Lyon & Turnbull are to turn the buyer’s premium system on its head by raising it for top-tier prices but cutting it for lower-priced lots in general sales.
While they become the first regional auction room to match Christie’s and Sotheby’s 25 per cent buyer’s premium for their fine sales, they will also decrease buyer’s charges for general sales of art and antiques where they say demand is more price-sensitive.
Though it challenges the traditional business model, Lyon & Turnbull believe the move is based on sound commercial logic.
Higher buyer’s premiums at the top end allow auctioneers to cut increasingly competitive deals with vendors, they say.
And the Edinburgh-based auctioneers confirm what other regional salerooms will say privately – that, because their own premiums are lower, they have found themselves at a disadvantage competing for blue-chip consignments since the imposition of the 25 per cent buyer’s premium on the first £25,000 of any purchase at Sotheby’s and Christie’s.
With more income now coming from the buyer, vendor’s charges at the top end have become negligible and – alongside promises of marketing and promotion – zero commission is now the norm for streetwise vendors of the best art and antiques.
Accordingly, while they acknowledge any increase in premium will be divisive – particularly one that (when VAT is added) amounts to close to 30 per cent on top of a hammer price – L&T see little alternative but to compete for consignments with Sotheby’s and Christie’s on level terms.
“Once again, an auctioneer hoping to compete at a high level has been forced by the pressures of the marketplace to follow Sotheby’s and Christie’s,” L&T vice chairman Paul Roberts told ATG. “At our previous level (20 per cent buyer’s premium) we were operating at a five per cent disadvantage – which in reality is a 25 per cent disadvantage – when pitching for business.”
L&T will charge a 25 per cent buyer’s premium (falling to 20 per cent over £25,000) at their ‘fine’ sales. They typically hold 13 such sales a year as well as selling single-owner collections that have become an L&T signature in recent years.
Among the first will be the first part of the Chen collection – a £6m consignment of top-rank silver and vertu acquired over the last 14 years by Hong Kong collectors Sinclair and Raye Heather Chen.
The sale at the Caledonian Club in London’s Belgravia on November 23 follows an extensive and costly marketing campaign that has seen the collection travel around the globe.
L&T recognise, however, that there are areas of the market that are much more price sensitive and really unable to tolerate such charges.
Sotheby’s/Christie’s have largely abandoned the market for goods under £10,000, but they will sell them if they are handsomely rewarded by buyer and seller, and so charge premiums accordingly. But this section of the market is important for provincial auctioneers, including L&T.
Because these lower value goods are subject to substantial vendor’s commission and so already bring the auctioneers revenue, L&T will hope to bring in more business by cutting the buyer’s premium to 17.5 per cent at their secondary sales (currently charged at 20 per cent).
These events, which make up more than half of L&T sales, include quarterly antiques, pictures, silver and jewellery catalogues.
The new charges come into effect from October 1.
By Roland Arkell