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Buyer's Premiums

This article describes the types of Buyer's Premium fees, how fees are applied at the company level vs. the auction level, the process for creating and editing Fixed Percentage and Scaled Buyer's Premiums, and how to override the Buyer's Premium on an invoice. This article also describes the how make the Buyer's Premium taxable and how to separate the out the Buyer's Premium tax on an invoice.

What is a Buyer's Premium?

Types of Buyer's Premiums

Fixed Percentage Buyer's Premiums

Scaled Buyer's Premiums

Overriding Buyer's Premium on Invoice

Taxes

 

What is a Buyer's Premium?                                                                     

In auction terms, the Buyer's Premium refers to an additional charge on the hammer price (winning bid at auction) of the lot that must be paid by the winning bidder. It is charged by the auctioneer to cover administrative expenses. The Buyer's Premium goes directly to the auction house and not to the seller.

 

Types of Buyer's Premiums                                                                      

Fixed Percentage

Buyer's Premium fees can be applied as a fixed percentage, sliding scale, or a cumulative sliding scale.  Fixed Percentage will apply a flat percentage regardless of the lot total (ex. 10%). For example, if a bidder wins a lot at $100 hammer price and the auctioneer's Buyer's Premium is 20%, the bidder would pay $120.

Fixed percentage Buyer's Premium fees can be created and applied at the company level and the auction level. A company cannot have both a fixed percentage and a scaled Buyer's Premium applied simultaneously.

 

Sliding Scale 

With Sliding Scale fees, the percentage charged generally decreases as the hammer price increases.  Fees are generally applied in a tiered system and are based on each individual lot.  For example, a lot selling for less than $200 will be charged a 15% Buyer's Premium fee, while a lot selling for $201- $500 will be charged a 10% Buyer's Premium fee. 

If the bidder wins multiple lots, the Buyer's Premium will be assigned based on the hammer price of each lot.  Using our example rates above, if the bidder wins Lot A for $100 and Lot B for $300, they will be charged a 15% fee for Lot A and a 10% fee for Lot B.

Sliding scale Buyer's Premium fees are created at the company level but can be applied at either the company level or the auction level. A company cannot have both a fixed percentage and a scaled Buyer's Premium applied simultaneously.

 

Cumulative Sliding Scale

Cumulative Sliding Scale fees work in the same way as Sliding Scale fees, except that the percentage is based on the total hammer price of all the lots the bidder won, rather than on each lot individually.  For example, again using our rates above, if the bidder wins Lot A for $100 and Lot B for $300, their total is $400 so they will be charged a 10% fee.

Sliding scale Buyer's Premium fees are created at the company level but can be applied at either the company level or the auction level. A company cannot have both a fixed percentage and a scaled Buyer's Premium applied simultaneously.

 

Company Level vs. Auction Level

Buyer's Premium fees can be applied at the company level or the auction level.  Buyer's Premiums applied at the company level will be applied to all new auctions, unless a different Buyer's Premium is applied at the auction level. Changes made to the Buyer's Premium at the company level will not impact active or complete auctions. Only new auctions created after the changes have been made will be impacted.

Changes made to the Buyer's Premium at the auction level will not flow back to the company level, meaning they will only impact that specific event. Auction level Buyer's Premiums will override company level Buyer's Premiums. Changes can be made to an active auction, however saved changes will only impact unpaid invoices associated with that auction. Invoices that have had any payments applied, be it partial or full, are locked and will not be impacted by premium changes.

 

Fixed Percentage Buyer's Premiums                                                        

Set Fixed Percentage Buyer's Premium at Company Level

Buyer's premiums can be set to default to a specific amount for every new auction made, saving time from having to set it per auction.

  1. To set a Buyer's Premium, navigate to My Links > Company > Profile.
  2. Click on the Preferences tab, this brings up the New Auction Default page. BuyersPremiumFixedCompany.JPG
  3. Select Fixed from the Default Buyer's Premium Type drop-down.
  4. Enter the desired percentage rate into the Default Buyer's Premium for new auctions field.
  5. If the Buyer's Premium is taxable, check the Is the Buyer's Premium Taxable box. For more information on taxes, see Creating Tax Codes.
  6. Click the Disk icon in the top right to save.
  7. Changes made to the Buyer's Premium at the company level will not impact active or complete auctions. Only new auctions created after the changes have been made will be impacted. To change the Buyer's Premium settings for a particular auction, see Edit Buyer's Premium at Auction Level.

