What is a buyer's premium?

A buyer's premium is defined as an additional percentage added to the final bid amount, which the winning bidder is required to pay on top of their bid. This premium serves as a fee for the auctioneer’s services and is typically expressed as a percentage of the final sale price.

Including a buyer’s premium helps auctioneers cover costs associated with holding the auction, such as venue expenses, advertising, and the administrative tasks involved in processing the auction sale. It is crucial to understand this concept, as bidders should factor this additional cost into their overall budget when bidding at an auction. Understanding the buyer's premium allows participants to make informed bidding decisions, ensuring they know the total amount they will be responsible for upon winning an auction item.