In October 2017, Paul Newman's own Rolex Daytona sold at Phillips in New York for $17,752,500, a record for a wristwatch that still gets quoted. The auctioneer's hammer came down at $15.5 million. The other $2,252,500 was the buyer's premium, the fee the house adds to the winning bid. It came to about 14.5 percent of the hammer under the rates Phillips charged at the time. Under the rates Phillips charges on watches in New York today, the same hammer would have produced a price of $18,387,500.

That is the first thing to understand about the premium: the famous number already includes it. The major houses publish their results as the price the buyer paid, hammer plus premium, and that is the figure the press repeats. The seller received something else again: the hammer, less whatever commission they negotiated. Every record has at least two numbers behind it, and the gap between them has rarely been as wide as it is this year.

A year of rising fees

All four of the major houses have reset their premiums in 2026. Sotheby's moved to 28 percent on the first $2 million of the hammer in February, then 22 percent up to $8 million and 15 percent above. Phillips moved in April to 29 percent on the first $2 million, with a lower 27 percent schedule for its watch sales. Christie's matched Sotheby's on September 1. Bonhams goes furthest from October 1: 30 percent on roughly the first $35,000, tapering to 14 percent above $7.5 million.

It was not supposed to go this way. In May 2024 Sotheby's cut its standard premium to 20 percent on everything up to $6 million, pitching it as a simpler and fairer deal for buyers. Less than a year later the house abandoned it after the change made it less attractive to sellers. That episode explains most of the market's economics. The premium is not just a charge for services rendered to the buyer. It is how the houses pay for competing over consignments: low or waived seller commissions, guarantees and the rest of the machinery needed to win the next great collection. Cut the buyer's side, and the seller's side has to pay.

Fifty years of the same argument

None of this is new. Christie's and Sotheby's introduced the buyer's premium in London together in 1975, at 10 percent, on top of the 10 percent they already took from sellers. The trade was furious. The British Antique Dealers' Association and the Society of London Art Dealers took both houses to court, arguing that introducing the fee in step amounted to collusion. The case was eventually withdrawn in a settlement brokered by Lord Goodman. In 1983 a Labour MP, Andrew Faulds, went as far as introducing a bill in the House of Commons to abolish the premium outright, with cross-party support. It never became law, and the premium has climbed from 10 percent to nearly 30 since.

Doing the division

For a bidder, the practical question is simple: what is the most I can bid? Take a lot at a house charging 28 percent. A $10,000 hammer becomes $12,800 with the premium. Sales tax, where it applies, is charged on that whole amount, so in New York it adds another $1,136, for $13,936 before shipping. The premium and the tax are separate costs, and both have to come out of your budget before you know your ceiling.

The rule that handles both is:

Maximum hammer bid = all-in budget � (1 + premium rate) � (1 + tax rate)
With $14,000 to spend in New York at a 28 percent house, that works out to a little over $10,000. Most houses also add small fees on top, such as a charge for bidding through a third-party online platform, and outside the United States, VAT may apply to the premium itself. In Geneva, Phillips charges 8.1 percent Swiss VAT on both the hammer and the premium. Work the number out before the sale and write it down. The last two minutes of a contested lot are the wrong time to be dividing by 1.39.

Where the premium is lower, and what that costs you

A saleroom premium buys real things: specialist cataloguing, printed catalogues, previews in several cities, a worldwide client list and a name on the invoice that carries weight when the object is sold again. For the most important lots, those services can be worth every point.

For the middle of the market, the calculation changes. Online auction platforms charge buyers far less: 5 percent with a minimum at one watch platform, 10 percent at another. I should declare an interest here. I run an online watch auction house that charges 7 percent, so read what follows knowing that. On a $10,000 hammer, the difference between 28 percent and 7 percent is $2,100 before tax, which is enough to change what a collector buys. For a fuller breakdown of how the fee is structured across the auction houses and the online platforms, with worked examples at several price points, see this guide to what a buyer's premium is and what it adds to a bid.

But the fee is only half of what you are buying. A saleroom stands behind its catalogue description and its conditions of sale, and that is recourse a buyer can use. Online, protection runs from nothing at all to independent inspection before the seller is paid, with the buyer's money held in escrow until the object passes. A 5 percent premium on a platform that offers no recourse can cost far more than 28 percent, the day the object that arrives is not the object in the photographs.

Before you register to bid

Read the fee section of the conditions of sale in full, not just the headline rate. Find the band your likely hammer falls into. Add the extra charges, the tax and insured shipping. Find out exactly what happens if the lot is not as described, and how long you have to say so. Then divide.

The premium will probably keep rising at the top of the market, because it pays for the competition over consignments. For everyone else, it is the largest cost of buying at auction after the object itself, and it is the easiest one to plan for. It only catches out the bidders who never do the division.

Colston Bowler is the founder of Grey Market, an online auction house for vintage and pre-owned watches, and has collected watches for twenty years.