Sotheby’s has cut its fees for both buyers and sellers in a new structure designed to simplify and clarify auction transaction costs.
The news follows a challenging year for historic auction houses with volumes and hammer prices dropping and scandals, including the impounding of every watch at Christie’s Passion for Time event by a Swiss court following irregularities in the sale room, draining confidence in the dark arts employed by the companies.
In addition, competition is on the rise from digital-natives like eBay (with its Authenticity Guarantee), Watchcollecting.com in the UK and Bezel in the United States charging single-digit percentage fees.
Sotheby’s says its lower and simplified charges will deliver the highest possible hammer prices while maintaining the company’s services from watch experts supported by its marketing teams.
Charles Stewart, CEO of Sotheby’s says fees have become too high, particularly for buyers, and too complex.
“Since 1979, when Sotheby’s first introduced buyer’s premium in our salerooms,
the market has largely shifted the transaction burden onto buyers. The result has been high costs for buyers and tiered commission structures that require a calculator to even understand, as well as an entirely opaque fee structure for sellers which distracts from what is most important to them. We are confident our simplified and clarified terms will benefit both buyers and sellers going forward,” he says.
The new rates will apply to items consigned after April 15, which misses this year’s spring auction season.
Fees will be 20% for purchases of a hammer value up to $6 million, dropping to 10% of the portion of the hammer price above $6 million.
For example, on the rare occasion a watch that sells for $10 million, it will carry a 20% buyer’s premium on the first $6 million and a 10% premium on the remaining $4 million.
Sotheby’s has also dropped its Overhead Premium, which was previously a 1% administrative fee on all sales.
There will be a uniform seller’s commission rate of 10% on the first $500,000 of the hammer price per lot and there will be no fee on the portion of the hammer price above $500,000 per lot.
“The standardisation of selling terms pivots away from private negotiations, prioritising transparency and simplicity,” the company says.
Sotheby’s will pay itself a new “success fee” of 2% on all lots where the hammer price exceeds the high estimate, so sellers should be wary of the auctioneer setting estimates artificially low, which had become routine during the boom years of 2020-22.
