Spending big at auction can cost collectors in more ways than one. Buyer’s premium — the charge added to the winning bid for an artwork, or hammer price — can increase the cost of a purchase by up to 25%.
Recent shifts in these fees at Christie’s and Sotheby’s now mean that buying at auction could be more expensive than ever. We compared buyer’s premium across auction houses and online sales to reveal where collectors are hit hardest.
Christie’s made headlines in August when it announced plans to raise buyer’s premiums to 25% for items costing up to £175,000 in London, or $250,000 in the US — up from £100,000 and $150,000 last year. The news came just one week after Sotheby’s announce it would raise fees to 25% for works up to and including $300,000, a change that will only come into effect on 1 November 2017, ahead of its New York sales.
The increase to buyer’s premiums means that, as each house enters its New York season next month, their fee structures are closely aligned. Sotheby’s, however, has made it marginally less expensive for top collectors to buy in New York: buyers will pay 12.9% of the hammer price for works up to $3,000,000, while Christie’s lowest rate of 12.0%, applies only to works of $4,000,001 and above, suggesting the house is seeking to improve the profit margins made on headline lots.
Though Sotheby’s fees for live auctions may now be closely aligned to those of its arrival, its approach to online sales has been markedly different. In August, Sotheby’s announced that it would be scrapping buyer’s premium entirely for online sales — an area it has struggled with in the past. The decision is yet to be mimicked by Christie’s, which retains fees of up to 25.0%, according to hammer price and sale location.
Sotheby’s move to make its online sales less expensive may prove to be a smart strategy: online sales typically attract first-time buyers, or collectors investing in emerging artists — many of whom are likely to be put off by Christie’s added costs. It also speaks volumes for the house’s attitude to buying: under the direction of CEO Tad Smith, the number of online sales in 2017 is on track to double from 2016.
Until this September, Phillips had not changed its buyer’s premium levels since May 2016. As Christie’s and Sotheby’s announced changes, however, Phillips followed, bringing its fees closely in line with Christie’s — though retaining a higher threshold for its 25% rate.
Following the hike in buyer’s premiums at Sotheby’s and Christie’s this summer, Bonham’s quietly announced changes to its own fee structure, raising fees for buyers across its sale locations. As with Sotheby’s, the new rates will not come into effect until 1 November, ahead of New York’s major contemporary art auctions.
Of course, buyer's premium isn't the only additional fee bidders should factor into auction house purchases: costs such as shipping, taxes and artist's resale right (subject to location) can all dramatically alter the final price of a purchase. Smart collectors should check the small print.