Following Sotheby’s decision to add a 1% “Overhead Premium” to their sales which became effective last month, Christie’s has also announced an increase in their Buyer’s Premium. The upcoming Asian Art Week in New York will be the first major sales to see the raise in Buyer’s Premium.
While Sotheby’s new policy charges an extra 1% of the hammer price, Christie’s has chosen to adopt a similar approach to how they themselves increased the prices usually, charging 1% more in the highest threshold of hammer price while adjusting the boundaries of each threshold. The major difference is that the upper limit of hammer price in the lowest threshold has doubled, meaning that more lots will have to bear the highest Buyer’s Premium rate. Details of the price increase can be found in the tables below.
Using strategies from their previous price increase in February last year, Christie’s has raised the buyer’s premium rate in the highest threshold from 13.5% to 14.5% while the rates in the other two thresholds remain at 25% and 20%. Amongst all salerooms worldwide, only the Buyer’s Premium in the Shanghai saleroom stayed the same and has no thresholds, charging a 20% Buyer’s Premium across all sales.
The major difference in the price increase this year is that Christie’s has opted to double the upper limit of hammer price in the lowest threshold. Take the Hong Kong saleroom as an example, the upper hammer price limit has been raised from HK$2.5m to HK$5m, meaning that in the future, anything hammered down at a price below HK$5m will have to bear a 25% Buyer’s Premium.
Both New York and London’s salerooms also see the same arrangements. New York’s upper limit is raised from US$300,000 to US$600,000 while that in London increases from £225,000 to £450,000.
(The Buyer’s Premium of the lowest threshold is 25% while that of the second threshold is 20%.)
A large gilt-bronze seated figure of Padmasambhava, Tibet, 15th Century
Sanyu’s White Chrysanthemum in a Blue and White Jardinière
For example, a large gilt-bronze seated figure of Padmasambhava from Tibet, 15th Century which sold in Hong Kong in July was hammered down at HK$3,500,000. And with a Buyer’s Premium of HK$825,000, it was sold for HK$4,325,000. If the new Buyer’s Premium schedule was applied to the sale, the Buyer’s Premium would be HK$875,000 and the figure would be sold at HK$4,375,000, HK$50,000 more expensive than the original selling price.
Let’s take a premium lot as another example. Sanyu’s White Chrysanthemum in a Blue and White Jardinière has a hammer price of HK$167,000,000. It was sold for HK$191,620,000 after adding a Buyer’s Premium of HK$24,620,000. The new system would mean an increase of HK$2,595,000 in Buyer’s Premium to HK$27,215,000, totalling a final price of HK$194,215,000.
Qianlong six-character seal marks in underglaze blue and of the period (1736-1795)｜Estimate: US$800,000 - 1,200,000
The upcoming New York Asian Art Week will be the first major sales to take place after the new schedule has been implemented. The Qianlong six-character seal marks in underglaze blue which will be leading the sale is expected to fetch between US$800,000 and US$1.2m. If hammered down at US$800,000, the lot's Buyer’s Premium, according to the current system, would be US$175,000 and it would sell for US$975,000. The new system would generate a Buyer’s Premium of US$190,000 and a selling price of US$990,000, resulting in an increase in price of US$25,000.
The price increase is no surprise to the auction industry. COVID-19 has put auction houses under immense pressure to cut costs and increase profit. Christie’s undertook vigorous action to lower costs in June, including layoffs and restructuring. The pay increase is another crucial strategy that helps the auction house to increase revenue.
Comparing Sotheby’s and Christie’s tactics, the following conclusion can be made: for lots with medium to low prices, Sotheby’s Buyer’s Premium is higher, while high-priced lots are more expensive at Christie’s. For instance, a lot with a hammer price lower than around HK$4.4m at the Hong Kong saleroom would be more expensive at Sotheby’s while those with prices higher than around HK$4.4m would be more expensive at Christie’s. The upcoming Autumn sales will show us how this new arrangement is going to affect the auction house's performance.