Buyer's premium

What is the buyer's premium?

The buyer's premium is the auction house's commission, paid by the buyer on top of the price at which a work is knocked down. It is not money for the seller, then, but the house's fee for holding the sale and selling the work. The buyer pays it on top, whether they like it or not.

How is it calculated and how much is it?

The premium is calculated as a percentage of the hammer price and simply added to it. Internationally it runs at roughly 27 to 30 per cent; in the Czech Republic it can reach 30 per cent. In some cases VAT is added on top of that, so the final sum can be noticeably higher than one might expect.

Why does it matter to a buyer?

Because it changes the whole picture of what a work will really cost you. When you read one figure in the catalogue and plan your budget around it in your head, the premium can stretch that budget considerably. Anyone who counts on it in advance avoids an unpleasant surprise at the moment of payment.

Can you give an example?

Kubišta's Staropražský motiv illustrates it beautifully. The difference between the hammer price and the final price, which with the premium reached 123.6 million crowns, ran into tens of millions. At such a figure it becomes plain that the premium is no trifle but an item that moves the total value of a transaction.

What should you watch out for?

Above all, which figure you actually have in front of you. When setting the ceiling you want to go to, count on the premium being added to your final bid. It is always good to know whether we are talking about the hammer price or already the final price, so that you bid with a clear head.

— Anna Pulkertová, founder of Art Part Club