What is defined as a "bidder's premium" in the context of an auction?

The term "bidder's premium" refers specifically to the additional fee that is charged to the winning bidder, calculated as a percentage of the final bid amount. This fee is added to the winning bid and is typically used by auction houses to cover their operational costs and ensure profitability. The concept is a standard practice in many auction settings and serves as a way to disclose to all bidders that the final amount they will need to pay includes not just their winning bid, but also this premium, which aids transparency in the auction process.

Understanding the bidder's premium is crucial for participants; it impacts the total financial commitment they must be prepared to make if they are successful in their bidding. This ensures bidders are aware of the complete cost associated with winning an item, beyond the mere bid they placed.