A hammer price is not a purchase price. At Sotheby's in New York, a lot knocked down at $1 M. costs the winning bidder $1.28 M. before sales tax, shipping, or insurance, because a 28 percent buyer's premium is added on top of every hammer. The consignor pays separately, from the other side of the same lot.
That gap—between the number the auctioneer calls and the number on the invoice—is where the auction business earns its living. It is not a rounding error. Public auction sales rose 9 percent to $20.7 B. in 2025, according to the Art Basel and UBS Global Art Market Report 2026, authored by Dr. Clare McAndrew, founder of Arts Economics; the premium is the toll on that flow.
Understanding the stack matters more than it did a decade ago. Rates and thresholds at the two dominant houses have moved repeatedly since 2024, and one of them briefly dismantled the model entirely before putting it back together.
What is a buyer's premium, and how much is it?
A buyer's premium is a commission the auction house charges the winning bidder on top of the hammer price, set as a percentage that steps down as the hammer climbs. The Art Newspaper describes these as non-negotiable fees, paid by the winning bidder on top of a lot's hammer price, and a major source of revenue for auction houses.
At Sotheby's in New York, the schedule effective 13 February 2026 runs 28 percent up to a $2 M. hammer, 22 percent from $2 M. to $8 M., and 15 percent above $8 M. The London schedule mirrors it: 28 percent up to £1.5 M., 22 percent to £6 M., 15 percent above.
The February 2026 revision did two things at once. The headline rate on the lowest band rose from 27 percent to 28 percent, and the ceiling of that band moved up, so a wider slice of the market now sits inside the most expensive tier. That is a rate increase aimed squarely at the middle market.
Houses publish these as banded rates. Whether a given rate applies to the whole hammer or only to the portion falling within each band is set out in that sale's conditions of sale, which is the document that governs, not the summary table on the website.
How do Sotheby's, Christie's, and Phillips compare?
Closely, and deliberately so. Christie's schedule, in force since September 2025, charges 27 percent up to $1.5 M. or £1 M., 22 percent from there to $8 M. or £6 M., and 15 percent above. The top tiers are identical to Sotheby's. The divergence is entirely at the bottom.
| Hammer price (New York) | Sotheby's, from 13 Feb. 2026 | Christie's, from Sept. 2025 |
|---|---|---|
| Up to $1.5 M. | 28% | 27% |
| $1.5 M. to $2 M. | 28% | 22% |
| $2 M. to $8 M. | 22% | 22% |
| Above $8 M. | 15% | 15% |
Phillips has taken a different route. In September 2025 the house introduced incentive pricing: bidders who place binding written bids at least 48 hours before a sale, at or above the low estimate, pay significantly lower fees, per The Art Newspaper. It is a discount for supplying certainty rather than for spending more.
The practical reading for a collector is unglamorous. On a trophy work the three houses are effectively priced the same, so premiums are not a reason to choose one consignment venue over another at the top. On a $600,000 picture the difference between 27 and 28 percent is $6,000, which is real but rarely decisive.
Why do premiums keep rising?
Because the fee is the one line the houses control, and because the pool it taxes is growing slowly. Global art sales rose 4 percent to an estimated $59.6 B. in 2025, per the Art Basel and UBS report, with the dealer sector up 2 percent to $34.8 B. and reported private auction sales down 4 percent to just under $4.2 B.
Volume tells a different story from value. The report puts transaction counts at an estimated 41.5 million in 2025, and art fair sales at 35 percent of dealer turnover, up 4 percent year on year. Lots of transactions, moderate value growth: precisely the shape of a market where a fee applied at the low end is worth more than one applied at the high end.
Escalation is also a long habit rather than a recent panic. Artnet News reported in February 2019 that Christie's was raising premiums for the third time since 2016, lifting its top tier from 12.5 percent to 13.5 percent and widening the band charged 25 percent from $250,000 to $300,000 in New York and from £175,000 to £225,000 in London. The mechanism has not changed. Only the numbers have.
What does the seller pay?
Whatever the house agrees to. Consignor terms are negotiated lot by lot and are not published, which is the single most important asymmetry in auction pricing: the buyer's side is a posted rate, the seller's side is a deal. Sotheby's returned to individualized, bespoke seller terms from 17 February 2025, according to ARTnews.
