The buyer premium is the fee added to the auction price to determine the final contact price. The Buyers Premium may be a percentage of the auction price or a flat fee. At closing an amount equal to the Buyer Premium is paid to the auction company for their services.
What does a buyer's premium mean?
Article Talk. In auctions, the buyer's premium is a charge in addition to the hammer price (i.e. the winning bid announced) of an auction item, or lot. The winning bidder is required to pay both the hammer price and the percentage of that price called for by the buyer's premium.
What does 5% buyers premium mean?
Buyer's premiums are fees charged by the auction house for their services in a private auction. These are typically charged as a percentage of the winning bid. The actual percentage amount is dependent on the auction house, but these usually run anywhere from 1% – 5% of the final price.
What is an example of a buyer's premium?
The buyer's premium is an additional charge on top of the winning bid amount that must be paid by the winning bidder. For example, if your bid successful at winning a lot at $100.00 and there is a 16.5% buyer's premium on that item, then you will pay a total of $116.50.
Why is buyers premium so high?
Raising the levels of buyers' premiums, according to Manhattan lawyer Judd Grossman, “reflects the fact that auction houses are looking to the buy side to make money or to make up losses.” The profit margins for objects in the lower price categories are not nearly as high, and auctioneers at many houses also are
How much is 15% buyers premium?
For example, if the winning bid for an item is $100 and the buyer's premium is 15%, the final price for the item would be $115 ($100 + $15). Bidders should consider the buyer's premium when determining their maximum bid amount, to ensure that they do not overbid on an item and end up paying more than they intended.
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What is a typical buyers premium at auction?
Major auction houses have levied the buyer's premium for several decades, particularly in fine art auctions, with percentages in the region of 10–30%.
Frequently Asked Questions
What does 10% buyers premium mean?
Simply stated, it is adding the sales commission as an obligation to the buyer after the bid. For example, if the bid is $100 and the buyer's premium is 10 percent, the invoice to the buyer would be $110.
How do you calculate buyers premium?
If the high bid price is known, the buyers premium is calculated by taking the BP as a percentage times the high bid price. For example, a diamond ring sells for $4,900 and a 10% BP is charged. The BP alone would be 4,900*. 10 = $490.
FAQ
- What is an example of a buyer's premium auction?
- Bidders need to be aware of the buyer's premium, as it can increase the final price of the item. For example, if the winning bid for an item is $100 and the buyer's premium is 15%, the final price for the item would be $115 ($100 + $15).
- What is the purpose of a buyer's premium?
- The buyer premium is the fee added to the auction price to determine the final contact price. The Buyers Premium may be a percentage of the auction price or a flat fee. At closing an amount equal to the Buyer Premium is paid to the auction company for their services.
