In Britain, unless you frequently buy second hand goods somewhere like a car boot sale, most of us don’t usually do much in the way of haggling over the price of something. Walking into a shop we expect things to be priced up in advance and we assume the price is fixed. I had my first experience of haggling many years ago, in a market in Jerusalem. I hadn’t got a clue and the shop keeper was far more enthusiastic about the process than I was. In the end I was happy to leave the shop having bought a sun hat that hadn’t cost me all my holiday spending money.
Almost by definition, antiques are second hand goods and so even if there’s a price label, the price might not be fixed as it first appears. This can make some people wary, which is a shame, and hopefully this posting will help if you’re unfamiliar with buying antiques. At the heart of a potential purchase are a fundamental set of calculations. The problem is, each side only knows their side the numbers and neither wants to let the other side know what these numbers are.
The story of a purchase
To illustrate the mathematics of a sale (don’t worry, I’ll do maths, you just have to follow the story) let’s take a hypothetical, but realistic, example.
A dealer spends an hour working through an online catalogue for a local auction house. The dealer writes down lot numbers and her maximum bid for items. Our dealer rents space in an antiques shop and also intends selling at an upcoming antiques fair. She has to use her experience to judge which items might sell through each, or both, outlet as shop buyers often have quite different tastes to people who pay to attend a fair.
A few days later the dealer goes along to the auction at the start of the day to bid in person. This gives her time to view the items she is interested in before the auction starts.
The dealer may add a few more lots to her bidding list but she is more likely to remove a few having had a close look. You soon learn how misleading (in both good and bad ways) photos can be. There will be a few maximum bids adjusted too, depending on how the items look in the flesh.
Visiting on auction day to view and then staying on to bid is great as you only have to travel once. The downside is that auctions usually run for many hours, so you can be in for a very long, and at times rather dull, day. If you don’t deal in furniture, having to sit through 200+ lots of old tables and chests of drawers can try anyone’s patience. Of course you can come and go throughout the day but many auction houses are on industrial estates so your options are usually limited to a walk to stretch your legs.
For our example, let’s assume our dealer wins a few items including a rather nice Moorcroft vase for a hammer price of £200. With a hammer price of £200 on an item the dealer is probably hoping for a selling price of at least twice that amount, i.e. at least £400. That might sound a high mark up but that’s before you take into account the costs.
The cost of a purchase
Before you can take your winnings home, the auction house will add a “buyer’s premium” of anywhere between about 25% and 35% of the hammer price. That’s their main source of income so without it there would be no auction. In the last couple of years, buyer premium has risen sharply and I’ve seen percentages as high as 37%. As a buyer, you must factor this in when you’re setting your maximum bid.
For our example, lets assume a typical value for buyer’s premium of 33% so the final bill for our vase is £266. That of course has just reduced the markup on a £400 selling price from £200 to £134, a very big drop. We have, of course, placed our dealer in the auction room so they get to pay directly and take the items away that day. If you bid online there may be additional fees and if you need your items sending because you can’t get to the sale room, that costs even more. Sometimes a lot more.
Selling through an antiques shop
Before the upcoming antiques fair, lets assume our dealer puts her newly purchased vase in an antiques shop where she rents some space, to see if it sells there? If it does, that’s great but before the dealer gets her hands on her profit there are two other costs to allow for.
Firstly a savvy buyer will ask for a reduction in the price (I’ll come back to this in a minute). That reduction is usually capped at between 5% and 10% and to get it you’ll need to ask (politely). A discount of 10% reduces the selling price from £400 by £40 to £360. I hope the buyer is very happy with the £360 price because the dealer may also lose another percentage to the antiques shop! That is typically between 7% 10%. At 7.5% of the selling price that would be 7.5% of the £360 or £27.
It’s got complicated hasn’t it? You might be wondering whether our dealer has actually made any money for all her efforts. In summary: the dealer…
- Won the vase at auction for £200
- Paid the auction house £266
- Ticketed the vase at £400
- Allowed the buyer a £40 (10%) discount
- Paid £27 to the shop through which the vase was sold
So at the point of sale, the dealer gets £67 profit from a vase with a hammer price of £200. However, we’ve not finished yet! Out of that £67 she also has to pay for:
- Fuel to get to and from the auction
- The time spent at the auction
- Some part of the space rented from the antique shop (rarely less than £100 a month, potentially over £1000 depending on the amount of space taken).
Those last three values are hard to quantify for a single vase. However at the end of a month the costs have to be paid either from sales or, failing that, the dealer’s own pocket. If you walk around a quiet antiques shop and wonder if anyone makes any money, the answer is not everyone does, certainly not every month.
Selling at an antiques fair
Lets assume the vase hasn’t sold through the antiques shop and the dealer takes the vase to sell at an antiques fair. Here the circumstances and costs are a little different.
