How to use the auction buyer's premium calculator
- Choose whether you want the total cost of a bid, or the highest bid that fits a budget.
- Enter the bid or the budget, then set the premium as one flat percent or as bands that depend on the price.
- Open the advanced options to add fixed fees, a tax rate and the amount the tax applies to. The tax rate starts at zero.
- Read the all-in total, the premium band by band and, in budget mode, the highest bid in whole cents.
Formula
premium = sum over bands of (part of the bid inside the band) x (band rate)
tax = tax rate x (premium, or bid + premium, or bid + premium + fees)
all-in total = bid + premium + fees + tax
highest bid = the largest bid in cents whose all-in total is at most the budget
Premium and tax are each rounded to the cent, half up. Because the total never decreases as the bid rises, the highest bid can be found by searching, and the tool checks that one cent more would break the budget.
A tiered premium on a $2,500 bid
With a 25% premium on the first $1,000, 20% on the part from $1,000 to $5,000 and 12% above that, a $2,500 bid pays $250 on the first band and 20% of $1,500 = $300 on the second. The premium is $550 and the all-in total is $3,050.00.
For a flat 19.5% premium on a $100 bid, with a 15% tax on the premium only, the premium is $19.50, the tax is $2.925, which rounds to $2.93, and the total is $122.43. In budget mode, a $5,000 budget with the tiered premium allows a bid of up to $4,125.00: the premium is $250 + 20% of $3,125 = $875, and the total is exactly $5,000.
Why the price you pay is not the bid
At an auction the hammer price is only the start. The auction house adds a buyer's premium, often a percentage that falls as the price rises, and may add fees for online bidding, handling or lot processing. Tax may then apply to the bid, the premium or both. Together these can add a large share to a winning bid, so it helps to decide a maximum bid before the sale.
For shipping and other costs after the sale, the Total Purchase Cost Calculator adds them to the all-in amount. The Sales Tax Calculator can check the tax line.
Setting bands
List the bands from the lowest limit to the highest and leave the last limit empty. Each rate applies only to the part of the bid inside its band, the way income tax brackets work, not to the whole bid. If your auction applies one rate to the whole bid once it passes a threshold, enter it as a flat premium for the bid you are testing.
Assumptions and limits
- The bands, rates and fees come from the auction terms you enter. Nothing is built in.
- Each band rate applies to the part of the bid inside the band.
- The tax rate starts at zero and is the rate that applies where you are; check which amounts are taxed.
- Premium and tax are rounded to the cent, half up, and bids are searched in whole cents.
- Currency conversion, import duty and shipping are not included. This is arithmetic, not tax advice.
Frequently asked questions
What is the hammer price?
It is the final bid accepted by the auctioneer, before any premium, fees or tax are added.
Does the premium apply to the whole bid or by band?
That depends on the auction. This tool treats a banded premium as applying to each part of the bid in its band. Use a flat premium if your auction applies one rate to the whole bid.
Why does the highest bid have exactly two decimals?
The tool searches in whole cents, so the result is the largest cent amount whose all-in cost fits your budget. Real auctions usually bid in set steps, so round down to the nearest step.
Is tax charged on the premium?
It differs by place and seller. The advanced options let you apply tax to the premium only, to the bid and premium, or to the bid, premium and fees.