WHY SELLERS OVERESTIMATE AUCTION PROFITS
Hidden fees, taxes, and costs sellers forget to calculate.
A HIGH HAMMER PRICE DOESN’T EQUAL HIGH PROFIT.
Many auction sellers remember the excitement of seeing their first high winning bid. What often comes later, however, is the realization that the final payout is lower than expected once seller fees and other costs are deducted. Other costs mentioned are what contribute to the actual payout. The mistake most novice sellers make is assuming that the profit taken home is the expected payout, which is the hammer (final bid) price. Thankfully for most it only takes one sale to realize the hidden fees involved in auctions.
Auctioning can be highly rewarding, whether done casually or aggresively, and future sellers need to be aware of hidden fees in order to evaluate their results and plan future listings with confidence.
EXAMPLE:
You submitted an item for auction last week and today’s the final day for bidding. As you count down the seconds until the items closes for bidding. Already excited by the high bids coming in, you can hardly contain yourself as someone bids 1000(€/$) for your item as it closes. Let’s look at the average seller’s expected profit versus actual profit:
EXPECTED PROFIT
Final Bid: +1000(€/$)
Shipping +Fee: 50(€/$)
-
-
Final Payout: 1050(€/$)
ACTUAL PROFIT
Final Bid: +1000(€/$)
Shipping Adjustments: -30(€/$)
Seller Fee: -12%
Insurance: -20(€/$)
Final Payout: 830(€/$)
FINAL BID (1000€/$)
This number represents the amount of money a buyer has reserved to pay for your item, typically after competing with other buyers for said item.
SHIPPING FEE (+50€/$)/ ADJUSTMENTS (-30€/$)
Even though shipping fees are represented as a net positive, a seller uses the profit gained from this fee to cover the cost of sending an item to the buyer. Oftentimes adjustments need to be made to accomodate longer distance, or higher class priority shipping which the seller has to cover out of their own pocket.
SELLER FEE (-12%)
The percentage above can be anywhere from 5-20% of the final bid depending on the auction house. This fee typically covers operating costs and staffing.
INSURANCE (-20€/$)
There are a multitude of applications for an insurance fee, which protect an item before, during, and after a sale. This fee protects sellers from loss or damages while shipping, and is usually 1-2% of the hammer (final bid) price.
TAXES AND REGULATORY COSTS
Different states and countries have specific laws and taxes regarding what you can import/export through sale. The most common forms of auction taxes include sales taxes and VAT (import taxes) which can be 4-20% of the hammer price based on the country, item, and cost when sold. These fees were not included in the example profit calculation due to the variety of circumstances they exist under. A separate article will be written on the subject.
HOW TO (ACCURATELY) CALCULATE AUCTION PROFIT
Accurately calculating auction seller profit requires looking beyond the final bid price. By accounting for seller fees, shipping-related costs, taxes, and insurances, sellers can estimate the amount they are likely to receive after the auction is over. Using a dedicated seller profit calculator can help streamline this process by automatically converting an inputted expected payout into an estimated actual payout.
This site offers a seller profit calculator tailored to the fee structure designed around Catawiki auctions, allowing sellers to estimate their potential payout before listing.
This calculator is provided for estimation purposes only and is not affiliated with or endorsed by Catawiki.
You can access the Seller Profit Calculator here.
FREQUENTLY ASKED QUESTIONS
Can I estimate my profit before listing an item?
Yes. Using a seller profit calculator allows you to input the final bid, shipping, taxes, and optional services to see an estimated payout before the auction begins.
Are all fees deducted automatically?
Most platforms calculate and deduct fees automatically, but sellers should be aware of optional costs like insurance or taxes that may not be included in the typical calculation.