 

Set Fixed Percentage Buyer's Premium at Auction Level

  1. Navigate to the appropriate auction on the dashboard and then select Auction > Edit Settings.
  2. Click on the Accounting tab. AuctionSettingAccountingTab.JPG
  3. In the Buyer's Premium Options box, click the Fixed Percent radio button and enter a percentage into the accompanying field.
  4. To set a cap, enter a dollar amount into the Buyers Premium Cap field. Bidders will not be charged more than this dollar amount, even if the percentage would be higher. For example, if the Buyer's Premium is set to 10% with a $300 cap in place, items selling for $4,000 will be charged $300 even though that is less than 10% of the hammer price.
  5. Click the Disk icon in the top right to Save.
  6. Changes made to the Buyer's Premium at the auction level will not flow back to the company level, meaning they will only impact that specific event. Auction level Buyer's Premiums will override company level Buyer's Premiums. Changes can be made to an active auction, however saved changes will only impact unpaid invoices associated with that auction. Invoices that have had any payments applied, be it partial or full, are locked and will not be impacted by premium changes.

 

Scaled Buyer's Premiums                                                                         

Create Buyer's Premium Scales 

Scaled Buyer's Premiums must be created at the company level, but can be applied at either the company level or the auction level.

  1. Navigate to My Links > Company > Accounting Settings > Scales - Buyer's Premium. 
  2. Enter a name for the scale in the Name field.  (While this field is not required, if it is not completed, the scale will appear as a blank space in the scale drop-down menu.) 
  3. Enter a Description, if desired.
  4. Enter the percentage of your premium in the Buyers Premium field.
  5. Enter the highest dollar amount the percentage should be applied to in the Up To ($) field. BuyersPremiumExScale.JPG
    • For example, a 15% premium will be applied to lots with a hammer price up to $100, while a 10% premium will be applied to lots with a hammer price between $101 and $1,000, and a 5% premium will be applied to lots with a hammer price between $1,001 and $2,000.  The 5% rate will also be applied to lots over $2,000 as the rate with the highest Up To amount will be used for any values greater than or equal to the highest Up To amount.
  6. If desired, enter the minimum premium dollar amount to be charged in the Min $ field. BuyersPremiumExScalewMinimums.JPG
    • This is the minimum dollar amount the buyer will be charged, regardless of whether if it is more than the percentage of the hammer price. For example, a 15% premium on a $50 lot would be $7.50, but since the minimum has been set to $10, the buyer will pay a $10 Buyer's Premium fee.  the buyer pays whatever is higher, the percentage or the minimum. 
  7. To add additional tiers to the scale, click the Add link. There is no limit to the number of rows that can be added here.
  8. To delete a row, click the X located to the right of the appropriate row.
  9. Click the Save button in the top right to save.
  10. Changes made to the Buyer's Premium at the company level will not impact Active or Complete auctions. Only new auctions created after the changes have been made will be impacted. To change the Buyer's Premium settings for a particular auction, see Edit Buyer's Premium at the Auction Level.

 

View/Edit Existing Buyer's Premium Scales                          

  1. Navigate to My Links > Company > Accounting Settings > Scales - Buyers Premium.
  2. Select the Choose a scale to work with drop-down menu to see a list of existing Scales. To edit an existing scale, select it from the drop-down menu.mceclip1.png
  3. Enter/edit information information in the section below as needed. For more specific information on completing these fields, see Create Buyer's Premium Scales.mceclip2.png
  4. Click the Save button in the top right.
  5. Changes made to the Buyer's Premium at the company level will not impact active or complete auctions. Only new auctions created after the changes have been made will be impacted. To change the Buyer's Premium settings for a particular auction, see Edit Buyer's Premium at the Auction Level.

 

Apply Scaled Buyer's Premium at Company Level

  1. To apply a scaled Buyer's Premium at the company level, navigate to My Links > Company > Profile.
  2. Click on the Preferences tab, this brings up the New Auction Default page. BuyersPremiumCompanyScaled.JPG
  3. Select either Sliding Scale or Cumulative Scale from the Default Buyer's Premium Type drop-down menu. Note: if a scale is selected, but a percentage remains in the Default Buyer's Premium for new auctions (Fixed Percentage) field, the system will still default to the selected scale.   
  4. Select the specific scale to apply from the Default Buyer's Premium Scale drop-down menu. For information on creating a scale, see Create Buyer's Premium Scales. If a specific scale is not chosen from this drop-down menu, it will need to be selected at the auction level. If a specific scale is not selected at either level, a Buyer's Premium will not be applied to auctions.
  5. If the Buyer's Premium is taxable, check the Is the Buyer's Premium Taxable box. For more information on taxes, see Creating Tax Codes.
  6. Click the Disk icon in the top right to save.
  7. Changes made to the Buyer's Premium at the company level will not impact active or complete auctions. Only new auctions created after the changes have been made will be impacted. To change the Buyer's Premium settings for a particular auction, see Edit Buyer's Premium at Auction Level.

