Phillips Auction House to Introduce Unprecedented Bidding System This Autumn
In a groundbreaking move, Phillips, the renowned auction house, is set to debut a new buyer's premium structure this September. The new system, known as Priority Bidding, rewards early bidders with lower buyer's premium rates, aiming to create a more vibrant and competitive auction environment [1].
Under this innovative structure, the premium rates for all locations - New York, London, Hong Kong, Geneva, and Paris - will remain fixed for standard rates and priority bids. However, early bidders will enjoy reduced buyer's premiums, with rates beginning at 25% in New York for hammer prices up to and including $1 million, decreasing to 20% and then to 14% for portions above $6 million [2].
This change is expected to offer greater certainty and stronger momentum from the start of the auction, potentially leading to more spirited bidding and improved final sale outcomes for sellers [1]. Early bidder engagement can help generate higher price competition, benefiting sellers with better realized prices and higher sell-through rates.
For bidders, the financial incentives to commit sooner are clear. By placing bids early, they can optimise their costs depending on when they place their bids, encouraging more proactive participation and strategic bidding behaviour [1][3].
The Priority Bidding framework also provides more certainty and transparency, contributing to a smoother, more dynamic auction process [1][4]. Bidders can place binding bids up to 48 hours in advance, adding convenience and accessibility to the live auction experience [4].
However, not all auctions will adopt the new structure. Timed online-only auctions will continue with the standard rates but are not currently eligible for priority bidding.
The announcement from Phillips follows a fee shake-up and subsequent walk-back by one of its primary competitors, Sotheby's. Charles Stewart, Sotheby's CEO, described the fee overhaul as a "smart disruption" and a sign of the art market's increasing "maturity" [5].
It's worth noting that 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. In contrast, Phillips' previous rates were 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 [6].
While the new fees at Phillips are expected to have limited impact, primarily affecting moderately priced lots [7], the question of who truly benefits from the changes remains. Some art advisors, like Dane Jensen, have suggested that the biggest advantage of the new structure benefits the auction house, as it gives specialists 48 hours to solicit higher bids [8].
In conclusion, Phillips' Priority Bidding system aims to encourage early participation by reducing fees, supporting stronger initial bidding momentum, benefiting sellers through potential price improvements, and enhancing the overall vibrancy and competitiveness of the auction [1][3][4]. The new structure will apply to live auctions beginning this fall.
- The art world is anticipating the debut of a new buyer's premium structure by Phillips, the auction house, in September, named Priority Bidding, which rewards early bidders with lower premium rates.
- By implementing the Priority Bidding framework, Phillips aims to create a more competitive and vibrant auction environment, offering potential benefits to sellers, such as improved final sale outcomes and higher sell-through rates.
- Bidders will find financial incentives to place bids early under the new structure, as they can optimize their costs and engage in more proactive and strategic bidding behavior.
- The new system promises to contribute to a smoother, more dynamic auction process, with added convenience and accessibility, as bidders can place binding bids up to 48 hours in advance.
