CNG…Roma increases Buyers Premium

[Egry]

26 minutes ago, Richard Beale said:

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. 

Good point. 
 

But I would say coins have increased more than 20% though in the last three years.(Edit, disregard this sentence, you have better data than me😅)

My business is the same, server and software costs are increasing, wages and insurance have increased, but my professional fees have been relatively flat for the last 5 years. 

Edited July 30, 2022 by Egry

[Richard Beale]

That's just my data set. It will vary from auction house to auction house, particularly depending on the type of coins they are selling. NAC for example, who do not handle 'low value' coins, will have seen the greatest % increase. Low value coins, which make up the bulk of the market, have seen little to no rise in prices, the mid range has seen a moderate rise, and the top 1% or less of high value coins account for the greatest rise in prices. 

[Egry]

5 minutes ago, Richard Beale said:

That's just my data set. It will vary from auction house to auction house, particularly depending on the type of coins they are selling. NAC for example, who do not handle 'low value' coins, will have seen the greatest % increase. Low value coins, which make up the bulk of the market, have seen little to no rise in prices, the mid range has seen a moderate rise, and the top 1% or less of high value coins account for the greatest rise in prices. 

Ya I’ve realized my place in this conversation. This is your business literally. 
 

just for my own info what price ranges do you classify low, mid, high? 

[Richard Beale]

4 minutes ago, Egry said:

Ya I’ve realized my place in this conversation. This is your business literally. 
 

just for my own info what price ranges do you classify low, mid, high? 

Sorry, it's not my intention to "put you in your place"! 🙂 I feel folks are entitled to a little explanation, and don't want them to think of all auction houses as motivated by greed. 

I'd classify low value as £0-250, mid range at £250-2,500 and high value as £2,500+ but that's not set in stone anywhere, it's just my opinion. 

[Egry]

You have every right to defend, and people on here have every right to complain.

However, I’m data driven. If someone puts the numbers to me that make sense then I’ll understand.

looking at it now (these are total guesstimates) say you have on average 1,500 coins per sale/month, and on average each coin sells for $400, and you take a BP of 20% ( I’m assuming you aren’t taking any premium from the seller, probably not correct?). That leaves you with approx $120k monthly gross turnover. Considering wages for expert professional staff (they aren’t just pumping gas), rent, tax, equipment, IT, and searching for stock, that’s really just getting by paying everyone a wage with a staff of say 10 or so.
 

You really would need some big signature sales with high value coins or above 1500 coins per sale to start bringing in a good profit. 
 

so really adding another 2% (or 10% increase on your fee) onto the BP will help but I can’t see it really changing the game. Big game changers would be more volume of high grade coins. 
 

TOTAL DISCLOSURE OF ABOVE - all those figures are made up and complete guess. 

[Richard Beale]

Exactly.

[LouisvilleKYShop]

Richard;

Your economy is under added stress as you in the UK are such a standout for supporting Ukraine.  So right now N&N might be lower BP being  out of German areas or Austria, but your country the UK is really spending a whole lot to protect Europe and you folks over there might not hear that enough lately.  Things can get locked up for months with the EU and Roma is extremely fast and tracks right to the door in a few days to the USA.  Thanks as you take a lot of stress out of the process for people waiting for shipments.

[akeady]

19 hours ago, Richard Beale said:

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. 

Thanks, I'll keep an eye on things!

ATB,

Aidan.

[Agricantus]

Annoying is when extra handling & credit card fees are added on top of a 20% BP. And worst, the shipping cost for lower value items. I recently paid 30 ΕΥΡΩ for shipping a little coin => equated to 10% of the hammer price. It's win big or stay out for me.

[Restitutor]

7 hours ago, LouisvilleKYShop said:

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.

Interesting point! For me, I use the data to determine how much I should bid on a coin irrespective of the buyer fee. If acsearch started to include the buyers fee in the hammer price you see initially it would definitely make me more likely to bid more on a coin at first glance. Mentally I dissociate the buyers fee with the price of the coin itself. Don’t know why! 

[Agricantus]

21 hours ago, Richard Beale said:

Belgium as the country offers no other potential business value to us

This reminded me of the movie "In Bruges" with Colin Farrell. Where is Bruges? Why would anybody want to go to Bruges?

[Dwarf]

7 hours ago, Richard Beale said:

Rather, if competitors increase their BP they have more ammunition, specifically in the form of greater flexibility with terms, to win consignments

The costs are shifting from the consignor to the buyer. Consignor's fees (there were and are still international differences!) used to be 20%, sometimes more. They are now shifting to 10% or zero-rate, for big deals (high 6 and 7-figures) some dealer are even willing to work with negative percentage, i.e. giving some % from the buyer's fee to the consignor. And the business is nearly completely international.