Two structural elements survived that reversal. A 2 percent success fee payable to sellers on amounts above the high estimate remained in place, and the 1 percent overhead premium the house had charged buyers did not return. Neither is a headline rate, and both change the arithmetic materially on a well-estimated lot.
Guarantees and irrevocable bids sit outside the fee schedule altogether and shift risk and upside between the house, the consignor, and a third party. They are disclosed in sale catalogues by symbol rather than by number, which means the economics of a guaranteed lot are visible in kind but not in amount.
What happened when Sotheby's tried to simplify the fee stack?
It failed within a year. In February 2024 Sotheby's announced a restructuring that took effect that May: a flat 20 percent buyer's premium on works up to $6 M. and 10 percent above, with seller's commission capped at 10 percent on the first $500,000 and waived entirely on lots carrying low estimates above $5 M.
By December 2024 the house had reversed it. ARTnews reported on 19 December 2024 that Sotheby's would return to a buyer's premium range of 15 to 27 percent, against a pre-2024 range of 13.9 to 26 percent. Chief executive Charles Stewart's framing was blunt: "We need to be responsive. We've tried, we've learnt and we've listened."
The diagnosis matters more than the retreat. Stewart has said the 2024 reduction proved less attractive to potential sellers—that is, cutting the buyer's fee removed the flexibility the house needed to win consignments, because a lower posted premium leaves less room to discount a seller's terms. Transparency, it turns out, is expensive.
What does a buyer owe after the invoice clears?
Sales tax or VAT at point of delivery, shipping and insurance, any artist's resale right where it applies, and—on eventual resale—capital gains. The Internal Revenue Service treats art as a collectible: net capital gains from selling collectibles such as coins or art are taxed at a maximum 28 percent rate.
The holding period follows the ordinary rule. A gain or loss is long-term if the asset is held for more than one year before disposal, and short-term if held one year or less, counted from the day after acquisition through the day of disposal. That is statute, not strategy; specifics belong with a tax adviser.
How do you calculate the true cost of a lot?
- Start with the hammer price you are willing to pay, not the low estimate.
- Apply the published buyer's premium band from that sale's conditions of sale, checking whether the rate applies to the whole hammer or band by band.
- Add sales tax or VAT at the delivery jurisdiction, and any artist's resale right the catalogue flags.
- Add shipping, crating, and transit insurance, plus condition reporting or conservation if the lot needs it.
- Work backwards: the resulting total is the number the work must exceed on resale, before a maximum 28 percent collectibles rate, for the purchase to have broken even.
Run that sequence before bidding and the paddle behaves differently. Run it afterwards and it is called a lesson.
Frequently asked questions
Is the buyer's premium negotiable?
No. The Art Newspaper describes buyer's premiums as non-negotiable fees paid by the winning bidder on top of a lot's hammer price, and a major source of auction house revenue. Seller's terms are the negotiable side of the transaction: Sotheby's returned to individualized, bespoke consignor terms from 17 February 2025.
How much is Sotheby's buyer's premium in 2026?
In New York, effective 13 February 2026, Sotheby's charges 28 percent on hammer prices up to $2 M., 22 percent from $2 M. to $8 M., and 15 percent above $8 M. The London schedule is 28 percent up to £1.5 M., 22 percent to £6 M., and 15 percent above.
Does Christie's charge less than Sotheby's?
Only at the bottom. Christie's schedule, in force since September 2025, charges 27 percent up to $1.5 M. or £1 M. against Sotheby's 28 percent up to $2 M. Above $8 M. and £6 M. both houses charge 15 percent, so the top of the market is priced identically.
Why did Sotheby's abandon its 2024 fee overhaul?
It did not attract consignments. The May 2024 structure set a flat 20 percent premium up to $6 M. and 10 percent above, with seller's commission capped at 10 percent on the first $500,000. Chief executive Charles Stewart said the reduction proved less attractive to potential sellers; the house reverted in December 2024.
What tax applies when a collector resells a work?
The IRS treats art as a collectible, and net capital gains from selling collectibles such as coins or art are taxed at a maximum 28 percent rate. A gain is long-term if the work was held more than one year before disposal, counted from the day after acquisition. Specifics belong with a tax adviser.
For a related art news perspective, read How Buyer's Premiums Work in Art Auctions, and Why Sotheby's Just Raised Its Rates.
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