A consignment commission is the percentage of an item’s final sale price that the selling party keeps before paying the owner the balance. Depending on the industry, that percentage typically runs between 20% and 60% of the gross sale price. The consignee (the seller) earns the commission only if the item sells; if it doesn’t, the consignor (the owner) still owns the goods and the consignee earns nothing.
The math is simple. If a piece of furniture sells for $2,000 at a 40% commission, the consignee keeps $800 and the consignor receives $1,200. What complicates the picture is the structure behind that percentage and the contract terms that surround it.
How the Split Is Calculated
Fixed Percentage
A single rate applies to every sale, regardless of price. A 50/50 split is standard in clothing and general-merchandise shops: a $600 handbag produces $300 for each side. The appeal is predictability. The weakness is that a flat rate gives the consignee no extra incentive to hold out for a higher price.
Tiered or Sliding Scale
The commission rate changes based on the sale price, usually giving the consignor a bigger share on higher-value sales. A common setup: 40% on the portion below $5,000, 30% on the portion above. On a $12,000 painting, the consignee takes 40% of the first $5,000 ($2,000) plus 30% of the remaining $7,000 ($2,100), for a total of $4,100. The consignor receives $7,900. The blended rate lands around 34%, even though neither tier reads that number.
Minimum Guarantee
The consignor names the dollar amount they must receive, and the consignee keeps everything above it. If a consignor demands $800 for a watch and it sells for $1,000, the consignee earns $200 (about 20%). If it sells for $1,400, the consignee earns $600 (about 43%). This structure protects the consignor’s floor while giving the consignee a strong reason to push the price up, because every extra dollar is theirs.
Auction Commissions and the Buyer’s Premium
Auction consignment works differently. The house charges the seller a commission on the hammer price and separately charges the buyer a premium on top of the hammer price. The buyer’s premium is usually tiered, with lower-value lots carrying a higher percentage.1Christie’s. Understanding Auction Fees The auction house earns from both sides. When evaluating an auction offer, look at what you net after the seller’s commission, not the total the house announces, which includes the premium you never see.
Typical Commission Rates by Category
Rates vary by what you’re selling. Higher-value goods usually carry lower percentages because the dollar amount is already substantial; lower-value items carry higher percentages to make the consignee’s effort worthwhile.
- Clothing and accessories: 40% to 60% to the consignee. Designer pieces sometimes negotiate a better split.
- Furniture and home goods: 30% to 50%. Bulky items that require floor space and delivery can push the rate higher.
- Art and antiques: 20% to 50%, depending heavily on the value and the gallery’s reputation.
- Luxury goods and collectibles: 10% to 20% to the consignee, meaning the consignor keeps 80% to 90%.
- Vehicles: 20% to 30%. The large sale price generates meaningful revenue for the consignee even at a modest rate.
These ranges are starting points. A consignee with a strong customer base can justify more. A consignor bringing rare or in-demand inventory has leverage to negotiate down.
Contract Terms That Change What You Actually Net
The percentage gets most of the attention, but the surrounding terms often decide whether the consignor walks away with what they expected.
Pricing Authority and Markdowns
Spell out who controls the retail price. Some agreements let the consignor set a firm price. Others give the consignee discretion. A common middle ground requires the consignor’s written consent before any reduction exceeding 20% to 25% of the original listing price.
Many contracts also include a scheduled markdown clause. If an item hasn’t sold within a set period, the price drops automatically by a preset percentage: 10% after 30 days, another 10% after 60, and so on. That keeps inventory moving, but it can catch a consignor off guard if it isn’t disclosed upfront.
Allowable Expense Deductions
Consignees sometimes deduct expenses before calculating the consignor’s share. Legitimate deductions might include professional cleaning, minor repairs, or specialized marketing for a specific item. The agreement should list every allowed deduction and cap them, either at a fixed dollar amount or as a percentage of the gross sale. Without a cap, expenses can quietly erode the return.
For high-value goods like luxury watches, fine art, or collectibles, the consignee usually handles authentication as part of its standard process and absorbs the cost. Confirm that in writing.
Duration and Retrieval
Consignment periods typically run from 60 days to one year depending on the merchandise. The agreement should say what happens when the period ends: how much notice either side must give, how the consignor retrieves unsold items, and whether the consignee can charge storage fees for slow pickup. Some contracts let the consignee donate or dispose of unclaimed items after a specified window. Consignors overlook that clause routinely, and it can be costly.
Insurance and Risk of Loss
The consignor still owns the goods while they sit with the consignee, so the agreement must address damage, theft, and destruction. The usual approach requires the consignee to carry insurance covering the consigned inventory, often under an “inland marine” policy, which covers property in someone else’s care or in transit.2National Association of Insurance Commissioners. Nationwide Inland Marine Definition Specify the valuation method: the agreed minimum return, the expected retail price, or the replacement cost. If you’re leaving $50,000 in jewelry in someone else’s display case, verify the coverage exists and the policy limits actually match your inventory.
Protecting Your Ownership With a UCC-1 Filing
This is where consignors make an expensive mistake. Owning the goods is not the same as being protected. Under Article 9 of the Uniform Commercial Code, a consignment of goods worth $1,000 or more is treated like a secured transaction, and the consignor’s interest is a purchase-money security interest in inventory.3Legal Information Institute. UCC 9-103 Purchase-Money Security Interest Application of Payments Burden of Establishing
To make that interest enforceable against third parties, the consignor files a UCC-1 financing statement against the consignee in the appropriate state. Without it, the goods can be treated as part of the consignee’s general inventory. If the consignee goes bankrupt, an unperfected consignor can lose the merchandise entirely and end up as a general unsecured creditor.
Filing alone isn’t always enough. To achieve priority over the consignee’s existing secured creditors, the consignor must also send written notice describing the consignment arrangement and the goods to any party already holding a lien on the consignee’s inventory, and that notice must reach the other creditor before the consignee takes possession.4Legal Information Institute. UCC 9-324 Priority of Purchase-Money Security Interests
UCC-1 filing fees typically run between $5 and $40. For anyone consigning goods worth thousands, it’s one of the cheapest forms of legal protection available. Run a UCC search on the consignee first to see whether other creditors already hold liens; if they do, the written notice step becomes critical.
Payment Timing and Tax Reporting
Nail down when the consignee pays. Monthly remittance for prior-period sales is common; quarterly is also seen. Immediate payment on sale exists but is rare outside high-value, low-volume categories like fine art and vehicles. The longer the payment window, the more the consignor should insist on regular itemized sales reports covering the date of sale, gross price, deducted expenses, commission, and net proceeds owed.
On taxes, the consignor’s proceeds are generally taxable income. For sales of consumer products totaling $5,000 or more on a deposit-commission or similar basis for resale, the consignee reports the transaction using either box 2 on Form 1099-NEC or box 7 on Form 1099-MISC. That is a checkbox entry with no dollar amount in the box.5Internal Revenue Service. Instructions for Forms 1099-MISC and 1099-NEC
For other consignment payments that qualify as nonemployee compensation, the consignee reports on Form 1099-NEC. Starting in 2026, the reporting threshold for nonemployee compensation rises from $600 to $2,000, with inflation adjustments beginning in 2027.6Internal Revenue Service. 2026 Publication 1099 Whether or not a 1099 gets issued, the consignor still has to report the income. Expenses tied to the consignment, such as cleaning, repair, and shipping, can be deducted against the proceeds if you keep records.