Consignment rip-off or legit practice?

vindibona1 · #1 08-22-2019, 08:05 AM

I think one of the local shops ripped me off, but before I decide what I'm going to do going forward I want to know what you guys think.

I put a Les Paul, numbered limited edition in a shop for consignment sale. We agreed that the commission for the consignment would be 25%. I thought it was high, but agreed. There is a lot more to this story. The short version is that it sold 3 months ago for $2000 and they never called me and only when I went in to pick up the guitar was I told it was sold.

But the part that got me riled was, with tax the guitar cost $2200 as there is 10% tax. He said he takes commission on everything INCLUDING THE TAX! Then he deducts the tax after he took his commission on everything including commission on the tax.

The difference didn't come out to be a lot of money, but it's the principle. The tax was paid by the customer through him. It wasn't paid TO him, yet he felt free to take 25% of that extra $200.

Am I right to feel cheated?

PM me if you want to know the name of the store.

RP · #2 08-22-2019, 08:12 AM

Quote:

Originally Posted by vindibona1

Am I right to feel cheated?

Yes! Taking a commission on the tax seems absurd. It's not like you received the other 75% of the tax collected....

Ed66 · #3 08-22-2019, 08:23 AM

I agree it seems like you got shorted $50.00. Was there any signed agreement on specifically how the commission would be calculated? I've never seen it calculated on gross price including sales tax, but it's all in the agreement. The owner may need to know it could be the last time you use him.

sportycliff · #4 08-22-2019, 08:24 AM

ripoff here.

sakar12 · #5 08-22-2019, 08:25 AM

I'd feel cheated, yes, and especially since they didn't tell you the guitar sold.

murmur70 · #6 08-22-2019, 08:27 AM

I believe 25% is standard for consignment but paying an additional 25% on the sales tax is definitely a ripoff.

jaymarsch · #7 08-22-2019, 08:27 AM

In all of the consignments that I have done, I have not run across that practice. I have had to follow up with shops who, due to their own cash flow, do not always contact me in a timely manner to let me know that an instrument sold. I tend to monitor the situation myself and stay in touch with them.

The tax thing sounds weird to me. That should have been spelled out clearly in the beginning if that is their practice. 25% including tax is a high consignment fee.

Best,
Jayne

ohiopicker · #8 08-22-2019, 08:28 AM

The fact that he took commission on the tax AND id not call you to tell you the item sold tells me this is someone you don’t want to do business with again.

Did you have a contract that spelled out anything?

macoshark · #9 08-22-2019, 08:38 AM

That stings. NOt sure what the fine print says. I get it's the principle, and it is. There squeezing every penny from you. To me, you should present your case to the owner. Maybe you weren't informed of what you feel you should of been upfront. You don't have anything to lose at this point and at least you'll get the satisfaction of telling your side. Also that there losing a solid customer and anyone else that you speak to.
Really, what's wrong with people?

mysterious1s · #10 08-22-2019, 08:39 AM

Yes. That is not fair.

GangstaPat · #11 08-22-2019, 08:41 AM

I'm going to have to chime in with my "Yes" vote. You do have the right to feel cheated. The fact that it sold and they didn't notify you really chaps my hyde. PM'ed.

Tone Gopher · #12 08-22-2019, 08:42 AM

Quote:

Originally Posted by vindibona1

The short version is that it sold 3 months ago for $2000...

But the part that got me riled was, with tax the guitar cost $2200 as there is 10% tax. He said he takes commission on everything INCLUDING THE TAX! Then he deducts the tax after he took his commission on everything including commission on the tax.

The difference didn't come out to be a lot of money, but it's the principle. The tax was paid by the customer through him. It wasn't paid TO him, yet he felt free to take 25% of that extra $200.

If he is charging commission on tax, then he should be reporting that income as well. That smells like tax fraud.

The 10% does not go into his pocket at all. It is paid by the buyer, and should be passed along in its entirety.

I would discuss the matter with the shop, and offer to refer them to the tax commissioner if they need to better understand the math of doing business.

Merak · #13 08-22-2019, 08:46 AM

Quote:

Originally Posted by Tone Gopher

If he is charging commission on tax, then he should be reporting that income as well. That smells like tax fraud.

The 10% does not go into his pocket at all. It is paid by the buyer, and should be passed along in its entirety.

I would discuss the matter with the shop, and offer to refer them to the tax commissioner if they need to better understand the math of doing business.

Agreed they sold the guitar, not the tax.

seannx · #14 08-22-2019, 08:47 AM

I've sold two guitars and an amp through a local store. The selling price was specified in a written contract, along with the commission, and what I would net. Sales tax was not included in the calculation.

At minimum I'd leave an FYI Yelp review to warn others of their commission strategy, as well as how three months after the sale you still hadn't been notified. If they have a Google business listing, leave one there, too.

jaymarsch · #15 08-22-2019, 08:48 AM

Quote:

Originally Posted by Tone Gopher

If he is charging commission on tax, then he should be reporting that income as well. That smells like tax fraud.

The 10% does not go into his pocket at all. It is paid by the buyer, and should be passed along in its entirety.

I would discuss the matter with the shop, and offer to refer them to the tax commissioner if they need to better understand the math of doing business.

Excellent points, George. I agree.

Best,
Jayne