The Times They Are A-Changing - and dealers and customers just have to adept.

Regards
Klaus

[robinjojo]

11 hours ago, jfp7375 said:

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. 

I see what you're saying.  Inflation has always been present generally and a low levels generally over the course of many decades following the Great Depression, especially post World War II. 

I'm not sure if "indexing" is the right term as far as coins are concerned, since they are also priced in just about any other currency, unless you mean for example that Roma lists their estimates in BPs.  Now gold is indexed to the US dollar on international markets, and the value for that metal has actually declined over the past new months vis a vis the US dollar.  The reasons for that have to do with the strength of the US dollar due to interest rate increases, which makes Treasury Bonds attractive to investors.  Also global conflicts, such as the war in Ukraine make the US dollar more of a safe haven compared to the euro and the British pound as indicated in the currency markets.

As for coins, it is hard, at least for me, to separate inflationary expectations and collector demand, that has been generally present in the market before this inflationary spike.  I have seen a trend of what I think are inflationary expectations in the bullion market for gold and silver coins.

As for CNG and Roma increasing their buyer's premiums, like other businesses they will pass increases in operating and staffing costs on to consumers, even if they are have very healthy profit margins (maybe the margins are wide, maybe they're more narrow).  The oil industry has been doing very well, thank you, in this regard, with record profits.  I don't know what the profit margins are for CNG or Roma.  I know that, as do other auction houses, they charge a seller's commission, but I don't know how much, having never sold a coin through them.  

[DLTcoins]

7 hours ago, Egry said:

Considering wages for expert professional staff (they aren’t just pumping gas)... 

Your lips to God's ears! 🤣

[TheTrachyEnjoyer]

19 hours ago, Severus Alexander said:

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. 😍

No its not. 
 

I think a coin is worth $400. I am willing to pay that as my entire total

It hammers for $200 at 15% BP. $230

It hammers for $200 at 20% BP. $240

It hammers for $200 at 25% BP. $250

How is buyers premium irrelevant? The inly world in which BP wouldn’t have an impact is if you happened to win on your decided maximum everytime, which is almost never the case unless you bid at Leu

[Egry]

1 hour ago, DLTcoins said:

Your lips to God's ears! 🤣

I don’t understand?  

Almost all the staff would have to be highly trained, most in a very niche skill like numismatics, with the others in international commerce and business.

I know first hand what it’s like to have to find, pay, and keep good professional employees. It is not cheap. Firstly, they don’t make minimum wage nor should they, secondly you don’t want to lose them because if you do there goes about 6months of their wage training someone else. 
 

I would without a doubt say that wages are any auction houses largest business expense. For example using a round number of $100,000/annum as an average salary, this is not outrageous for anyone that is an expert in their field or highly skilled staff. That equates to gross $8,300/month add all other benefits, etc the employer has to pay, say round up to $10k/month. Say they have 10 employees that’s $100k/month just in wages, not rent, taxes, or anything else. 
 

I’m not defending the increased BP by any means, but can see why they need it to help keep up with rising costs.

[DLTcoins]

@Egry I was making a joke. Many highly skilled numismatists are essentially gig workers and competition for available assignments can be stiff. It's not always as lucrative as one might think.

Edited July 30, 2022 by DLTcoins

[Severus Alexander]

3 hours ago, TheTrachyEnjoyer said:

How is buyers premium irrelevant? The inly world in which BP wouldn’t have an impact is if you happened to win on your decided maximum everytime, which is almost never the case unless you bid at Leu

All I meant was that if all bidders were acting perfectly rationally, they will have factored in the BP and bid so that their total comes to the same number, whether the BP is 10% or 20%.  Which means that you, the winning bidder, end up paying the same too.  So in your three examples:

3 hours ago, TheTrachyEnjoyer said:

It hammers for $200 at 15% BP. $230

It hammers for $200 at 20% BP. $240

It hammers for $200 at 25% BP. $250

The first bidder had a max of $230, the second had a max of $240, and the third had a max of $250.  Had the BP been different, they would have bid differently, and what you ended up paying would be the same.

Of course, as @Curtisimo pointed out, not everyone acts perfectly rationally so the BP does indeed make a difference.  Thus my "should" in my original statement.

[Severus Alexander]

15 hours ago, SimonW said:

20 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.

Cool, I look forward to hearing about that!!  It's a great idea.  Biddr is already the best auction platform out there hands down, IMO, and this will extend its lead considerably.

15 hours ago, SimonW said:

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.

Calling for volunteers! 😄 

15 hours ago, SimonW said:

We will at least start recording auction terms from now on as this seems to be helpful in the future.

