Buyer Guide
Understanding Buyer's Premium & Auction Fees: Complete Guide
Know your all-in cost before you bid. A clear breakdown of buyer's premium, taxes, and shipping so there are no surprises after you win.
Understand the Hammer Price
The hammer price is the final winning bid amount, the number the auctioneer calls when a lot closes. This is what the seller's commission is calculated on, and it's the baseline for your total cost calculation. Think of it as the "before fees" price.
Calculate the Buyer's Premium
The buyer's premium is a percentage added on top of the hammer price that you pay as the buyer. If the buyer's premium is 18% and the hammer price is $10,000, you owe $11,800 total before taxes. Always check the buyer's premium percentage in the auction's Terms & Conditions before bidding.
Account for Sales Tax
Most states require sales tax on auction purchases. The applicable rate depends on where the equipment is located (not where you are). Some buyers qualify for sales tax exemptions, typically manufacturers purchasing equipment for direct use in production. Bring your exemption certificate to the auction if applicable.
Factor in Payment Processing Fees
Credit card payments often carry an additional processing fee (typically 2–3%). Wire transfers are usually free. If you're bidding on multiple lots, the difference adds up. Factor this into your all-in cost calculation before setting your maximum bid.
Budget for Removal and Shipping
Equipment doesn't move itself. Industrial machinery requires professional rigging (disconnecting, skidding, and loading), specialized transport (flatbed, enclosed, oversized), and potentially rigging at your facility. Get freight and rigging quotes before the auction for any significant purchase.
Calculate Your All-In Cost Before Bidding
Before placing a bid, calculate: Hammer Price + Buyer's Premium + Sales Tax + Payment Fee + Rigging + Freight. That total is what you're actually paying for the equipment. Set your maximum hammer price based on that full number, not just the hammer price in isolation.
Common Questions
Is buyer's premium negotiable?
For individual buyers, no, the buyer's premium is set by the auctioneer and applied uniformly to all bidders for a given auction. Volume buyers or institutional purchasers occasionally negotiate premium structures on large purchases, but this is arranged before the auction, not after.
Does the seller's commission affect what I pay?
No. The seller pays a separate commission to the auctioneer from the hammer price. As a buyer, you pay the hammer price plus buyer's premium. You are not affected by what the seller's commission structure is.
Are there any additional fees I should know about?
Check the specific auction terms for: documentation fees, lot handling fees, and late payment fees. KD's full fee structure is disclosed in each auction's Terms & Conditions. Read them before registering.
How is buyer's premium used?
Buyer's premium is part of the auctioneer's revenue model: it offsets the cost of running the auction (marketing, photography, catalog production, platform fees, staff, insurance). It allows auctioneers to reduce seller commissions while maintaining full-service marketing that drives higher hammer prices.