The policy change comes as costs rise and profits fall.
As they report a 9.4% decline in net profits to just under $118m for the year, the company's February 1, 2015 restructuring of auction commissions to improve margins at lower- and middle-market prices provides the strongest indicator of the change in heart.
Driving this move is the fall in auction commission margins from 15.9% to 14.7% due to "the competitive environment for winning high-value consignments" - clear evidence of the toll that marketing hyperdrive has taken at the top end between Sotheby's and Christie's as they compete for trophy lots in Contemporary and Modern art.
Revenues were up 9.9% at $938m, but the impact of shareholder activism (c.$20m), the costs of restructuring (c.$14m) and CEO transition (c.$8m), as well as the hike in Sotheby's effective income tax rate from 30% to 39%, all took their toll, with the resulting decline in profits.
Private sales were also down 32% to $59.5m, chiefly because of the spike in 2013 sales resulting from a number of high-value consignments that were not repeated in 2014, say Sotheby's.
Cutting Costs
Trimming costs further, repositioning the company to compete more effectively at all levels and creating a war chest to fund innovation on the internet, in particular, are all part of the plan.
The company report a 42% increase in buying online and a doubling of the audience viewing live-stream auctions on sothebys.com.
"We're reaching more collectors, in more corners of the world, through more channels," said outgoing CEO Bill Ruprecht, as he pointed to "market-leading sales" in Old Masters, Contemporary, Modern and Impressionist art.
Sotheby's other great challenge for the year ahead will be the ongoing battle to improve shareholder value - another reason to boost commission yields.
With a $6bn sales total for 2014 leading to revenues of just under $1bn and a net profit of $118m, activist investors Marcato Capital have replaced Dan Loeb as the company's bête noire in calling for a better return, going as far as demanding a $500m buyback of shares and the sacking of Sotheby's chief financial officer over what they see as poor management.
Sotheby's have refused to take action on any of this before appointing a new CEO.
The upcoming spring sales will provide the first indications of how - if at all - Sotheby's intend to temper their use of price guarantees, one of the main marketing tools employed when competing for trophy lots.
