Who benefits from the buyer's premium in an auction?

The buyer's premium is an additional fee that is added to the final bid amount of an item during an auction. This fee typically serves to compensate the auctioneer for their services and can also provide a portion of revenue to the seller.

When the auctioneer sets a buyer's premium, they ensure that they receive a commission for their role in facilitating the auction. This means that the auctioneer benefits directly through this added fee. Additionally, the seller may benefit as well, particularly if the auctioneer shares a part of that premium with the seller as part of their agreement, which can enhance the overall proceeds from the sale.

Therefore, both the auctioneer and seller gain from the buyer's premium, as it enhances the total funds generated in the auction process beyond just the sale price. This structure is a common practice in many auctions, making it an essential aspect of the auction business model.