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What Sotheby’s Buyer’s Premium Increase Reveals About the Major Houses’ Evolving Commercial Strategies

The recent fee increase reflects a structural shift in how auction houses generate revenue, compete for consignments and finance increasingly complex transactions in a rapidly expanding luxury collectibles market.

Sotheby’s raised its buyer’s premium across its global auctions on February 13, bringing its fee structure into closer alignment with other major auction houses. Under the new structure, the buyer’s premium for sales in the U.S. increased from 27 percent on lots priced at or above $1 million to 28 percent for all works sold at hammer prices up to and including $2,000,000, which corresponds to £1,500,000 in London, €1,750,000 in Paris and Milan, SGD 2,600,000 in Singapore, CHF 1,600,000 in Switzerland and HKD 15,000,000 in Hong Kong. On the next tier, which captures most blue-chip secondary market transactions, the buyer’s premium remains 22 percent of the hammer price but will now apply to lots sold for hammer prices between $2,000,000 and $8,000,000, whereas previously it applied to works priced between $1,000,000 and $8,000,000. This corresponds to £1,500,000 to £6,000,000 in London, €1,750,000 to €7,000,000 in Paris and Milan, SGD 2,600,000 to SGD 10,000,000 in Singapore, CHF 1,600,000 to CHF 7,000,000 in Switzerland and HKD 15,000,000 to HKD 60,000,000 in Hong Kong. The buyer’s premium for the top tier of ultra-high-value consignments with hammer prices above $8,000,000 is still 15 percent.

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Last September, Christie’s raised its fees to similar levels, with a 27 percent premium on hammer prices up to $1,500,000, 22 percent from $1,500,000 to $8,000,000 and 15 percent above $8,000,000. Phillips has the highest buyer’s premium among major houses, with 29 percent up to $1,000,000, 22 percent from $1,000,000 to $6,000,000 and 15 percent above $6,000,000. However, the auction house introduced priority bidding benefits last year, rewarding bidders who submit binding written bids at or above a lot’s published low estimate at least 48 hours before an auction begins with discounted buyer’s premiums of 25 percent up to $1,000,000, 20 percent from $1,000,000 to $6,000,000 and 14 percent above $6,000,000. According to the auction house, this strategy is already yielding results, with priority bidding increasing early bids by 275 percent and contributing to $927,000,000 in global sales in 2025, up 10 percent from the previous year.

Bonhams, which is expanding its global footprint with broader cross-category offerings, has a fee structure broadly aligned with that of its competitors. In the U.S., for most categories, Bonhams applies a buyer’s premium of 28 percent on the first $50,000 of the hammer price, 27 percent on amounts exceeding $50,000 up to and including $1,000,000, 21 percent on amounts exceeding $1,000,000 up to and including $6,000,000 and 14.5 percent on amounts exceeding $6,000,000. In Coins & Medals, Bonhams applies a flat buyer’s premium of 20 percent of the hammer price for each lot, consistent with the category’s strong retail collector base and typically lower price points. For Motor Cars, excluding automobilia, the premium ranges from 12 percent on the first $250,000 of the hammer price to 10 percent on any amount above that threshold. Motorcycles follow a similar structure, with a 15 percent premium applied to the first $100,000 of the hammer price and 10 percent on any amount exceeding $100,000.

By contrast, Heritage Auctions, which with $2,150,000,000 in total sales was the third-largest Western auction house in 2025, just behind Sotheby’s and Christie’s, maintains a 25 percent buyer’s premium on hammer prices of $1,000,000 and under. In a LinkedIn post, Heritage Auctions director Taylor Curry described the increases across competing auction houses as “Buyer’s Premium Creep,” explaining how in a market where buyers are more selective and focused on value, fees directly affect how people evaluate prices and how aggressively they bid. Consignors, he argued, eventually feel it, too. “When buyers become more sensitive to total cost, bidding can cool and that can put pressure on final results,” he wrote. Heritage has been able to grow year over year precisely by operating within that more accessible, often nostalgia-driven ecosystem across dozens of collectible categories, from illustration art and historic sports memorabilia to rare coins, comic books and other cultural artifacts. Its business model is oriented toward generating volume through low- and mid-market lots that fall within that higher-fee band, rather than relying on the trophy consignments other auction houses pursue today.

What collectors need to know about buyer’s premiums

The buyer’s premium is a non-negotiable, mandatory fee paid by a winning bidder to the auction house, calculated as a percentage of the hammer price. Notably, its introduction is relatively recent. From their founding in the 18th and 19th Centuries through the mid-1970s, auction houses derived their revenue almost entirely from seller commissions, and buyers paid only the hammer price. This model reflected the auction house’s original role as a service provider to the seller, rather than an intermediary extracting value from both sides of the transaction.

Christie’s was the first to alter this structure, introducing a flat 10 percent buyer’s premium in London in 1975—a move initially met with widespread criticism from collectors. Sotheby’s followed in 1977, implementing its own buyer’s premium at a similar level to remain competitive. This marked a structural turning point for the auction market, formalizing a new revenue model that would soon be adopted globally. Over time, the buyer’s premium evolved into a tiered system, with higher percentages applied to lower price brackets and reduced marginal fees at higher values, allowing auction houses to optimize revenue across different market segments.

Today, the buyer’s premium is one of the most important sources of revenue for auction houses, and recent increases can be understood as a strategy to capture greater value from the dynamic market for lower-priced lots. This is particularly relevant as auction houses like Sotheby’s are broadening their cross-category offerings of luxury collectibles, from watches and jewelry to handbags, cars and memorabilia, and marketing themselves as upscale retail destinations.

On the seller side, auction houses are often forced to reduce their commissions or offer highly favorable terms in order to secure the most important consignments, which has become the primary field of competition. In many cases, seller commissions are reduced substantially or eliminated altogether. For instance, auction houses may offer enhanced hammer agreements, in which they share a portion of the buyer’s premium with the consignor, allowing the seller to receive more than the hammer price, often around 105 percent, effectively reversing the traditional commission structure. In such cases, the consignor pays no seller’s commission and instead receives a premium, shifting the economic burden almost entirely onto the buyer’s premium.

At the same time, buyer’s premiums are also used to finance third-party guarantees, which have become increasingly central to the orchestration of major sales, particularly in fine art. In exchange for committing to bid at a predetermined level and securing a minimum price for the seller, the third-party guarantor typically receives compensation derived from the buyer’s premium, often in the form of a financing fee calculated as a percentage of the premium, sometimes up to 50 percent, as well as a portion of the upside if the work sells above the guaranteed level.

As the art market has become increasingly financialized, the buyer’s premium has effectively assumed the role of a brokerage fee, providing auction houses with the flexibility and financial capacity to secure consignments, structure guarantees and manage risk while expanding margins, particularly in faster-moving, lower-value segments that now account for a growing share of overall transaction volume.

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