(8) Ways to Charge Auction Expenses


Running a successful auction business requires many things.  There are marketing expenses, travel expenses, labor expenses just to name a few.  Tracking expenses and billing them correctly is an important part of the auction business.  It is very common to charge sellers the expenses necessary to sell their items.  But be careful, over billing will upset sellers and under billing will hurt profitability. Here are eight common ways auctioneers recover some or all of the expenses necessary to conduct an auction.

1)    As a percent of items in the auction
Charge an auction expense to the seller as a percent based on the percentage of items they have in the auction. This is a fair practice when all the items are a similar value or the expense can be fairly distributed based on the number of items, not the value.  Common examples would be a facility rental fee or a ringman’s wages.

2)    As a percent of the auction gross
Charge an auction expense to a seller as a percentage based on the percentage of what the auction grosses.  This is common because the sellers with the highest auction grosses pay the highest percent of the expense.  It is very common in marketing when key items are featured and as a result bring the most money.

3)    Directly to an individual seller
Some expenses incurred are as a direct result of an individual seller, for example going to pick up an estate.  That expense should be charged to only one seller and spread across all the items sold.

4)    Directly to an individual lot
Some expenses should be attributed to an individual item.  A yard sign, cleaning a machine, detailing a car are all examples of expenses that should be billed to an individual item.

5)    As a fixed fee per seller
Some expenses are routine and can be bulked together for an auction seller.  A flat fee (or expense) can be charged to cover these costs without providing a breakdown.  This saves time and reduces questions from sellers.

6)    As a fixed fee per lot.
There is an expense to catalog and sell an item.  Some auctioneers have a per lot fee to cover their expenses.  They charge a fixed fee per lot sold (or unsold) at the auction.  This method saves time and simplifies the expense process.

7)    As part of your commission
Some auctioneers find it is easier to just roll the expenses into their commission.  That way the seller doesn’t have to bother thinking about expenses, the commission is all encompassing.

8)    Not at all
Some auctioneers do not take expenses into account.  They just charge a commission and at the end of the year hope they made more money than they spent.  This is not the best approach for many many different reasons.  Tracking expenses gives you control of your business and it allows you to understand the profitability of individual auctions.  Charging sellers allows you to capture an important source of revenue.

Regardless of how you charge for auction expenses, you should charge for them.  Expenses are a very significant part of the auction business.  Outdated clerking software does not make tracking expenses very easy.  Tracking individual expenses and assigning them differently was nearly impossible.

Wavebid is auction management software that can easily track expense for the first seven scenarios mentioned above.  It is easy to use and fast to learn.  Now you can track each expense and apply it to the correct sellers.  Wavebid also allows you to print detailed expenses reports for each seller. Tracking and billing expenses should be part of your successful auction business. With the right tools it can be fast and easy.

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