A Guide to the Hidden Costs When Purchasing Art

Purchasing art is often viewed as a straightforward transaction: find a piece you love, pay the listed price, and take it home to hang up on your wall. However, the reality is far more complex. Numerous hidden costs can significantly impact the final expense. Whether you're a seasoned collector or a first-time buyer, understanding these costs is crucial for anyone looking to invest in art, whether for personal enjoyment, investment purposes or as part of a broader collection. This guide will unveil the various hidden costs associated with buying art, so that you feel fully prepared and informed for your next purchase.

One of the most significant hidden costs in purchasing art is the buyer’s premium. This fee, charged by auction houses, is a percentage of the hammer price (the final bid). Typically ranging from 15% to 25%, the buyer’s premium can substantially increase the total cost. For example, a £10,000 artwork with a 20% buyer’s premium will ultimately cost you £12,000. It's essential to factor this into your budget when bidding at auctions.

You may have seen that Sothebys have recently lowered their buyers’ premium from 26% to 20% for works up to $6 million, above which the rate lowers to 10 percent. So, what does this imply? In essence, Sotheby's is striving to implement a more transparent fee system to make auctions more attractive to both buyers and sellers.

Find out more about the benefits and pitfalls of purchasing art via auction in our Guide to Auction v Private Sale.

Auction houses and galleries often charge marketing fees to promote artworks. These traditional auction fees cover catalogue production, advertising, and promotional events designed to attract potential buyers. Depending on the venue and the level of marketing required, these costs can vary widely, adding hundreds or even thousands of dollars to the final price of the artwork.

Proper documentation and listing of artwork are crucial for both sales and insurance purposes. Cataloguing costs cover the research, photography, and detailed descriptions needed for auction catalogues and gallery listings. These expenses ensure that potential buyers have all the necessary information about the artwork’s provenance, condition, and significance, but don't forget they also add to the overall cost.

Proper storage is vital to maintaining the condition and value of your art collection. Climate-controlled storage facilities are necessary to protect artworks from damage due to temperature fluctuations, humidity, and pests. Storage fees are usually calculated based on the size and value of the art, and these costs can accumulate over time, especially for larger collections.

It is always prudent to speak to industry-leaders when it comes to safely storing your artworks. Convelio, for instance, has just unveiled a new London facility with an inventory management ecosystem to enhance control and efficiency when it comes to storage and logistics. Convelio offers integrated quoting and shipping for clients looking to release their lots through their service, making this a convenient option which minimises the risk of unexpected and heavy costs for both buyers and sellers.

Discover more services to facilitate your storage needs through our Directory.

Beyond the primary expenses, several additional hidden costs can impact the final cost of your art purchase:

Insurance Costs

Insuring your art is essential to protect against theft, damage, or loss. Insurance premiums depend on the artwork’s value, location, and the type of coverage. Comprehensive policies can be costly but are necessary for safeguarding your investment.

Restoration and Conservation Fees

Over time, artworks may require restoration or conservation to maintain their condition and value. These services, performed by skilled professionals, can be expensive, particularly for older or more delicate pieces. Regular maintenance is also crucial to prevent deterioration. We spoke to our recommended conservators to create A Guide to Restoring and Caring for Modern and Contemporary Prints.

Import/Export Duties and Taxes

If you’re purchasing art from abroad or selling it internationally, import and export duties and taxes can add a significant expense. These costs vary by country and can include VAT, customs duties, and other fees. It's essential to research these potential charges before completing a purchase.

All you need to know about UK Import Duty and Tax.

While hidden costs are an inevitable part of buying art, there are strategies to manage and minimise them:

1. Research and Budgeting: Thoroughly research all potential costs before making a purchase and include them in your budget.
2. Negotiate Fees: Some fees, like buyer’s premiums and storage costs, may be negotiable, especially for high-value purchases.
3. Package Deals: Consider buying multiple pieces from a single seller or gallery to negotiate better terms on fees and shipping.
4. Insurance Review: Regularly review and compare insurance policies to ensure you’re getting the best coverage at the best price.
5. Professional Advice: Consult with art advisors or financial experts to help navigate the complexities of art purchases and manage costs effectively. Our specialist would be delighted to discuss any queries you may have, please do not hesitate to contact us.

Purchasing art involves more than just the listed price. By understanding and anticipating the hidden costs—from buyer’s premiums to insurance and restoration—you can make more informed decisions and better manage your budget. Awareness and preparation are key to ensuring that your art investment is both enjoyable and not a financial burden with surprising costs.