Car consignment fees: how commission is charged
Car consignment fees are usually charged as a flat fee, a percentage of the sale price, a tiered percentage, or a margin over an agreed reserve. Each model pays the dealer differently as the price changes, so the right one depends on the cars you take.
- Four common models: flat fee, percentage, tiered and margin over reserve.
- There is no published national average rate. Every figure here is an example to show the maths.
- Flat fees suit cheap cars poorly; percentages suit them poorly too unless there's a minimum fee.
- Extra fees (marketing, recon, early withdrawal) matter as much as the headline rate.
The four common models
| Model | How it works | Good for | Watch out for |
|---|---|---|---|
| Flat fee | One set amount per car | Simple to explain; owner knows the cost upfront | Thin return on expensive cars, heavy cost on cheap ones |
| Percentage | A percentage of the sale price | Scales with the car | Too little on cheap cars unless you set a minimum |
| Tiered | Different rates for price bands, or a minimum fee plus a percentage | Mixed stock | Harder to explain; show a worked example |
| Margin over reserve | Owner receives an agreed net amount; dealer keeps the excess | Owner wants a fixed number | Conflict of interest if the reserve is set low; check your state allows it and disclose it |
Worked example: the same car, four models
Example only. Sale price $25,000, no finance owing, no extra costs.
| Model (example terms) | Dealer earns | Owner receives |
|---|---|---|
| Flat fee $1,500 | $1,500 | $23,500 |
| 6% of sale price | $1,500 | $23,500 |
| 8% of the first $10,000, 5% above | $800 + $750 = $1,550 | $23,450 |
| Margin over $23,000 reserve | $2,000 | $23,000 |
Worked example: how each model moves with price
Example only, using the same terms as above. Margin model assumes the reserve is set $2,000 below the sale price at $25,000 and stays the same.
| Sale price | Flat $1,500 | 6% | Tiered 8% / 5% | Margin over $23,000 |
|---|---|---|---|---|
| $8,000 | $1,500 (19% of price) | $480 | $640 | Not viable |
| $15,000 | $1,500 | $900 | $1,050 | Not viable |
| $25,000 | $1,500 | $1,500 | $1,550 | $2,000 |
| $40,000 | $1,500 | $2,400 | $2,300 | Reserve would be renegotiated |
A flat fee takes a big bite out of a cheap car and leaves money on the table on a dear one. Many dealers use a minimum fee plus a percentage to cover both ends.
Worked example: extra fees on settlement
Example only. Sale price $25,000 at 6% commission, with finance owing.
| Line | Amount |
|---|---|
| Sale price | $25,000 |
| Less commission (6%) | -$1,500 |
| Less marketing fee (agreed) | -$250 |
| Less recon approved by the owner (detail and two tyres) | -$640 |
| Less financier payout | -$12,300 |
| Owner receives | $10,310 |
Agree every one of these lines in writing before you start. In QLD you can't keep commission on expenses the seller paid in advance, commission can't be raised after signing, and it can't be calculated on more than the actual sale price.
What else to put in the fee schedule
- A minimum fee, if you charge a percentage.
- Marketing or listing fees, and whether they're charged if the car doesn't sell.
- A recon approval limit: what you can spend without asking.
- An early withdrawal fee, and how it's worked out.
- Whether fees include GST. Ask your accountant how GST applies to your commission.
Compare on your own numbers
Plug in your fee model and the cars you usually take into the consignment commission calculator. For the bigger picture on whether to consign or buy a car, see consignment vs selling outright.