Wednesday, June 11, 2008

Why Auctioneers prefer not to quote rates over the phone…

The answer's simple really. We want to make to make sure we price our service properly, and since every sale is unique, our pricing structure needs to be customized for each seller. Let's start with the basics.

Auctioneers are commissioned sales people. By and large, we earn our money by doing a good job of selling your assets. What we sell, who we sell it to, how much we have to sell, and how much it will bring are all questions we ask before we set a fee or a rate. Here are a few of the key issues we need to explore before we set a price.

Labor: In order to sell your assets, we need to determine how much labor it will take to set up or stage your property. It takes a lot more time and effort to set up a restaurant for auction than it does a small fleet of vehicles. Will your auction attract a small crowd or a large crowd? Labor is one of our biggest expenses, and we need to have a pretty good idea of what it will take to make your event a success, whether it's 2 people or 15.

Assets: What we're selling makes a difference. An all day sale that nets $10,000 will have a significantly different price structure than a 2-hour sale that nets $250,000. Larger revenue sales don't necessarily mean higher costs. Will we be selling just a handful of items or will we be selling hundreds or thousands? Are the items fairly common or extremely unique? What you're selling, and how much it could potentially bring, is a huge factor in how we set fees.

Location: Are we selling from your location, or are we moving your merchandise? There are costs involved in moving things, and we need to calculate the pros and cons of selling on-location versus selling elsewhere.

Technology: Will this auction be simulcast on the internet? This option might bring more bidders or larger bids, but there's a cost involved in bringing reliable technology to the sale. There's also a cost of having the staff available to operate the systems, whether we use our staff locally or outsource it.

Will we need to bring in audio or visual equipment for the sale to be a success? What about pre-catalog inventory? How much time will be needed to photograph each item? Technology adds an element to sales that needs to be factored in.

There are dozens of questions we need to ask to make sure we're conducting an auction event that meets your expectations and brings us both a valuable return on our investments. We prefer to ask you these questions in person, or somehow get an idea of what we're dealing with before we tell you "how much".

Some auctioneers will quote their rates to you over the phone, without knowing all of the details of your sale. They may be very confident that their rates will be appropriate to cover their expenses and earn their profits. Some auctions are so similar to other auctions that we can do that without hesitation. For example, we conduct storage auctions at more than 70 locations, and we know from experience that our standard rate works just fine. Each and every one of our clients gets exactly the same rate.

However, unique sales need unique approaches and therefore the more we know upfront, the better we can quote a fair rate for each client. If you're having just one auction, then we need to treat that pricing as unique.

One thought about auctioneers discussing commission rates. It's against the law for us to discuss rates with each other. Having that conversation, even in generalities, could be considered price-fixing, and is a clear violation of the Sherman Anti-Trust act. That doesn't mean you can get comparison quotes, but it does mean we can't help you with what someone else might quote.

Will we ever quote a rate over the phone, sight unseen? You bet. Somewhere between 2% and 98% plus costs. We'll narrow it down for you once we meet in person.

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