You win a skid steer at $20,000. A few days later the invoice says $22,260. The gap is the buyer’s premium, a fee the auction company adds on top of your winning bid ($1,000 at one Pennsylvania sale’s 5% tier), plus 6% sales tax charged on the total. Bid from your phone and an online bidding fee can push it higher.
None of this is hidden. It is written in the terms of sale. But the terms change from one auctioneer to the next, and even from one event to the next with the same auctioneer. This guide explains how a buyer’s premium on equipment auctions works, shows what real Pennsylvania auctioneers and national platforms charge, and walks through the math so you can set a maximum bid that matches your budget.
What is a buyer’s premium?
A buyer’s premium is a percentage (sometimes with a cap or a minimum) that the auction company charges the winning bidder on top of the hammer price. The hammer price is your winning bid. The premium is the auctioneer’s fee for running the sale, and it is separate from the commission the seller pays to consign the machine.
- Who pays it: the buyer, on every lot they win.
- Who sets it: the auction company, in its terms of sale. Bidding platforms such as Proxibid say they do not dictate it.
- When it applies: on top of the hammer price, before sales tax.
- Where to find it: in the terms and conditions of each event, usually next to the catalog.
How auctioneers structure the premium
There is no standard rate. Most equipment auctions use one of three structures, often with an online bidding fee on top.
Flat percentage
One rate on every lot. Purple Wave’s terms, for example, set a 10% buyer’s premium on the winning bid. Simple to calculate, and on a big machine it is the most expensive of the three.
Percentage with a cap
A rate up to a maximum dollar amount per item. On big machines the cap matters more than the rate. McGrew Auction Company’s terms for its November 10, 2026 tractor and construction sale set 10% with a $500 cap per item. Its no-reserve dealer sale used 10% with a $2,950 cap.
With a 10% rate and a $500 cap, the cap kicks in at $5,000. Below that, you pay the full 10%. Above it, every extra dollar you bid carries no extra premium. For a buyer looking at a loader or an excavator, this is the friendliest structure on the calendar.
Tiered by price
The rate drops as the price goes up. Hess Auctioneers’ terms for its December 11, 2026 sale list 10% up to $9,999.99, 5% from $10,000 to $249,999 and 3% from $250,000 and up, per item.
Tiers raise one question worth a call to the office: does the band rate apply to the whole price, or only to the part inside each band?
If it applies to the whole price, a $9,900 lot carries $990 in premium and a $10,000 lot carries $500, so the lower bid costs you more. If the bands work like tax brackets, the math is smoother. The examples in this guide use the whole-price reading, so confirm it before you rely on them.
| Auction company | Buyer’s premium | Online bidding fee | Card payments |
|---|---|---|---|
| McGrew Auction Company (Seven Valleys, PA) | 10%, capped at $500 per item (dealer sale: $2,950 cap) | +3% per item | Not accepted (cash, wire or certified funds) |
| Hess Auctioneers (Marietta, PA) | 10% under $10,000; 5% $10,000 to $249,999; 3% from $250,000 | +1% on HessBid; +2% on EquipmentFacts and Proxibid | Up to $5,000, plus a 3% fee |
| Purple Wave (national, online) | 10% | None listed | Up to $3,000 |
| IronPlanet (national, online) | Shown on each listing, based on the selling price | Bidding is free | 2.95% convenience fee |
Rates come from each company’s published terms as of November 2026: McGrew, Hess, Purple Wave and IronPlanet. Terms change, so always check the event you are bidding on. December sales, including the Hess date, are listed in our equipment auctions for December 2026.
Online bidding fees: the second premium
Bidding from your phone is convenient, and many auctioneers charge for it. The fee is usually a percentage of the hammer price added only to lots won online.
- McGrew adds 3% per item for bidders on its own platform, EquipmentFacts and Proxibid.
- Hess adds 1% on its own HessBid platform and 2% on EquipmentFacts and Proxibid. Its absentee bids also carry a 2% fee.
- Purple Wave’s terms list no separate online fee: its sales run online, and the 10% premium is the main charge.
On a $20,000 machine, a 3% online fee is $600. If you live close to the sale, bidding in person can be the cheapest move you make all day. At Hess, the platform you pick changes the bill: the HessBid fee is half the fee on the other two.
