What is a buyer's premium?
A buyer's premium is a percentage fee added to the winning bid that the buyer pays the auction house. Here is what it means, how it is calculated, and why auctioneers use it.
A buyer's premium is an additional charge that the winning bidder pays on top of the hammer price — the amount of the highest accepted bid. It is set as a percentage of that bid and goes to the auction house, not to the consignor. It is also separate from any sales or value-added tax, which is usually calculated on the combined total.
The premium exists because auctions have two parties to a transaction. The seller pays a commission on what their lot fetches, and the buyer pays a premium on what they win. Together these cover the real cost of running a sale: cataloging items, photographing and marketing lots, staffing the clerking floor, and producing invoices and settlements. Charging both sides also lets a house offer consignors a more competitive commission to win quality inventory.
Example: you win a piece of equipment at a $10,000 hammer price in a sale with a flat 15% buyer's premium. The premium is $1,500, so your subtotal is $11,500 before tax. On Unovance, premiums — flat or tiered — are configured per auction and applied automatically, so every bidder sees the correct total at checkout and consignor settlements reconcile cleanly.
How a buyer's premium works.
It is added on top of the hammer price
The premium is calculated as a percentage of the winning bid (the hammer price) and charged to the buyer. A $1,000 hammer with a 15% premium means the buyer pays $1,150 before tax.
It is disclosed before bidding
Reputable houses publish the premium rate in the catalog and terms of sale, so bidders can factor it into the maximum they are willing to bid.
It funds the house, not the consignor
Unlike the seller's commission, the premium is the buyer's contribution to the cost of running the sale — cataloging, marketing, clerking, and settlement.
Rates are often tiered
Many auctioneers use sliding scales — for example a higher percentage on the first band of the price and a lower one above a threshold — which platforms must calculate automatically at checkout.
Frequently asked questions
What is a buyer's premium?+
A buyer's premium is an additional charge, expressed as a percentage of the winning bid, that the successful bidder pays to the auction house on top of the hammer price. It is the buyer's share of the cost of conducting the auction and is separate from any sales tax.
How is a buyer's premium calculated?+
Multiply the hammer price by the premium rate and add it to the bid. If you win a lot at $5,000 with a 12% buyer's premium, you pay $600 in premium for a subtotal of $5,600, plus any applicable tax. Tiered rates apply different percentages to different price bands.
Why do auction houses charge a buyer's premium?+
It lets the house earn revenue from both sides of a transaction. The seller pays a commission and the buyer pays a premium, which together cover cataloging, marketing, staffing the sale, and settlement — and can let the house quote sellers a lower commission rate.
Is the buyer's premium negotiable?+
For most public auctions it is fixed and applies equally to every bidder, which is what keeps the sale fair and transparent. The rate is set by the auction house and published in the terms of sale before bidding opens.
Run sales where the math is always right.
Unovance applies buyer's premiums, taxes, and consignor settlements automatically — on an auction platform you own and brand as your own.