Vendor Commission
The main charge to be aware of when selling goods at auction is vendor commission. This is a percentage of the hammer price that goes to the auctioneer if the item is sold. The average vendor commission in the UK is around 15% plus VAT. Therefore, if an item sells for £1,000 hammer, you would receive £820 (£1,000-£150(-£30VAT)).
Auctioneers may also have a minimum charge when applying vendor commission. For example this could be £20+VAT, so if 15% of the hammer price achieved was lower than this threshold it would be rounded up to that amount (Hammer=£50 (15% of £50 = £7.50+VAT). This has been introduced to dissuade vendors from consigning low value items as the amount of time taken to photograph, list and sell the lot is not sustainable for auction houses without enforcing a minimum charge (in the example above they would earn £7.50+VAT).
If an item sells over a certain threshold the vendor commission may be reduced for the amount over that threshold. Some auctioneers state that if an item sells over £20,000, for example, the vendor commission will be reduced to 10% for the remaining amount. The £20,000 would still be charged at the standard rate and the excess would get the reduced rate of 10%. Therefore, if an item sold for £30,000 you would receive £25,200 (£20,000-£3,000(-600VAT)) (£10,000-£1000(-£200VAT)).
When you consign items to auction the specialist will inform you of the auction house’s selling terms and will discuss vendor commission rate with you. In many cases, there is no discussion to be had and you will be charged the full advertised rate. In some cases, you may be able to negotiate a reduced rate. This may be if you have a large consignment, such as an estate, or if you have a particularly valuable item that the auctioneer wants to sell. This varies significantly auction house to auction house, some may make deals routinely while for others it will be for special cases only.
Some auctioneers may also have different vendor commission rates for different sale types. For example, an Interiors sale may charge 15% and a Fine Art sale 14%. In some cases, it may not be by sale category but by format such as live auction and timed auction. This is rare, but again is something to be aware of.
All of the above calculations are using the auctioneer’s margin VAT scheme. This is the most common way items are sold and means that VAT is only charged on the vendor commission and not the hammer price. In my first example, the item that sold for £1,000 was only charged £30 vat as that is 20% of the vendor commission (£150). If you are selling goods as a VAT registered business your lots may be subject to standard or inclusive VAT. If this is the case please discuss this with the auction house in question.
This concludes my article on vendor commission. Please read the terms of your local auction house to find out their terms and vendor commission rates.