Example:
❌ Wrong: “The premium is capped at $500, so a $40,000 excavator costs me $40,500.”
✅ Right: “The premium is capped at $500, but I’m bidding online, so there’s another 3% ($1,200). That’s $41,700 before sales tax.”
Other fees that end up on the invoice
The premium is the biggest add-on, but not the only one. These show up in the same terms of sale:
- Card surcharges: Hess charges 3% when you pay by card (up to $5,000). IronPlanet charges a 2.95% convenience fee on card payments.
- Late payment: Hess charges 1% of the balance per day once a week has passed. McGrew charges 18% a year after three business days.
- Storage: Hess charges $50 a day after the second Friday following the sale. McGrew charges $20 per item per day after 30 days. IronPlanet sellers can charge $25 a day from day 9.
- Default fees: if you win and do not pay, Purple Wave’s terms set a fee of 15% of the purchase price.
Some companies also charge documentation or title fees on titled items such as trucks and trailers. They are small next to the premium, but they belong in your math.
Do you pay sales tax on the buyer’s premium in Pennsylvania?
Expect to. Pennsylvania’s sales tax regulation for auctioneers says the tax is computed on the total purchase price of each transaction “without deduction for the auctioneer’s commission” (61 Pa. Code § 31.23). Auctioneers’ own terms, such as McGrew’s and Purple Wave’s, define the purchase price as the hammer price plus the premium. The state rate is 6%, with 1% more in Allegheny County and 2% more in Philadelphia.
Equipment used predominantly in farming may qualify for an exemption. Hess, for one, charges Pennsylvania sales tax unless the buyer provides an exemption form. If you think you qualify, fill out the Pennsylvania Exemption Certificate (REV-1220) and bring it to the sale.
Want a price without a premium?
Dealers on Heavy Listing sell directly to you, with no buyer’s premium. Compare their asking prices with what you expect to pay all-in at auction.
Browse equipment for sale →What a $20,000 machine really costs at auction
Here is the same $20,000 hammer price under the terms above, before sales tax: To see what a used skid steer typically lists for at Pennsylvania dealers, read How Much Does a Used Skid Steer Cost?
| Scenario | Premium | Online fee | Total before tax |
|---|---|---|---|
| McGrew, bidding in person | $500 (10%, capped) | $0 | $20,500 |
| McGrew, bidding online | $500 | $600 (3%) | $21,100 |
| Hess, bidding in person | $1,000 (5% tier) | $0 | $21,000 |
| Hess, bidding on EquipmentFacts | $1,000 | $400 (2%) | $21,400 |
| Purple Wave | $2,000 (10%) | $0 | $22,000 |
| Buying from a dealer at the same price | $0 | $0 | $20,000 |
Add 6% Pennsylvania sales tax on the purchase price and the first McGrew scenario lands around $21,730. The spread between the cheapest and most expensive auction scenario here is $1,500 on the same hammer price. That can cover a good part of the hauling bill. On a $60,000 excavator, a capped premium becomes even more valuable: the same $500 cap is less than 1% of the price.
How to set your maximum bid
- Start with your all-in budget: the most you will pay for the machine on your trailer, including tax.
- Take out hauling and any repairs you already expect: what is left is your budget for the invoice.
- Divide by 1.06 for sales tax (or your county’s rate) unless you have an exemption.
- Take out the premium and online fee. With a flat 10% premium and a 3% online fee, divide by 1.13. With a capped premium, subtract the cap and then divide by 1.03 for the online fee.
- Round down to the bid increment. If your number falls between steps, the lower one is your bid.
- Write the number next to the lot and stop there.
Say your invoice budget is $30,000 for a lot at a sale with a 10% flat premium, no online fee and 6% tax: $30,000 ÷ 1.06 ÷ 1.10 = about $25,730. That is your last bid, not $30,000. The hard part is not the division. It is putting your hand down when the bidding passes your number.
Questions to answer before you register
Every one of these is answered in the terms of sale. If the wording is unclear, a two-minute call to the auction office settles it.
- What is the premium for this event, and is there a cap or a minimum?
