What is the purpose of a buyer’s premium?

The purpose of a buyer’s premium is to serve as an additional charge over the winning bid price, which is taken as a commission by the auctioneer. This premium is typically a percentage of the final bid amount and is added to the cost that the winning bidder must pay. The buyer’s premium is essential for the auctioneer as it helps to cover expenses associated with conducting the auction and can also contribute to the auctioneer's profit. It is a standard practice in many auction settings, ensuring that the auctioneer is compensated for their services.

In contrast, discounts for repeat buyers, registration fees, and taxes imposed on auction sales serve different functions and do not directly relate to the mechanism of pricing in an auction context. The buyer’s premium specifically relates to the transactional relationship between the winning bid and the total amount payable by the buyer.