Since Christie’s and Sotheby’s introduced the buyer’s premium in 1975 in England, and soon after (1977) in the United States, the buyer’s premium has been part of the auctioneering landscape in the United States.
Many auctioneers are now charging a “buyer’s premium” to increase auctioneer profits and sometimes offset seller costs.
Up until more recently, however, the word, “premium” has been used exclusively regarding buyer costs; seller costs have typically been referred to as “commissions.”
We’re now seeing auctioneers using the word, “premium” in regard to both buyer and seller costs, omitting the word “commission” altogether.
The dictionary definitions of these words are similar:
- An amount of money, typically a set percentage of the value involved, paid to an agent in a commercial transaction.
- A sum added to an ordinary price or charge; a sum over and above a regular price paid chiefly as an inducement or incentive.
I suppose it’s a fair word usage? Premium coffee costs more and I just paid my automobile insurance premium.
While the definition for premium does imply a sum added, versus an amount deducted, I think the word “premium” implies something better, or receiving something in exchange for the payment. The word “commission” also implies similar meanings, but doesn’t necessarily suggest “better.”
Therefore, possibly sellers paying commissions tend to think they are receiving fairly typical service in return, where sellers paying premiums more likely believe they are receiving improved service? I’m paying a premium, so I’m receiving premium?
I suspect the phrase “buyer’s premium” is used for this same reason, instead of say, “buyer’s fee.”
Relatedly, the state of Wisconsin actually prohibits the use of the words “buyer’s premium,” https://mikebrandlyauctioneer.wordpress.com/2011/06/20/buyers-premium-in-wisconsin/
Words mean things and they matter. “Your coffee will cost $2.50” or “The premium for your coffee is $2.50” sound materially different. I suspect the word premium will be well received by sellers, in contrast to commission.
Mike Brandly, Auctioneer, CAI, AARE has been an auctioneer and certified appraiser for over 30 years. His company’s auctions are located at: Mike Brandly, Auctioneer, Keller Williams Auctions and Goodwill Columbus Car Auction. He serves as Adjunct Faculty at Columbus State Community College, Executive Director of The Ohio Auction School and Faculty at the Certified Auctioneers Institute held at Indiana University.