What is a "buyer's premium"?

A buyer's premium is an additional fee charged to the buyer, which is typically calculated as a percentage of the winning bid. This fee is standard practice in many auctions and serves several purposes. It helps cover the costs of the auction house or platform, such as marketing, administrative expenses, and the overall facilitation of the auction process.

The buyer's premium is applied after the auctioneer has determined the winning bid, and the buyer must add this percentage to their total payment. For example, if an item sells for $100 and there is a 10% buyer's premium, the buyer will need to pay $110 in total. This structure is beneficial for auction houses to ensure they remain profitable while providing a space for buyers and sellers to conduct transactions.

This fee is a crucial aspect of the auction business model and helps maintain the viability of auction services over time. Understanding the concept of a buyer's premium is essential for anyone participating in auctions, as it impacts the overall cost of acquiring an item.