Great, @SimonW!  If it's possible to implement it gradually, such that when the data point is available it's given in the search result and not otherwise (or maybe there's a button you can click to see if it's available, I don't know what's easiest) then the latest results can always have this, while you and our community here can gradually make more available.  It would be relatively easy to do it for large auction houses with their terms online, for example; in that case I'd be prepared to do some of that work myself.  Roma had the same BP for ages I think.

Still hoping for that time restriction filter to become available... 😉 (For others: I requested a feature whereby you could restrict the time range of your results, for instance from 2018 to present, so that older obsolete pricing is omitted.  Would be very useful, amiright??)

[DonnaML]

I can only imagine how huge a task it would be to figure out all the different buyers' premiums that were applied by different auction houses at different times over the last 20 years or so, the period generally covered by acsearch. Never mind further back!  I can tell you all, though, that when Ars Classica sold my Vespasian aureus in 1938, the buyers' premium was already 10%. They're certainly nothing new.

[TheTrachyEnjoyer]

2 hours ago, Severus Alexander said:

All I meant was that if all bidders were acting perfectly rationally, they will have factored in the BP and bid so that their total comes to the same number, whether the BP is 10% or 20%.  Which means that you, the winning bidder, end up paying the same too.  So in your three examples:

The first bidder had a max of $230, the second had a max of $240, and the third had a max of $250.  Had the BP been different, they would have bid differently, and what you ended up paying would be the same.

Of course, as @Curtisimo pointed out, not everyone acts perfectly rationally so the BP does indeed make a difference.  Thus my "should" in my original statement.

No. 
 

What I am saying is:

Lets say your max is 200 before a 20% BP
192 before a 25% BP
208 before a 15% BP

Hammer is 150

150 x 1.20
150 x 1.25
150 x 1.15

You pay more with a higher BP

[Egry]

3 minutes ago, TheTrachyEnjoyer said:

No. 
 

What I am saying is:

Lets say your max is 200 before a 20% BP
192 before a 25% BP
208 before a 15% BP

Hammer is 150

150 x 1.20
150 x 1.25
150 x 1.15

You pay more with a higher BP

I’m not sure if I’m an outlier but when I purchase a coin regardless of where it’s being sold I set the total price I’m willing to pay then back calculate BP, import tax, shipping, exchange rate. My max bid is based on my total price minus all the expenses, therefore if the buyers premium goes up it results in my max bid being lower to compensate. 

[TheTrachyEnjoyer]

7 minutes ago, Egry said:

I’m not sure if I’m an outlier but when I purchase a coin regardless of where it’s being sold I set the total price I’m willing to pay then back calculate BP, import tax, shipping, exchange rate. My max bid is based on my total price minus all the expenses, therefore if the buyers premium goes up it results in my max bid being lower to compensate. 

My point is that any hammer under your max bid and your total invoice comes out to more than it would have before

[Egry]

10 minutes ago, TheTrachyEnjoyer said:

My point is that any hammer under your max bid and your total invoice comes out to more than it would have before

I guess that’s true if you just set a max bid and disregard all other expenses. I don’t do that, possibly some do. 

[Severus Alexander]

4 hours ago, TheTrachyEnjoyer said:

No. 
 

What I am saying is:

Lets say your max is 200 before a 20% BP
192 before a 25% BP
208 before a 15% BP

Hammer is 150

150 x 1.20
150 x 1.25
150 x 1.15

You pay more with a higher BP

I don’t think I’ve missed your point. Let me try to do a better job of explaining what I mean to see if there’s any remaining disagreement.

I’m saying you need to ask what determined that 150 hammer in your example.  Another bidder, of course. How did they come up with their max bid?  Well, if they did it like you, me, and @Egry do, and I daresay like most of us on the board, they figured it out by including all their expenses. So, ignoring shipping, and supposing the bid increment is 10, their max all-in at 20% was 140 + 28 = 168, or basically 170.  That’s how they came up with their bid of 140.  You end up paying 150 x 1.2, as you say, i.e. 180.

Had the BP been only 10%, their all-in max would be the same, but they would have bid more to arrive at that max.  They would have bid either 150 or 160, giving them an all-in cost of 165 or 176, as close as they can get to their target all-in of 170 given the increment. (The increment always decreases flexibility meaning our numbers won’t be exactly on target.) And what do you end up paying in this case? Either 160 x 1.1 = 176, or  170 x 1.1 = 187, which averages out to 181.50, in effect the same as the 180 you were paying in the other scenario with the 20% BP. So unless you’re talking about that negligible $1.50, you pay the same either way. That’s what I meant, but didn’t explain very well.

That of course assumes your underbidder’s bidding behaviour is determined by an all-in target cost, which it should be. Not everyone does as they should, though, so as I acknowledged to Curtisimo, an increase in the BP can indeed have an effect on us, the “rational bidders,” when the bidders who ignore all-in costs bid higher than they should.