Industrial Auction Commission Structures Explained: What Sellers Actually Pay

The Two Fee Streams

Every industrial auction has two separate fee streams that are easy to confuse: (1) the seller's commission, paid by the seller from the hammer price, and (2) the buyer's premium, paid by the buyer on top of the hammer price. These are separate charges paid by separate parties. Understanding both is essential for evaluating your net recovery.

How the Hammer Price Works

The hammer price is the final bid price at which a lot closes. It's the number from which everything else is calculated. Example: a CNC machining center closes at $50,000. That's the hammer price.

The Seller's Commission

The seller pays a negotiated commission on the hammer price, deducted from what the seller receives. There is no fixed rate: at KD Auctions the commission is tailored to the engagement, quoted upfront, and most sellers pay nothing out of pocket. The number that actually matters is not the headline rate, it is what you net after fees, expenses, and buyer reach.

Commission rates vary significantly based on: total engagement value, equipment type, amount of auctioneer work required, seller involvement (do they handle cataloging? Facility access?), and market conditions. Large plant closures generally command lower rates than smaller consignment lots, where the per-item work is higher relative to proceeds. Every deal is negotiated individually.

The Buyer's Premium

The buyer pays a percentage on top of the hammer price. Using the same example: $50,000 hammer price + 18% buyer's premium = $59,000 total buyer pays. The seller is not involved in this transaction. It goes directly to the auctioneer. Buyer's premiums in industrial auctions typically range 15–20%.

Combined Example

On a $50,000 hammer price:

• Buyer pays an 18% buyer's premium of $9,000 on top of the hammer price, so the buyer's total is $59,000
• The seller pays a negotiated commission, tailored to the engagement and quoted upfront, and most sellers pay nothing out of pocket
• The seller nets the hammer price minus the agreed commission and any expenses

The auctioneer's total take is split between the two parties, the buyer's premium and the seller's commission, so it does not all come out of the seller's proceeds.

Why Commissions Vary So Much

A $5M plant closure generates enough buyer's premium revenue that a much lower seller's commission is economically viable for the auctioneer. A $50,000 consignment lot requires much more per-item work relative to proceeds, so commission rates are higher. There is no standard rate: it's a negotiated business arrangement based on deal economics.

Frequently Asked Questions

Should I compare auctioneers on commission rate alone?

No, net recovery matters more than the commission rate. An auctioneer with a slightly higher commission who reaches far more buyers may net you more than a cheaper one with a small audience, because competition on sale day is what drives the hammer price.

Do sellers ever pay zero commission?

In some large engagements, auctioneers waive the seller's commission entirely and earn only from the buyer's premium. This depends on deal size and certainty of sufficient buyer participation.

What is a net minimum guarantee?

Some auctioneers offer a guaranteed minimum net to the seller, regardless of auction results. The auctioneer bears the downside risk. Rates and minimums are negotiated case by case.

Is the buyer's premium negotiable?

The buyer's premium is set by the auctioneer and disclosed to buyers before the auction. Sellers generally don't negotiate it: it's the auctioneer's pricing to buyers.

At KD

Our fee structures are negotiated per engagement based on deal size, equipment type, and complexity. We don't quote commission rates on this website because the right structure depends entirely on your situation. Contact us for a specific proposal.