Online Coin Auctions
Michael Bugeja, a coin collector since childhood, is a professor at Iowa State University and also a former member of the Citizens Coinage Advisory Committee. He is a nationally known author, journalist and educator.Visit one of our other blogs:
Rising Buyer Premiums on Proxibid
Buyer Premium ranges from 8 to 23% in Proxibid Coin Auctions
Conversely, some sellers are able to keep rates as low as 8%.
I understand the reasons for higher fees. Auctioneers have to pay credit card companies, Auction Payment Network (for secure transactions) and Proxibid hosting fees. Those fees alone justify an 8-10% premium. Then there are photography costs from equipment to freelance photographers. So add another 2% there. So if the house charges 15% buyer premiums, it is looking at 3-5% profit.
Moreover, some of these estate auctioneers are doing simultaneous onsite sessions requiring rent space or other physical preparations and staff.
Onsite sessions usually have lower buyer premiums, or none at all, which has always bothered me because all venues--online and onsite--come with expenses.
One auctioneer charging 23%, the highest BP in the coin category on Proxibid, says the higher fees are needed to offset losses. "I lose 2%, on every transaction at that," he states, noting Proxibid fees went from 5 % to 6%. "I am trying to keep my head above water. It boils down to overhead. It costs me just as much for advertising for small a auction as it does for a large auction."
This auctioneer does charge onsite buyers a 10% fee for winning bids.
Another auctioneer has limited buyer premiums to 8%. "We do not use the buyer's premium as a revenue stream," he says. "We use it to pay fees - credit card processing, Internet fees and shipping. The 8% covers that, in most cases."
This auctioneer doesn't have simultaneous onsite sessions, using Proxibid for Internet only ones.
The damage of any buyer premium over 18% concerns return customers. I bid low or not at all when the fee rises to 20%. And others who do not pay attention to higher fees, bidding as usual, then have to pay credit cards and lose a higher share of their hobbyist money.
Chances are they won't be back.
What's worse is that raw coins sold on Proxibid auctions are risky at best. Even with my numismatic acumen, I lose out on my lower bids more than half the time. Thankfully, every month I am able to score a big bargain so that keeps me bidding.
If you sell on Proxibid, think about a tier system that starts at 20% for purchases of $100 or less; 17.5% for $100-500; and 15% for anything over $500. You can run specials for gold. The more buyers bid, the more money you make.
Keep in mind these auctioneers also may charge consignors, so buyer fees are not the only revenue stream here.
I still patronize with dozens of bids my favorite sellers who still charge 15%. I encourage you to look for them on Proxibid and see if they are featuring any coins you like.
In any event, think about the problem with a 23% fee if a bidder wants to score a one once gold bullion with gold at $1,350 an ounce. The bid would have to be $1,100 to reach the retail price. The net result of that would be the consignor not only loses $250 at retail but also more than $300.
Now the consignor will not be a repeat client.
Better for consignors and buyers to sell or purchase the gold at wholesalers online for a $1,390 fee.
And that phenomenon should not only trouble auctioneers but Proxibid, too. If you keep raising fees, you'll end up with a domino effect and fewer auctions because, well, there are fewer buyers on the portal.