A New Type of Auction
By Steve Gillman
The idea I have for a new type of auction has probably been
thought of before, although I have not heard of anything like
it. It is probably a bad idea that will not work. But then this
page is part of the "money making ideas" section, and
not part of the "guaranteed ways to make money section"
(okay I haven't added that section to the site yet). It
will perhaps trigger some better ideas, and as a prelude I will
be looking at some types of auctions that you may not be familiar
The most typical auction is one where the auctioneer babbles
on in some stylized way while bidders either call out their bids
or raise paddles indicating what they're willing to pay, with
the item going to whoever makes the highest bid. This seems like
a decent way to run an auction, except for the nonsense gibberish
coming from the auctioneer. Ah, yes, I will get an email or two
for my opinion. But let me explain...
I choose not to participate in auctions where I don't know
what is going on because the auctioneer feels the need to be
"traditional" and talk too fast to be understood. I
know that others feel the same way (many have told me so). I
understand that this style is entertaining and may increase excitement,
but I have a simple question: What if the person who would have
paid the most for an item is not bidding because, like myself,
he or she prefers to actually know what's happening? Doesn't
that suggest that sometimes things are selling for less because
potential bidders are chased away by this ridiculous style? Show
me one study which demonstrates that speaking clearly and more
slowly brings in lower prices and I'll withdraw my complaint
(but I will still skip the auctions with the fast-talkers). Now
there's an idea for a new type of auction--one where all is clear.
Have you seen an auction where the price starts really high
and drops? I have, and I'll explain it as well as I can remember.
They apparently do this for some flower auctions in Holland (I
saw it in a documentary). This is for large wholesale batches
of flowers, and there is a "clock" of sorts, with prices
around the outside edge. The one hand on the device starts at
a price that nobody is willing to pay, and then clicks around
one step at a time, each time landing on a lower price.
The buyers watch, and when someone sees a price that makes
sense for him, he stops the whole process and he has bought that
bunch of flowers. Not as exciting as the usual type of auction,
but it makes sense if you think about it for a moment. You only
get one chance to buy those flowers, so you better pay as much
as you are willing to pay or you will go home with nothing. It
may even generate higher bids than a typical auction would. Consider
that in a normal auction, if an item is worth $15,000 to you
but the bidding only goes to $11,000, that's what you pay. But
in this type, you better pay the $15,000 when the clock hand
gets there, or you may watch someone else buy that item and have
no second chance.
Sealed bids are another way to auction things, and they share
one thing in common with the "countdown clock" method.
They motivate you to bid the most you are willing to pay, because
you don't get a second chance. You know that if you really want
a car at $4,000, for example, you better not bid $3,000, because
it might then go for $3,100 and you don't get to later say, "wait.
I'll pay $3,200!"
My New Type of Auction
Okay, here it is, and the more I think about it, the more
it seem appropriate to auctioning something off to raise money
for a charity. In any other context the bidders might get too
The basic idea is that each bid is kept by the seller. So
if, for example, our charity is auctioning off a new television
worth $600, I might start out by bidding a dollar. To do so I
actually pay them that dollar, and they keep it no matter what.
Someone else can bid $10 and they keep that--and since my bid
is beat it is lost forever. This process continues with the highest
(last) bidder getting the item. Consider the psychology involved.
You know you are almost certain to lose that $1 or $20 bid, but
it isn't much to risk to win a new TV. Then, suppose the bidding
has gone something like this $1, $10, $13, $15, $16, $17, $20,
$21, $23, $25, $26, $27, $29, $31, $32, $33, $34, $35, $36 $37,
$39, $40, $41, $42, $43. The charity has already collected $686
that they get to keep. But you may have put in three of those
bids, and now you don't want to spend that money without getting
something for it, so you bid yet again.
One major problem is that bidders will soon figure out that
it is best to wait and when it looks like everyone is done, make
one bid to win the auction. We could solve this by requiring
everyone to bid higher or drop out , and then go to the next
round and continue in this way. One interesting aspect of this
sytem is that in the end the TV might be won for a bid of $60,
but the winner might have actually spent $400 to get there.
Here's another new type of auction: pay-per-bid. Bidders pay
a set fee each time they enter a bid. This raises revenue along
the way without being as obnoxious as the auction described above.
Paying a dollar or two for each bid is not a big deal, for example,
if you are bidding on cars. It also make people less likely to
"up the ante" by a dollar or two at a time. After all,
you don't get the bid fees back, do why bid a dollar more than
the last guy if you suspect the price is going higher and you
are willing to go much higher? Because of this effect the final
prices might go higher than they otherwise would. After numerous
bids and fees, for example, with the current bid at $2,350 for
a used car, you might jump to $2,600 to avoid more of those fees--not
knowing that you could have won the bidding at $2,400.
How Much Can You Make?
Not a relevant question, since this is an unproven idea, but
an auctioneer normally takes a cut of each sale or gets a fee
for auctioning each item. These arrangements might work for this
system as well.
Ways to Make More | Related Opportunities
Getting publicity for such a radical idea might be easy enough,
and that could get you more bidders.
Qualifications / Requirements
Okay, maybe you have to be a little bit crazy.
Find a better idea than this one.
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