Bidding - How does the software handle it?
Problem:
How does the auction software handle bidding and proxy bidding?Solution:
The software handles bidding by standard auction bidding rules but also has a proxy bid feature. The proxy bid feature allows the bidder to enter the maximum amount (any amount greater than the current minimum bid) they are willing to bid for an item. This proxy bid is kept confidential from other bidders and sellers. When another bidder makes a bid on an auction you have a proxy bid on the two bids are compared. The system then places bid on your behalf in amounts necessary dictated by bidding increments and the amount of your proxy bid to maintain you as the high bidder. The system will bid for you up to the maximum amount of your proxy bid. The proxy bid can only be outbid by a higher maximum bid. Below is an example which hopefully will illustrate a bidding scenario.Bid setup in the admin:
- Bid increments are set to $1
An example auction:
- Starting bid is $5.00
- Reserve price is $20.00
Bidding:
- User A bids a proxy of $30.00
- Current bid is then set to $20.00 and minimum next bid is $21.00. NOTE: The current bid is $20.00 and not $5.00 because the reserve price is $20.00. If there was no reserve price the current bid would be $5.00 and the minimum bid $6.00. Any bid higher than a reserve bid will automatically push the bid to the reserve price to make sure the auction closes successfully. Also if the the User A bid was less than the $20.00 reserve price the current bid would be that bid and the minimum bid would be that bid plus $1. A proxy bid for user A has been saved within the system. Example: User A bids $15.00. The current bid becomes $15.00 and the minimum next bid becomes $16.00 but the reserve price is not met.
- User B bids $50.00 after User A bids. The current bid becomes $31.00 and the minimum next bid becomes $32.00. The $30 proxy bid for user A has been removed and a proxy bid for user B has been entered into the system. NOTES: The software automatically applies the bids for each user and continues until one loses.
- User C then bids $55.50. The current bid becomes $51.00 and the minimum bid becomes $52.00. The proxy bid for user B is removed and a proxy bid of $55.50 for user C is entered into the system.
- User D then bids $60.00. The current bid becomes $56.50 and the minimum bid becomes $57.50. The proxy bid for user C is removed and a proxy bid of $60 for user D is entered into the system. NOTE: The software accepts the bids in the amount submitted and then applies the bid increment to that amount.
- All users are notified of this process as it is occuring so that they can re-submit a bid if they are outbid.
If the auction were to close immediately after User D's $60 proxy bid the bid history should look like:
User A $20.00
User A $30.00
User B $31.00
User B $50.00
User C $51.00
User C $55.50
User D $56.50 - winner
NOTES: The software also has the ability to extend auctions if a bid is placed within a certain time from auction closing. This is a feature that must be set to operate within the admin tool. This will prevent bid sniping.