What is a "buyer’s premium" in the context of an auction?

A "buyer's premium" refers to an additional fee that the buyer is required to pay on top of their winning bid amount in an auction. This premium is typically a percentage of the final bid and serves as compensation for the auction house's services. It is important for bidders to understand that the total cost of acquiring an item includes both the winning bid and this buyer's premium.

This practice is common in auctions and varies by auctioneer or auction house, which may set different rates for the buyer's premium. Clear communication of this fee is crucial, as it affects the overall value of the purchase for the buyer. Understanding the buyer’s premium helps bidders accurately assess their total financial commitment when participating in an auction.