Phillips Auction House to Introduce Pioneering Bidding Mechanism this Autumn
Phillips, a renowned auction house, is set to revolutionise the auction experience with the introduction of a "first-of-its-kind buyer's premium structure" featuring priority bidding. This new model, launching in September, aims to incentivise early, binding bids through significantly reduced buyer's premiums for those bidders who commit early and meet the minimum lot estimates [1][3][4].
Key Benefits for Bidders
Priority bidders stand to gain substantial savings. For instance, on high-value lots, they could save tens of thousands of dollars by bidding early and committing to the minimum lot estimates. The reduced premiums apply whether the winning bid is the priority bid or a higher bid by the same buyer during the auction, encouraging proactive bidding and strategic engagement from the start [1][2][4].
Advantages for Sellers
Early, irrevocable bids provide Phillips greater confidence in the sale, limiting last-minute surprises and helping to shore up mid-priced lots typically not covered by third-party guarantees. This increased certainty can translate to more robust and reliable sales outcomes [1][4].
Enhanced Auction Dynamics
The new structure aims to prevent the typical “cold-start” lulls in auctions by motivating early action and sustained bidding excitement, leading to a more vibrant auction atmosphere. This behaviourally informed approach links financial incentives with increased pricing clarity to enhance overall auction dynamics [3][4].
In the UK, Sotheby's recently announced a fee shake-up and subsequent walk-back, making Phillips's move all the more significant [1]. Under Sotheby's current system, the buyer's premium ranges from 15 to 27 percent of the hammer price, depending on the work's value. Phillips's premium tiers for London, Hong Kong, Geneva (jewelry only), and Paris will remain fixed across all locations [1][3].
In New York, the updated rates are: 29% for hammer prices up to and including $1 million, 22% for the portion above $1 million and up to $6 million, and 15% for the portion exceeding $6 million. Timed online-only auctions will adopt the new standard rates but are not currently eligible for priority bidding [1].
Dane Jensen, an art advisor, stated that the new fees at Phillips will have a limited impact, primarily affecting moderately priced lots. He also commented that the changes do not benefit either the house or the buyer, implying that they are too high and can be a deterrent to buyers [1]. However, Jensen added that the structure removes unpredictability from auctions, which buyers typically want to work to their advantage [1].
References: [1] Artnet News. (2023, August 1). Phillips Announces New Buyer's Premium Structure for Live Auctions. Retrieved from https://news.artnet.com/market/phillips-announces-new-buyers-premium-structure-for-live-auctions-1914876 [2] Art Market Monitor. (2023, August 1). Phillips Introduces New Buyer's Premium Structure for Live Auctions. Retrieved from https://www.artmarketmonitor.com/2023/08/01/phillips-introduces-new-buyers-premium-structure-for-live-auctions/ [3] The Art Newspaper. (2023, August 1). Phillips to introduce new buyer's premium structure. Retrieved from https://www.theartnewspaper.com/market/phillips-to-introduce-new-buyers-premium-structure [4] Art Daily. (2023, August 1). Phillips Announces New Buyer's Premium Structure for Live Auctions. Retrieved from https://artdaily.com/news/144377/Phillips-Announces-New-Buyer-s-Premium-Structure-for-Live-Auctions
- Phillips's "first-of-its-kind buyer's premium structure" aims to encourage early, binding bids from collectors, offering them considerable savings on high-value art pieces.
- This new pricing model could potentially boost the art market, as it incentivizes proactive bidding and strategic engagement from the start, creating a more vibrant auction atmosphere.
- The art market, particularly in London, Hong Kong, Geneva, and Paris, will see a change in buyer's premium rates, following Phillips's announcement, which may impact moderately priced art loads.
- In the business world, Phillips's move to update its buyer's premium structure could signal a shift in auction house finance strategies, potentially being emulated by other players in the art market.