One the cost side, the dealer has to pay for space at the fair. This can range from about £50 to several thousand pounds for high end fairs. A typical, good sized fair with 100 to 300 dealers will generally charge about £100 for a single pitch. That’s about the same as a whole month’s rent for a typical cabinet in an antiques shop. That might sound a lot but at least there are no additional fees when items are sold.
The only other costs for a dealer are the fuel to get to and from the fair and their time. In truth, I doubt many dealers count their time at well attended fairs. They are the most enjoyable part of the whole business. On the flip side, a poorly attended fair is a depressing and frustrating experience for everyone.
Fairs have two other big benefits for a dealer. Firstly they get to sell their own stock. This should mean they can provide information about an item to a potential buyer. Being able to tell someone about an item is a great way of improving your chances of selling it. Secondly, assuming the fair organisers have done their job well, the fair will have hundreds, and ideally thousands of visitors interested in spending money. The fair may only run for one day but in that time there may well be considerably more genuine buyers comes past your stall than go near your cabinet in an antiques shop, especially in winter.
To return to our example vase, with its £400 price ticket. If someone shows an interest there’s a slim chance they will pay full ticket price. More likely, buyers at fairs will ask for a discount and will expect to get about 10%. Now comes the fun part. In a shop if £360 is too much for the potential buyer they will probably walk away. At a fair, it’s your stock so you have the option of offering more discount if you want to get the sale. This is still potentially worthwhile as there are no more costs for you at the point of sale. For the dealer there are a whole load of considerations such as:
- how long have you had the item (you do get bored with some things!)?
- do you actually like the item yourself?
- do you think you’ll get a better offer soon?
- how much profit have you made already that day?
- how hard to pack up and transport is the item?
- has the customer bought anything else from you that day or previously?
On small value items going beyond a 5% discount isn’t usually worthwhile for a dealer but as the value rises it can be. As a buyer you can always ask (politely) but be prepared for the dealer to say no. This should never be a cause for embarrassment or friction, it’s just two adults working out if a deal can be achieved. Neither side should want either side to feel cheated. If a buyer decides they don’t want to pay the asking price, there’s usually a comment of “Thank you, I’ll think about it” and they leave. It’s rare for them to come back, but that’s fine. As a dealer I’d rather know which items are attracting interest, even if they don’t sell.
The lessons learned
Antique dealers are rarely profiteering
As you can see, for a dealer, profits are pretty slim, sometimes bordering on non-existent even on quite expensive items. To improve matters the dealer can of course increase the ticket price. Before reading this, you might have been surprised to learn that many antique dealers try set ticket prices at nearer three times the hammer price for items bought at auction. Hopefully this illustration shows that’s not really profiteering, it’s just the price to cover a dealer’s costs and allow them a small profit.
The cheapest antiques are usually at auctions
If you want to buy antiques for yourself, you get the best price by buying at auctions, but you have to commit to spending a lot of time and effort. I know from my days working full time that’s rarely an option. You may have the income buy a few antiques but you don’t have the time to sit in an auction all day waiting for your lots to come up. Even going to collect lots bought online can be an issue since most auction houses close at weekends, when you’re free to travel. If you have to have items sent to you, that can be an expensive mine field of its own and involve third party couriers.
If you’re interested in attending and maybe buying from an auction, have a read of my guide here.
Dealers renting space are not making a living
Most dealers selling antiques through shops where space is rented are not making a living from the business. They do it because they enjoy buying and selling antiques. It’s a fantastic world to be in, full of interesting and friendly people. In theory the dealers are competing with each other but you’d never know it. The best most people aim for is to cover their costs and make enough for a few weekends away (usually to visit antiques fairs).
You probably get the best service from antiques fairs
By visiting a large antiques fair you get a huge range of goods to look through and you get to buy from dealers who will know their stock. Dealers rarely sell things they don’t like or aren’t interested in so fairs are a great place to learn. If the fair is quiet, most dealers are very happy to chat for ages! Prices are also more fluid at fairs. The dealers are selling their own stock and they want to sell. I overheard Mark Stacey (who appears on British TV antiques programs quite often) sum it up beautifully to a potential customer when he said “Everything’s here to sell, but I have to make a living”.
When buying antiques, ask for a discount in hope not expectation
When you’re buying antiques you can usually get a discount. Please don’t ask for a discount for anything under £20, that’s not fair to the dealer. Also, at any price, if you’re told no discount is available, accept that with good grace. If you try being forceful, a dealer is likely to simply ask you to leave.
A useful thing to look for in shops is that most items will have a ticket attached. Many shops use codes such as “T5” or “NT” on the label. “T5” would usually indicate Trade £5 meaning that the dealer would be happy with a maximum discount of £5. “NT” means No Trade, or no discount. You can always ask in this case but but you’ll usually be told no, regardless of the ticket price.
