflation when anyone with even basic economic knowledge can see through that

Actually inflation decreases the value of currency, be it dollars, British pounds or euros, so if inflation in the UK is at 10%, that means the BP's buying power has declined by roughly 10% on the average, depending the service or product.  That means basically more money is needed to pay for items compared to a prior period.  We've had very low inflation for many years, but now geopolitical, supply chain, pandemic and economic conditions have boosted demand for staples such as food and energy, to name a few.

Now, does a business need to increase its fees (i.e. buyer's commission) to cover costs driven by inflation?  Yes they do in order to stay in business.  By how much?  Ah, that's the $64,000 dollar question, of course that should also be adjusted for today's inflation, so let's make that $85,000 instead.

As I wrote in another post inflationary times produce inflationary expectations.  The polar opposite is deflationary expectations (think the Great Depression), where prices crash and cash is king.  Both are bad situations for coin collectors and almost everyone else.  We're in a kind of weird situation right now, with a technical recession underway, while still having very low unemployment and rising wages, albeit not really keeping up with the galloping rate of inflation we are experiencing now.  As noted inflation is worse in other parts of the world.  I hope we can get out of this tangle. 

[jfp7375]

35 minutes ago, robinjojo said:

Actually inflation decreases the value of currency, be it dollars, British pounds or euros, so if inflation in the UK is at 10%, that means the BP's buying power has declined by roughly 10% on the average, depending the service or product.  That means basically more money is needed to pay for items compared to a prior period.  We've had very low inflation for many years, but now geopolitical, supply chain, pandemic and economic conditions have boosted demand for staples such as food and energy, to name a few.

Now, does a business need to increase its fees (i.e. buyer's commission) to cover costs driven by inflation?  Yes they do in order to stay in business.  By how much?  Ah, that's the $64,000 dollar question, of course that should also be adjusted for today's inflation, so let's make that $85,000 instead.

As I wrote in another post inflationary times produce inflationary expectations.  The polar opposite is deflationary expectations (think the Great Depression), where prices crash and cash is king.  Both are bad situations for coin collectors and almost everyone else.  We're in a kind of weird situation right now, with a technical recession underway, while still having very low unemployment and rising wages, albeit not really keeping up with the galloping rate of inflation we are experiencing now.  As noted inflation is worse in other parts of the world.  I hope we can get out of this tangle. 

Inflation decreases the value of currency, but the BP is indexed to a real asset - a coin. Obviously there's never a perfect correlation, but generally the prices physical assets like a coin, precious metals, real estate, and all goods over the long run will increase with inflation. That's a big part of the reason why a coke cost $0.05 in 1920 and it costs $2.00 now. 

So if the price of the coin increases due to inflation, the dollar amount goes up while the value of the money remains about the same in terms of actual purchasing power. The BP is directly proportional to the price of the coin, so the auction house's fees should increase in lock-step with inflation, just as their costs will over time increase. 

All that is to say: if there's inflation, the auction houses should be unaffected on a net basis. BP's go up while costs go up. 

[Prieure de Sion]

Almost everyone is trying to ride this "inflation" horse now. It is a welcome scenario to justify price increases that would otherwise be difficult to explain to customers.

Of course, there are many industries and sectors that have had to raise their prices because of the price explosions. But there are also many free riders who, as I wrote, gratefully climb on the horse and try to ride along with the masses unrecognised...

[SimonW]

5 hours ago, Severus Alexander said:

Not gonna happen for precisely the reasons you outlined.  The auction houses wouldn't like it.

Don't be so sure about that 🙂 I won't give away too much, but there will be something in this direction soon.

5 hours ago, Severus Alexander said:

It could happen, at least in principle, at acsearch.  However it would involve a large time investment that I know they aren't able to commit for the foreseeable future. 😞 Unless... I wonder if NumisForums could somehow partner with them to make this available to our members somehow?  Hmm....

The problem is the vast extent of such a task. Acsearch features almost 10'000 auctions of more than 330 different auction houses. Researching all the past buyer's premia takes a huge amount of time and you need access to all the old auction catalogs (not all of them are available online anymore) and their terms. If some members here have the time and are keen enough to approach this task, I am more than happy to implement this into acsearch. We will at least start recording auction terms from now on as this seems to be helpful in the future.

BTW, hi everyone, I am Simon and I am working for both biddr and acsearch. Some of you know me already from CT (user name acsearch.info) 🙂

Edited July 30, 2022 by SimonW

[LouisvilleKYShop]

So why do people look to acsearch to see old prices?  Could it be to know what is a fair price to pay for a coin of that series?  And if that is even 50% of the reason people use acsearch, for past prices, will correcting the price for buyers premium, but saying the final price paid by the buyer only, might that make people pay even more for the ancient coins of that series today?  I often tell people, if you think you will want to get out of a coin someday by selling it yourself, and you don't plan on consigning it as it is not a high end coin, then check eBay advanced search for sold auctions and make sure it was an auction with actual bids you are referencing, not some high price make offer past sale, and the recent prices you see compared for coin and grade will be what you can expect to get out of the coin with if you sell it yourself.  So maybe then buy the coin for a price (from wherever) you can reasonably tell your wife it is worth in case she worries about you spending all that money.

[Qcumbor]

I see and understand the issue we're facing with inflation and increase in buyer's premiums. But we're talking about coins, not food, clothes or housing. I hope everyone here is spending on coins only the money they don't need for their family. If there is a bit less coins in the trays at the end of the year it will be nothing more than a frustration, right ?

 

Q

[Egry]

14 hours ago, jfp7375 said:

Inflation has hit Europe and the Euro (including the UK and GBP) much harder than the US, actually, if you can believe it. 

What makes no sense is specifically citing inflation as a reason for increasing the BP like CNG did. Inflation affects prices for coins and BP is directly proportional, so if inflation boosts coin prices by 10%, your BP also goes up 10%. So it's sort of a nonsense excuse. If you feel you need to raise your BP for competitive reasons then it's better to just say so 😉 at least roma was straight forward about the change... really rubbed me wrong how CNG tried to blame inflation when anyone with even basic economic knowledge can see through that

My thoughts exactly. Inflation will raise the sale price and therefor the BP. Increasing the   % BP with the excuse of inflation is straight up BS. Please excuse the acronyms. 

[Richard Beale]

1 hour ago, Egry said:

My thoughts exactly. Inflation will raise the sale price and therefor the BP. Increasing the   % BP with the excuse of inflation is straight up BS. Please excuse the acronyms. 

Coins are not bread or milk which when hit by increased production costs end up being marked up on shelves accordingly. Bidders don't increase their bids by 13.8% in line with inflation - I certainly don't when bidding, do you? 🙂

Sure, coin prices have generally risen by about 20% on average since late 2019 across the 27,000 or so coins we sell each year according to my data, but over 3 years a 20% rise is not considerable. 

Now, I can't speak for other auction houses, but in our case although staffing costs have increased by over 15% per capita over the past year, and courier costs have risen considerably (which we haven't passed on), inflation was not the motivation for us. Rather, if competitors increase their BP they have more ammunition, specifically in the form of greater flexibility with terms, to win consignments.