Auctioneer Bob charges 20% commission and Auctioneer Dave charges 30%. Our question involves if all else is equal, can one assume Dave is a better auctioneer than Bob?
Generally, market prices (including auctioneer commissions) are determined by the marketplace. Prices in virtually any market depend directly upon supply and demand; given there is only one Bob and one Dave (limited supply:)
- When demand for any auctioneer’s service goes up prices (commissions) can/do go up.
- When demand for any auctioneer’s service goes down prices (commissions) can/do go down.
In 2011, we wrote a detailed analysis about how commissions are only “half the picture.” That article can be read in entirety here: https://mikebrandlyauctioneer.wordpress.com/2011/04/24/auctioneer-commission-is-only-half-the-picture/.
Of course, we are somewhat suggesting “busy” means “better.” Quite frankly, if more people are demanding Dave’s services over Bob’s services, at minimum the public believes Dave’s better or they would have called Bob. Can Dave charge more? He can and likely does.
You might wonder, “How much more Dave can charge?” Can he up his rate to 35%? 40%? 45%? He might be able to but has to weigh the amount of business he’s able to secure at those rates — in other words, do the math.
Further, would it be generally better to sell $10,000,000 in $1,000 items at 45% versus $15,000,000 in $1,000 items at 30%? Many think so. In other words, do less work for the same (or more) money.
As an expert witness, we often work with other expert witnesses around the United States who tell me the general rule in our business is (for doctors, forensic scientists, surgeons and the like,) the more specialized and unique your services are, the more you can charge. Its all about supply and demand.
Maybe a good rule for auctioneers — and anyone else — is, charge all you can so long as you are attracting a sufficient amount of business to meet your goals.
Further, if you are only “selling” a commodity, price matters more to consumers. If on the other hand, you are selling a more unique experience or a better product and/or service, price matters less.
Mike Brandly, Auctioneer, CAI, CAS, AARE has been an auctioneer and certified appraiser for over 30 years. His company’s auctions are located at: Mike Brandly, Auctioneer, RES Auction Services and Goodwill Columbus Car Auction. He serves as Distinguished Faculty at Hondros College, Executive Director of The Ohio Auction School, an Instructor at the National Auctioneers Association’s Designation Academy and America’s Auction Academy. He is faculty at the Certified Auctioneers Institute held at Indiana University and is approved by the The Supreme Court of Ohio for attorney education.