Industrial auctioneer commission structures are more nuanced than a single percentage. Here is a plain-language breakdown of how fees actually work, what sellers pay versus buyers, and what to look for when comparing auctioneer proposals.

One of the most common questions sellers and lenders ask before engaging an industrial auctioneer is: "What is your commission?" The honest answer is that industrial auction fee structures are not a simple one-number answer. They involve two separate revenue streams, one paid by the seller, one paid by the buyer, and the right structure depends heavily on the size and type of engagement. Here is a plain-language breakdown of how industrial auctioneer fees work.

The Two Revenue Streams

Every industrial auction generates revenue through two separate channels. Understanding both is essential for evaluating your net recovery and for comparing competing auctioneer proposals apples-to-apples.

Seller's Commission

The seller pays a negotiated percentage of the gross hammer price (the final bid price at which each lot closes) to the auctioneer. This is deducted from your proceeds before you receive your settlement check. Rates vary significantly by deal size:

Large plant closures ($500K+ in expected gross proceeds): the strongest commission economics for the seller. For very large engagements, some auctioneers waive the seller's commission entirely.
Mid-size liquidations ($100K–$500K): commission rates fall between the two extremes, driven by the specifics of the deal.
Small consignment lots (individual machines or small collections): the highest commission rates, because per-item work is high relative to proceeds.

Actual rates are always negotiated based on the specific deal. An auctioneer quoting a very low commission rate on a deal they expect to perform poorly is no bargain. Net recovery, not commission rate, is the correct comparison metric.

Buyer's Premium

The buyer pays an additional percentage on top of the hammer price, directly to the auctioneer. For example: a CNC lathe closes at $30,000 hammer price with an 18% buyer's premium. The buyer pays $35,400. The seller receives their settlement based on the $30,000 hammer price, minus the seller's commission. The buyer's premium goes entirely to the auctioneer and does not reduce the seller's net. In industrial auctions, buyer's premiums typically range from 15% to 20%.

Combined Fee Example

Using a $100,000 lot as an illustration:

Hammer price: $100,000
Seller's commission at 8%: $8,000 paid by seller to auctioneer
Buyer's premium at 18%: $18,000 paid by buyer to auctioneer
Total auctioneer revenue: $26,000
Seller nets: $92,000 (before any expense deductions)
Buyer pays: $118,000 total

The seller's out-of-pocket cost is only the commission, not the buyer's premium. This is why comparing commission rates alone without understanding buyer's premium is misleading.

Other Fee Structures to Understand

Expense Reimbursement

Most auctioneers charge the seller for direct costs of the auction: photography, cataloging, advertising, internet listing fees, and sometimes labor for inspection setup and removal. These are separate from the commission. Always ask for an itemized estimate of expenses before signing an engagement.

Minimum Guarantee

Some auctioneers offer a guaranteed minimum net to the seller. They absorb downside risk if auction results fall short of expectations. This shifts risk to the auctioneer and typically comes with a higher commission rate or a lower guarantee number. Useful for sellers who need certainty of close over maximum recovery.

Outright Purchase

An auctioneer or dealer purchases the equipment outright from the seller at a negotiated price. No commission structure applies. The auctioneer takes all upside and downside. Provides maximum certainty of close; typically results in below-auction-market net to seller.

What to Compare When Evaluating Auctioneer Proposals

Projected gross proceeds: what does the auctioneer actually think your equipment will sell for?
Net to seller after all fees and expenses, not commission rate alone
Buyer's premium charged: high buyer's premiums suppress hammer prices as buyers build premium into their bids
Buyer reach: how many registered buyers will actually see and bid on your equipment?
Sector expertise: does the auctioneer have relationships with the specific type of buyer your equipment requires?
Track record: can they show you comparable results from similar equipment in the current market?

At KD Auctions

We structure every engagement individually based on deal size, equipment type, and seller priorities. We do not publish a standard commission rate because the right structure genuinely depends on your situation. For a specific proposal on your equipment, whether a single machine, a department, or a full plant closure, call KD Auctions at 480.455.3910.

Industrial Auctioneer Fees: How Commission Structures Work