 

Apply Scaled Buyer's Premium at Auction Level

  1. Navigate to the appropriate auction on the dashboard and then select Auction > Edit Settings.
  2. Click on the Accounting tab. AuctionSettingAccountingTab.JPG
  3. To set a Sliding Scale or a Cumulative Sliding Scale, select the appropriate radio button and then select the specific Buyer's Premium Scale from the drop-down menu. To view the selected scale, click the Show link. A selection must be made from this drop-down in order for the scale to be applied. If a specific scale is not chosen from this drop-down menu, no Buyer's Premium fees will be applied to the auction.                                                           AuctionBuyersPremiumOptions.JPG
  4. To set a cap, enter a dollar amount into the Buyers Premium Cap field. Bidders will not be charged more than this dollar amount, even if the percentage would be higher. For example, if the Buyer's Premium Scale is set to 10% on sales over $2,000 with a $300 cap in place, items selling for $4,000 will be charged $300 even though that is less than 10% of the hammer price.
  5. If the Buyer's Premium is taxable, select the Buyer's Premium Taxable radio button located in the Taxes box on the right side of the window. BuyersPremiumTaxable.JPG
  6. Click the Disk icon in the top right to Save.
  7. Changes made to the Buyer's Premium at the auction level will not flow back to the company level, meaning they will only impact that specific event. Auction level Buyer's Premiums will override company level Buyer's Premiums. Changes can be made to an active auction, however saved changes will only impact unpaid invoices associated with that auction. Invoices that have had any payments applied, be it partial or full, are locked and will not be impacted by premium changes.

 

Overriding Buyer's Premium on Invoice                                                  

Wavebid provides users with the option to override the Buyer's Premium that was applied at the company or auction level. During the invoice process, Buyer's Premiums can be altered for a specific lot or bidder. This option is only available for unpaid invoices. Changes cannot be made to the Buyer's Premium after a payment (partial or full) has been applied to an invoice.

  1. From an unpaid bidder's invoice, (Current Auction > Accounting > Invoices) click on any of the individual blue premium values to change the Buyer's Premium for that specific lot. To change the Buyer's Premium for every lot on the invoice, click on the word Premium.mceclip2.png
  2. The Confirm Buyer's Premium Override window appears. Enter a new percentage into the Percentage field. The percentage entered will override the previously applied buyer's premium, regardless of whether it was applied at the auction or company level.   mceclip3.png
  3. Click the Ok button.
  4. Altered Buyer's Premiums will have an asterisk (*) located to the right of the new fee to indicate that it is a variation from the auction default. This asterisk will be removed if the Buyer's Premium is returned to the default auction rate.
    • To return the Buyer's Premium to the default auction rate, click on the blue Premium amount again, leave the Percentage field blank, and click the Ok button.BuyersPremiumAlteredInvoice.JPG

 

Taxes                                                                                                         

The Buyer's Premium (BP) can be set to be taxable or non-taxable. If the Buyer's Premium is taxable, invoices can be set up to display the BP tax separately from the sales tax. 

Company Level

To set the BP as taxable at the company level, navigate to My Links > Company > Profile and then click on the Preferences tab. Select the New Default Auction menu from the left side of the page, check the Is the Buyer's Premium Taxable box, and then click the Disk icon in the top right corner of the page to Save. Changes made to the BP at the company level will not impact existing auctions. To update the tax status of the BP of an existing auction, edit the BP at the auction level.

Auction Level

To set the BP as taxable at the auction level, navigate to the applicable auction from the Dashboard, then select Auction > Edit Settings. Click on the Accounting tab and check the Buyer's Premium Taxable box. Click the Disk icon in the top right corner of the page to Save.

For more information on tax exemption, see Tax Exemption.

Separate BP Tax

The default is for the Buyer's Premium taxes to be combined with sales tax and appear in one Tax column on the invoice. To have the BP tax appear separately from the sales tax, navigate to the applicable auction from the Dashboard, then select Auction > Edit Settings. Click on the Invoices tab, select the Options menu from the left side of the page, and check the Show separate buyers premium tax box. Click the Disk icon in the top right corner of the page to Save. Once the changes are saved, the BP and BP tax will be listed separately from the sales tax. In the example below, the Sale Price and Buyer's Premium amounts are listed in yellow, while the Sales Tax and Buyer's Premium Tax appear below those in red.

SeperateBPTax.PNG

Users have the option of updating the tax code for Buyer's Premium directly on a bidder's invoice. To do so, navigate to the applicable invoice and click the bottom blue value in the Premium Tax column. A pop-up window will open. Select the Tax Code from the drop-down or check the Tax Exempt box, then click the Set Tax Code button. EditBPTaxonInvoice.PNG

 

 

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