- If the premium is tiered, does each rate apply to the whole price or only to its band?
- What does each bidding platform add, and is there a fee for absentee or phone bids?
- Which payment methods are accepted, and what do cards cost?
- When is payment due, and what is the late fee?
- When does the machine have to leave the yard, and what does storage cost after that?
- Will they accept your tax exemption form, and do they need it before the sale?
Can you avoid or reduce the buyer’s premium?
You cannot negotiate it on the day, but you can choose where and how you buy:
- Bid in person when the online fee is high and the sale is close.
- Favor capped premiums on expensive machines: a $500 cap on a $60,000 loader is a small fraction of a 10% premium.
- Pay the way the terms reward: wire or certified funds usually avoid card surcharges.
- Buy direct from a dealer: no buyer’s premium at all, and you can inspect on your schedule. Compare listings from Pennsylvania dealers before auction day.
None of this means auctions are a bad deal. A machine that sells well under dealer prices is still a good buy after the premium. The point is to compare the all-in auction price with the dealer’s asking price, not the hammer price. You can search the used equipment listed by dealers for the same make and model before the sale.
Common mistakes with buyer’s premiums
1. Assuming every sale uses the same terms
The same auctioneer can run a $500 cap at one sale and a $2,950 cap at the next. Read the terms for the event, not the company’s homepage.
2. Forgetting the online fee
It is listed separately and only applies if you win online, which makes it easy to miss.
3. Paying by card without checking the surcharge
A 3% card fee on a $5,000 attachment is $150 you did not need to spend.
4. Leaving the machine too long
Storage fees start on a fixed date. Book the hauler before you bid, not after you win.
Upcoming auctions in Pennsylvania
Every sale on the Heavy Listing calendar links to the auctioneer’s own catalog, and the terms of sale are usually one click from there. Open them before you register and find the buyer’s premium first.
McGrew’s 11/10 Tractor & Construction Equipment Auction
Kurtz Trading November 11th Equipment Auction
McGrew’s 11/17 Timed Online Auction
McGrew’s 11/17 No Reserve Dealer Equipment Auction
For a full guide to the sales themselves, read Equipment Auctions in PA: Calendar and Buyer’s Guide.
The bottom line on buyer’s premiums
A buyer’s premium is a normal part of buying at auction, and it varies more than most bidders expect: from a $500 cap to a flat 10% on the same hammer price. The number that matters is the all-in price, not the hammer price.
- ✓ Read each event’s terms: premium, cap, online fee and card surcharge.
- ✓ Work backwards from your budget to a maximum bid before the sale.
- ✓ Compare the all-in auction price with dealer prices, where there is no premium.
Price it both ways before you bid
Check upcoming sales on the Heavy Listing auction calendar, then look up the same machine from dealers near you, where the asking price carries no premium.
See the auction calendar →Frequently asked questions
What is a typical buyer’s premium at an equipment auction?
There is no standard. Among the terms reviewed for this guide, rates run from 10% flat (Purple Wave) to 10% with a $500 cap (McGrew) and a 10%, 5% and 3% tiered scale by price (Hess). Many auctioneers add 1% to 3% for online bidding.
How do I calculate the buyer’s premium?
Multiply the hammer price by the premium rate, then check for a cap. At 10% with a $500 cap, a $20,000 bid carries $500, not $2,000. Add any online bidding fee separately, then sales tax on the total.
Is the buyer’s premium negotiable?
Not at the sale. The rate is part of the terms you accept when you register. You can lower what you pay by bidding in person, choosing sales with capped premiums or buying from a dealer, where there is no premium.
Do I pay sales tax on the buyer’s premium in PA?
Generally yes. Pennsylvania computes tax on the total purchase price without deducting the auctioneer’s commission, and auctioneers define the purchase price as the hammer price plus the premium. Equipment used predominantly in farming may be exempt with a REV-1220 exemption certificate.
Why do auctions charge a buyer’s premium?
It pays for running the sale: marketing, staff, the bidding platform and the yard. The seller pays a separate commission, so the auctioneer is paid by both sides of the deal.
Does buying from a dealer have a buyer’s premium?
No. Dealers set an asking price, which you can negotiate, and you pay sales tax and any documentation fee they charge.
