What are "buyer's premiums" in auction settings?

Buyer's premiums are additional fees charged to the buyer at an auction, typically calculated as a percentage of the final bid amount. This is a common practice in auction settings, as it serves to compensate the auctioneer for their services in facilitating the auction. The buyer's premium provides the auctioneer with a source of revenue that is separate from the final bid price, ensuring that their commission is covered even if the bidding is lower than expected.

The percentage added as a buyer's premium varies among auction houses and can sometimes be quite significant, impacting the total cost the buyer must pay to acquire the item. This is essential for buyers to understand, as the final amount they will pay is not only the highest bid but also includes this premium.

Understanding buyer's premiums is crucial for potential bidders so they can accurately assess their total costs and make informed decisions when bidding on items. It highlights the auctioneer's role in managing the auction process while also indicating the importance for bidders to factor in this extra cost before participating.