Why might an auctioneer offer a "buyer’s premium"?

A buyer's premium is an additional fee that an auctioneer adds to the hammer price of the item sold at auction. This fee typically serves to cover the various costs that the auction house incurs, such as marketing, staffing, venue rental, and other operational expenses associated with conducting the auction. By implementing a buyer's premium, auctioneers can ensure that their financial needs are met while providing a platform for buyers and sellers to engage in the auction process.

For instance, during an auction, while the hammer price reflects the highest bid at which an item sells, the buyer's premium ensures that the auction house receives a portion of the proceeds, thereby making the auction financially viable. This mechanism helps in sustaining the auction's operations and provides the infrastructure for future auctions.

In contrast, other options suggest motives that do not accurately reflect the purpose of a buyer's premium. Offering incentives for higher bids or reducing final prices may appear beneficial to the bidding process, but they deviate from the primary function of the buyer's premium, which is financial support for the auction house. Similarly, restricting bidding to certain buyers does not relate to the buyer's premium and could deter potential bidders, which is contrary to the goals of promoting participation at an auction.