In late January 2015, Sotheby’s announced that it will once again be raising their buyer’s premium. This change comes following a difficult year for Sotheby’s that saw, among others, the loss of president William Ruprecht. According to their website, the new rates will be as follows: buyer’s premium payable on the hammer price up and an including $200,000 will be 25% (previously $100,000); buyer's premium payable on the hammer price in excess of $200,000 up to and including $3,000,000 will be 20% (previously above $100,000 to $2 million) and any excess over $3 million (previously $2 million) will be charged at 12%. The last increase came in 2013 when it was Christie’s who led the charge by hiking their rates to bolster returns. We wonder what Christie’s response will be this time.
More importantly, what does this mean for the art market? The ever-increasing buyer’s premium illustrates the struggle of both houses to remain competitive in a changing international landscape where smaller auction houses and online sales platforms are starting to eat up market share. By increasing the increments on which buyer’s premium is calculated Sotheby’s could be driving away clientele, but perhaps that is intentional: Sotheby’s has made no secret of the fact that it prefers to focus on the higher end of the market. All this being said, this past month’s sales have shown there is still strength in the auction market, with no lack of record-breaking prices achieved. The real effect of this change will be with Sotheby’s clients. There were serious grumbles over the last price raise, and this most recent adjustment may drive art buyers towards dealers and galleries. Time will tell the true repercussions of this change.
Annie Morony, Marketing Director, Tang Art Advisory