Buyer's premium is the hidden cost that catches most new auction bidders off guard. Here's exactly what it is, how much it costs, and how to factor it into your maximum bid calculation.
If you're new to auction buying, buyer's premium is probably the first thing that will catch you off guard. You bid £100, you win — and then the invoice says £132. Where did the extra £32 come from?
That's buyer's premium. Here's everything you need to know.
Buyer's premium is an additional fee charged by the auction house on top of the hammer price (the winning bid). It's how auction houses make their money.
If the hammer price is £100 and the buyer's premium is 20%, you pay:
£100 (hammer) + £20 (20% premium) = £120
But it often doesn't stop there.
Many auction houses also charge VAT (20%) on top of the buyer's premium — not on the hammer price, but on the premium itself.
So that same £100 hammer price with 20% buyer's premium and VAT:
£100 (hammer)
+ £20 (20% buyer's premium)
+ £4 (20% VAT on the premium)
= £124
Some auction houses charge VAT on the full purchase price including hammer. Always read the terms before bidding — the difference between 20% and 24% effective premium can kill your margin.
| Auction Type | Typical Buyer's Premium | |-------------|------------------------| | Online auction houses | 15–25% | | Traditional salerooms | 20–30% | | eBay auctions | 0% (no buyer's premium) | | Government surplus auctions | 10–20% | | Specialist (art, wine) | 25–35% |
The major UK online auction platforms (BidSpotter, i-bidder, the-saleroom) typically charge between 18–25%.
This is where most resellers make mistakes. They look at an item selling on eBay for £100 and think "I can bid up to £80 and make £20 profit." But they forget buyer's premium.
Wrong calculation:
eBay sell price: £100
Minus eBay fees (12.8%): £87.20
Max bid: £80
Profit: £7.20 ✓ (but this ignores buyer's premium)
Correct calculation:
eBay sell price: £100
Minus eBay fees (12.8%): £87.20
Minus postage: £5
Minus target profit: £15
Available for total auction cost: £67.20
If buyer's premium is 20%:
Max hammer price = £67.20 ÷ 1.20 = £56.00
The difference between £80 and £56 is enormous. Bid £80 thinking you'll make £20 profit and you'll actually lose money.
To find your max hammer price:
Example with 22% buyer's premium:
Expected sell: £150
After eBay fees (12.8%): £130.80
After postage (£6): £124.80
After target profit (£20): £104.80
Max hammer = £104.80 ÷ 1.22 = £85.90
Your max bid is £85.90. If the bidding goes to £86, you walk away.
Calculating this for every lot manually is tedious and error-prone. Arbitrage AI's max bid calculator does it instantly — enter the buyer's premium percentage, your target profit, postage and platform fees, and it gives you the exact ceiling price.
It also pulls the expected sell price automatically from eBay's live data, so you don't even need to look that up.
Buyer's premium is not optional, not negotiable, and not something you can ignore. It is a core part of your cost calculation on every auction purchase.
The resellers who consistently make money at auction are the ones who factor this in before they bid — not after they've already won and seen the invoice.
Know your max. Stick to it. Walk away when you need to.
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