The doodle was sold in a charity auction on TradeMe last night, after receiving more than 180 bids and 132,000 views in just over a week.
The money will go to the charity, Cure Kids.
The auction followed Mr Key's appearance on TVNZ's Breakfast programme last week, in which he was asked to draw the flag he would prefer if the current one was ditched.
He quickly sketched out a crude silver fern, which host Pippa Wetzell described as a "lop-sided Christmas tree".
Mr Key gave his consent for the drawing to be auctioned for charity and later promised to take morning tea with the winning bidder.
The auction was won by the Elite International School of Beauty and Spa Therapies, which last year raised $55,000 for charity by offering beauty therapies to the public on student training days.
The school's director, Simon Harding, said he would have bid higher, but would not say by how much.
"The students are very excited to contribute to the cause," he told NZPA.
It would be too difficult to squeeze 300 students into Mr Key's office, so the Prime Minister would be invited to morning tea at the highest-achieving of the school's four national campuses, Mr Harding said.
The school has offered to sell the drawing to the next highest bidder, on the condition that the proceeds also go to Cure Kids.
"It was never really about the doodle, it was about the cause."
Mr Harding said he also favoured the silver fern as an alternative flag, but was more equivocal about Mr Key's artistic skills.
"I think it needs a little bit of sketching out. The Prime Minister should maybe stick to governance and leave the artists to the creative side."
TradeMe spokesman Paul Ford said staff were surprised bidding went so high.
Staff had called bidders to ensure they were genuine and had removed a number of false bids, one as high as $20,000.
The auction attracted over 600 questions and comments, ranging from light-hearted political asides to critiques of Mr Key's deftness with a pen.
TVNZ Breakfast reporter Matty McLean has also listed his own drawing of an alternative flag in a tongue-in-cheek attempt to raise more money for charity than the Mr Key.
The auction closes this morning, and is currently sitting at almost $340.
A recent poll by the New Zealand Herald showed 52 percent of New Zealanders wanted a new flag design, but Mr Key has ruled out a change.
