Sotheby’s
On Thursday, December 19th, Sotheby’s sent a letter to clients informing them that, after only six months, they are reversing their decision to adopt a new, pared-down fee structure.
In February 2024, Sotheby’s announced that starting in May, they would implement a new fee structure where all sales up to $6 million would be subject to a 20% buyer’s premium, with everything over $6 million hit with 10%. This stood in stark contrast to their previous fee structure, similar to the buyer’s premium systems maintained by comparable auction houses like Christie’s and Bonhams. This consisted of a 26% first tier on all sales up to $1 million, with a 20% fee on anything between $1 million and $4.5 million. Sotheby’s would then apply 13.9% to everything beyond $4.5 million. The switch to the two-tier structure was said to simplify things, make things easier for buyers, and bring in new business. In Sotheby’s letter, they explained that the initial move was meant to “encourage growth in our markets by creating transparency, simplicity, and fairness on fees that have always been intimidatingly complex.” Along with the buyer’s premium changes, they set their seller’s commission to a flat 10%, aiming to discourage negotiations with buyers. Sotheby’s CEO, Charles Stewart, described the move as “a step toward maturity for the art world”. Despite the sentiment surrounding the changes, it appears they did not have the desired effect.
Auction house premiums have only been going up and up over the past few years, with Christie’s increasing their buyer’s premiums three times in three years. This trend of increasing fees and decreasing returns for sellers could have long-term effects on the market, potentially dissuading buyers and sellers from participating in auctions. So Sotheby’s February announcement was like a breath of fresh air. Finally, we’ll all be getting a bit of space to breathe without thinking about exorbitant commissions. Sotheby’s tried to explain the return to the old fee structure as the result of “evaluating the needs and preferences of both our buyers and sellers”. Is it because they care about clients, or is it because they’re not making as much money as they hoped? Sotheby’s has been making some drastic changes in response to the 2024 art market, including cutting around one hundred employees from their New York offices in December and fifty staffers from their London headquarters in May.
The new fee structure, which will go into effect February 17, 2025, will consist of 27% on everything up to $1 million, 22% for between $1 million and $8 million, and 15% on everything above that. The new structure enacted in May did away with the 1% overhead fee Sotheby’s previously charged. Despite the sudden reversal, the overhead charges will not be coming back. Additionally, the only remaining part of the new structure is a 2% fee on sellers for when an item sells over its estimate, or what some call a success fee.
By: Nathan Scheer
Sotheby’s Announces About-Face On Fees
Sotheby’s
On Thursday, December 19th, Sotheby’s sent a letter to clients informing them that, after only six months, they are reversing their decision to adopt a new, pared-down fee structure.
In February 2024, Sotheby’s announced that starting in May, they would implement a new fee structure where all sales up to $6 million would be subject to a 20% buyer’s premium, with everything over $6 million hit with 10%. This stood in stark contrast to their previous fee structure, similar to the buyer’s premium systems maintained by comparable auction houses like Christie’s and Bonhams. This consisted of a 26% first tier on all sales up to $1 million, with a 20% fee on anything between $1 million and $4.5 million. Sotheby’s would then apply 13.9% to everything beyond $4.5 million. The switch to the two-tier structure was said to simplify things, make things easier for buyers, and bring in new business. In Sotheby’s letter, they explained that the initial move was meant to “encourage growth in our markets by creating transparency, simplicity, and fairness on fees that have always been intimidatingly complex.” Along with the buyer’s premium changes, they set their seller’s commission to a flat 10%, aiming to discourage negotiations with buyers. Sotheby’s CEO, Charles Stewart, described the move as “a step toward maturity for the art world”. Despite the sentiment surrounding the changes, it appears they did not have the desired effect.
Auction house premiums have only been going up and up over the past few years, with Christie’s increasing their buyer’s premiums three times in three years. This trend of increasing fees and decreasing returns for sellers could have long-term effects on the market, potentially dissuading buyers and sellers from participating in auctions. So Sotheby’s February announcement was like a breath of fresh air. Finally, we’ll all be getting a bit of space to breathe without thinking about exorbitant commissions. Sotheby’s tried to explain the return to the old fee structure as the result of “evaluating the needs and preferences of both our buyers and sellers”. Is it because they care about clients, or is it because they’re not making as much money as they hoped? Sotheby’s has been making some drastic changes in response to the 2024 art market, including cutting around one hundred employees from their New York offices in December and fifty staffers from their London headquarters in May.
The new fee structure, which will go into effect February 17, 2025, will consist of 27% on everything up to $1 million, 22% for between $1 million and $8 million, and 15% on everything above that. The new structure enacted in May did away with the 1% overhead fee Sotheby’s previously charged. Despite the sudden reversal, the overhead charges will not be coming back. Additionally, the only remaining part of the new structure is a 2% fee on sellers for when an item sells over its estimate, or what some call a success fee.
By: Nathan Scheer