How Consignment Actually Works

In consignment the owner keeps title while the consignee stores, markets, and demonstrates the unit, then deducts commission and agreed costs from the sale proceeds before remitting the balance. Title passes from owner to end buyer at the onward sale, not at handover to the consignee.

That structure creates three consequences sellers should understand before signing. First, no money changes hands at the start, so the owner is financing the process. Second, the owner’s asset is physically elsewhere, which is why insurance and inspection rights belong in the agreement rather than in a side conversation. Third, the owner’s exposure to the market is now indirect: they depend on the consignee’s buyer pool, marketing reach, and responsiveness, and they have no direct control over any of it. Consignment is not a passive route; it is a delegated one.

Net Return: Consignment Versus Outright Buyback

The comparison is between two net figures, not between two prices, and the difference is carried by whoever holds the risk. Consignment keeps the resale margin out of the number but keeps the risk with the owner; buyback removes the margin and removes the risk at the same time.

Two costs are frequently left out of a consignment comparison: the time value of money while the unit sits, and the condition risk during storage and demonstration. A unit that is demonstrated repeatedly accumulates wear and consumable usage that the owner still owns. Where a platform’s consumable position is part of its value, that usage is a real cost, and it should be capped or reported.

Who Insures the Unit and Who Pays for Storage

Insurance and storage are the two obligations most often assumed rather than assigned, and both fall on the owner when the agreement is silent. The default position in many contracts is that the owner remains responsible for their own asset until title passes, which leaves them exposed to a risk they can neither control nor observe.

• Whether the consignee insures the unit, at what value, and on what basis — replacement or market value.
• Who bears the excess or deductible if a claim is made.
• Whether storage is charged, and whether the charge accrues monthly or only on completion.
• Whether transport to and from the consignee is at the owner’s cost or the consignee’s.
• What condition standard applies while the unit is on the consignee’s premises.
• Whether the owner may inspect, and with how much notice.

A workable arrangement assigns storage to the consignee for the agreed period and names the insurance value explicitly. Where storage is chargeable, the charge functions as a deadline in disguise: once the accrual approaches the value being recovered, consignment has stopped making sense.

Clauses That Decide the Outcome

Most consignment disputes trace back to four or five clauses, and all of them can be settled before the unit leaves the premises. Where a clause is absent, the practical default is usually the one least favorable to the owner, because the owner is the party whose asset is out of sight.

• Reserve or minimum net figure: the amount below which the consignee may not sell without written approval.
• Commission basis: a percentage of gross or of net, and whether it steps down for a higher achieved price.
• Exclusivity: whether the consignee is the only route to market, and what that prevents the owner from doing meanwhile.
• Reporting: how often the owner receives an update, and what the report must contain.
• Exit: the consignment period, the return obligation, and who pays the return transport.

Exclusivity deserves particular attention. An exclusive consignment prevents the owner selling directly to a buyer they already know, which can cost more than any improvement in the achieved price. Where exclusivity is required, it should be time-limited and tied to a reporting obligation.

Pricing: Reserve, Listed Price and Commission

Three different numbers get confused in consignment discussions, and separating them removes most of the argument. The reserve is the owner’s floor; the listed price is the marketing number; the commission is what the consignee keeps when a sale completes at or above the reserve.

The reserve should be set from the net figure the owner needs rather than from a hoped-for gross, because commission and agreed costs come out of the gross. Where the achieved price exceeds the reserve, the agreement should state whether the excess is shared or retained by the consignee, since that determines whether the consignee is motivated to hold out for a better buyer or to close quickly. Setting the reserve realistically also matters for the consignee’s own economics: a reserve above the market produces no sale, and a consignment that does not sell is a cost to both parties.

What Happens When the Unit Does Not Sell

The unsold outcome is the one sellers plan for least and remember longest. A consignment without a defined exit becomes an indefinite arrangement in which the owner’s asset continues to age while storage obligations accumulate, and the eventual net figure can be lower than a buyback would have been at the start.

Two mechanisms protect against that. The first is a fixed consignment period with an automatic return at a stated cost, which converts an open-ended exposure into a bounded one. The second is a conversion step — if the unit has not sold by a defined date, the consignee may buy it at an agreed figure, or the owner may reprice it. Selecting one of these in advance keeps the arrangement commercial rather than awkward, and it gives both parties a reason to keep the listing active.

Records the Consignee Must Maintain

A consignee holds an asset that is not theirs and cannot verify its own performance from memory. The records obligation is what makes the arrangement auditable, and it should be specified in the agreement rather than left to practice.

• A current inventory of consigned units, with serial numbers and recorded condition at intake.
• Records of every demonstration, including consumable usage where the platform consumes tips or applicators.
• Storage conditions and any movement of the unit between locations.
• Offers received and declined, so the owner can see the market response rather than infer it.
• Insurance cover evidence for the consignment period.
• Settlement statements showing achieved price, commission, agreed costs, and the net remitted.

Where the unit requires service, calibration, or compliance documentation while it sits, the owner should retain access to those records. Independent alert reporting such as that published by ECRI is a useful check on whether a model’s status has changed during the consignment period, and maintenance expectations should align with recognized practice such as the equipment-maintenance guidance from AAMI. Where a prospective buyer needs the unit described consistently with its cleared intended use, the references are jurisdiction-specific: the FDA medical device portal and the electronic Code of Federal Regulations for the US, and EUR-Lex for the EU position including MDR 2017/745.

Choosing Between Routes: A Decision Table

The route should follow the unit’s characteristics and the owner’s constraints, not a preference for the highest nominal figure. Working through the table below before contacting anyone avoids the common mistake of starting a consignment for a unit that needed a quick sale.

Before signing a consignment agreement or releasing the unit, verify:

• The reserve, commission basis, and treatment of any price achieved above the reserve.
• Insurance cover, the insured value, and who bears any excess.
• Storage charges, when they start, and how they accrue.
• The consignment period, return obligation, and who pays return transport.
• Exclusivity scope and duration, and whether direct sale to a known buyer is permitted.
• Reporting frequency and the contents of each report.
• Condition standard at intake, recorded photographically and agreed in writing.
• The conversion mechanism if the unit has not sold by the end of the period.

Consignment is a delegated sale with the owner’s capital still at risk, which is why the agreement matters more than the headline commission. Setting a realistic reserve, assigning insurance and storage explicitly, and defining the unsold outcome converts an open-ended arrangement into a bounded one. Sellers comparing routes can review how the cosmetic laser disposal process handles preparation and valuation, or open a specific question through contact before requesting a consignment or buyback quotation.

Questions About Consignment