What is a Buyer’s Premium? Everything You Need to Know
If you are new to auctions, the term “buyer’s premium” can be confusing. This guide explains exactly what it is, how it works, why it exists, and how to factor it into your bidding strategy.
Buyer’s Premium Explained
A buyer’s premium is an additional fee charged to the winning bidder on top of the hammer price. It is the auction house’s fee for facilitating the sale — covering costs such as cataloguing, photography, marketing, insurance, and running the saleroom.
The buyer’s premium is expressed as a percentage of the hammer price and is always stated in the auction house’s Terms and Conditions and catalogue.
How is the Buyer’s Premium Calculated?
At Clumber Auction House, the buyer’s premium is 20% + VAT (24% inclusive of VAT at the current standard rate). Here is how the total cost is calculated:
| Hammer Price | Buyer’s Premium (20%) | VAT on Premium | Total Cost |
|---|---|---|---|
| £50 | £10 | £2 | £62 |
| £100 | £20 | £4 | £124 |
| £500 | £100 | £20 | £620 |
| £1,000 | £200 | £40 | £1,240 |
Why Do Auction Houses Charge a Buyer’s Premium?
The buyer’s premium is an industry-standard practice used by virtually every auction house in the UK, from small regional salerooms to major houses like Christie’s, Sotheby’s, and Bonhams. It helps cover:
- Cataloguing and photography — Professional descriptions and images for each lot
- Marketing and advertising — Promoting auctions to attract buyers
- Saleroom facilities — Viewing days, storage, and auction day operations
- Online platforms — Live streaming, online bidding infrastructure
- Insurance — Covering items whilst in the auction house’s care
- Staff expertise — Qualified auctioneers and specialist valuers
Tips for Bidding with the Premium in Mind
- Always calculate the total cost — Before bidding, work out the hammer price plus premium. If your budget is £124, your maximum hammer price bid should be £100.
- Check the Terms — Premium rates vary between auction houses. Always check before bidding.
- Factor in VAT — For standard lots, VAT applies to the premium only. For VAT-registered lots (marked with a dagger †), VAT may apply to the hammer price too.
- Compare total costs — Even with premium, auctions often offer better value than retail for antiques and collectables.
Start Bidding at Clumber Auction House
Browse our upcoming auctions and start bidding today. New to auctions? Read our complete guide to how auctions work or contact us with any questions.