8-K From Sotheby's Shows Letter From Pres, CEO Tad Smith To Holders, Clients Disclosed Changes To Buyer's Premium Schedule
Benzinga 9 years ago
NewsManagement
Dear Shareholders and Clients:
I am pleased to share that we will be implementing some changes to Sotheby’s Buyer's Premium schedule this fall.
The most noteworthy change is that we are eliminating the Buyer's Premium entirely for our "online-only" sales. Last year, we held 16 such sales, and we are on track this year to double that number. These sales are now our best tool for attracting first time buyers and we were encouraged to see that approximately 20% of new clients acquired through these sales have subsequently participated in our live auctions.
The online marketplace is a related, yet distinct business opportunity for Sotheby’s beyond our live auctions - one with a different competitive landscape and reduced traditional expenses - that demands a different approach to pricing. We expect the elimination of the buyer’s premium to simplify the auction process for buyers and enable us to reach an even larger audience of participants. As a result, we will achieve higher prices and greater returns for our online-only sellers and we will continue to charge a Vendor’s Commission for that service. This new approach for our “online only” sales will be effective as of the Contemporary Art Online auction opening for bidding on September 16, 2017.
Turning to the Buyer's Premium for our regular live auctions, including those lots purchased by online buyers in our live auctions: we are very slightly increasing the Buyer's Premium rates. The added revenue will help to ensure that Sotheby's is providing the best service possible to our clients.
Going forward, our new structure for all sales excluding wine will be: 25% up to and including $300,000, 20% from $300,000 to $3 million, and 12.9% above $3,000,000. We anticipate that 94% of these lots we sell annually will be unaffected by this change. For our wine auctions, the Buyer’s Premium will be: 23% in New York and Hong Kong and 19.5% in London. These changes will be effective as of November 1, 2017.
In summary, Sotheby's is pleased to introduce the innovative new "zero buyer’s premium" pricing for our "online-only" sales, and we expect that clients and shareholders will be the beneficiaries of substantial market share gains and high hammer prices in those sales.
Tad Smith
President & CEO
I am pleased to share that we will be implementing some changes to Sotheby’s Buyer's Premium schedule this fall.
The most noteworthy change is that we are eliminating the Buyer's Premium entirely for our "online-only" sales. Last year, we held 16 such sales, and we are on track this year to double that number. These sales are now our best tool for attracting first time buyers and we were encouraged to see that approximately 20% of new clients acquired through these sales have subsequently participated in our live auctions.
The online marketplace is a related, yet distinct business opportunity for Sotheby’s beyond our live auctions - one with a different competitive landscape and reduced traditional expenses - that demands a different approach to pricing. We expect the elimination of the buyer’s premium to simplify the auction process for buyers and enable us to reach an even larger audience of participants. As a result, we will achieve higher prices and greater returns for our online-only sellers and we will continue to charge a Vendor’s Commission for that service. This new approach for our “online only” sales will be effective as of the Contemporary Art Online auction opening for bidding on September 16, 2017.
Turning to the Buyer's Premium for our regular live auctions, including those lots purchased by online buyers in our live auctions: we are very slightly increasing the Buyer's Premium rates. The added revenue will help to ensure that Sotheby's is providing the best service possible to our clients.
Going forward, our new structure for all sales excluding wine will be: 25% up to and including $300,000, 20% from $300,000 to $3 million, and 12.9% above $3,000,000. We anticipate that 94% of these lots we sell annually will be unaffected by this change. For our wine auctions, the Buyer’s Premium will be: 23% in New York and Hong Kong and 19.5% in London. These changes will be effective as of November 1, 2017.
In summary, Sotheby's is pleased to introduce the innovative new "zero buyer’s premium" pricing for our "online-only" sales, and we expect that clients and shareholders will be the beneficiaries of substantial market share gains and high hammer prices in those sales.
Tad Smith
President & CEO