What is a buyer's premium?
A buyer's premium is a fee the auction house charges you on top of the price you win an item for. It's why a winning bid of £800 can easily cost over £1,000 by the time you've paid.
Hammer price vs what you actually pay
The hammer price is the winning bid: the amount at which the auctioneer brings the hammer down. The buyer's premium is a percentage of that price which the auction house adds for itself. Auction houses usually charge the seller a commission as well.
The premium isn't the only extra. Depending on the auction, your bill can also include:
- VAT, usually on the premium (see our guide to VAT on auction fees)
- An online bidding fee if you bid through an online platform rather than in the room, by phone or by leaving a commission bid
- Delivery, packing or shipping, if you can't collect the item yourself
- Other charges listed in the conditions of sale, for example storage if you collect late, or Artist's Resale Right on some artworks
A worked example
Suppose you win a lot at a hammer price of £800. The auction house charges a 20% buyer's premium plus VAT, and a 4% online bidding fee because you bid online. These rates are only for illustration.
| Hammer price (winning bid) | £800.00 |
| Buyer's premium (20% of £800) | £160.00 |
| Online bidding fee (4% of £800) | £32.00 |
| VAT at 20% on the fees (£192.00) | £38.40 |
| Total to pay | £1,030.40 |
That's £230.40, or 28.8%, more than the winning bid.
Where to find the premium before you bid
It should be stated in the auction's conditions of sale or buyer information, usually linked from the sale page or printed at the front of the catalogue. Look for:
- The percentage. Rates vary a lot between auction houses, and some use a sliding scale that changes with the price.
- Whether it's quoted "plus VAT" or "inclusive of VAT". This changes your total, as explained in the VAT guide.
- Any extra charge for bidding online and how it's calculated.
- Whether the rate applies to the lot you want, as some sales and categories have their own rates.
Don't assume it's the same as the last auction you went to. Rates differ between auction houses, and sometimes between sales at the same one.
Common mistakes
- Forgetting that VAT is usually added to the premium as well
- Missing the online bidding fee, which is easy to overlook because it only applies if you bid online
- Leaving out delivery or shipping, which can be a big cost for large or fragile items
- Setting a budget from the hammer price instead of the total (see how to work out your maximum bid)
How BidCalc helps
Enter your bid and the percentages from the auction's terms, and BidCalc adds the premium, online fee, VAT and delivery for you, line by line. It can also work backwards from a budget, convert the total into other currencies, and add up several lots.
See this example in the calculator Compare two auction housesGeneral information only, not tax or financial advice. Auction houses set their own fees and terms, so always check the conditions of sale and confirm the details with the auction house before you bid.