The Basics Of A Dutch Auction

The world is going mad for saving money and it is easy to see why. The economic climate is certainly not favouring consumers spending lots of cash. People are losing jobs and the cost of living is rising. Auction sites have been an important part of people saving plenty of cash over the last few years, but most people are extremely confused over how they really work.

What Dutch auctions are not!
Dutch auctions are not simply auctions that are held in the Netherlands. This is a common myth and it is one that is completely not true!

What Dutch auctions are!
Dutch auctions are auctions where the price starts high and finishes low. It's a fairly unique concept and a concept that many people really struggle to comprehend. The reality is that the concept is clever while remaining simple. What people need to do is be the first person to bid. The auctioneer will start the auction at a high price and continue to reduce the price until someone decides to bid. As soon as a person bids, the auction is over and there is a winner. An example would be a car worth ?20,000, being started at ?20,000. Those looking for a bargain are not going to pay market value, so they will wait for a price reduction. The price reduces to ?19,000 and gets no bids. The auctioneer reduces the price to ?17,000, ?16,000 and still no bids. Eventually when the auctioneer reduces the price to ?15,000, there is a bid. This means that an individual has won a car for ?15,000 that has a total value of ?20,000 and saved ?5,000. Obviously the other people that planned to bid expected to get the car for a lower price, and their greed eventually meant that they missed out!

The strategy.
Dutch auctions are extremely hard to win. It can be tempting to bid early for some and end up paying much more than they needed to. On the other hand, many people get greedy and think that they can win the item for a lot less than they originally thought. This could mean that they end up missing out on what would of already been a great deal. There is no second chance with these auctions, once a bid is placed, the item will be sold.

Why use Dutch auctions.
Traditional style auctions tend to sell products at around market value. Everyone knows what they are worth and therefore, they are willing to pay anything as long as it is less than this price. The reality is that in dutch auctions, the price that the item is worth is only what the first individual is willing to pay. Everyone that hopes to bid hopes they will be the first and therefore, there is no real value to products until after a bid has been placed.

Conclusion.
In a time where finances are tight, people look at ways to save money. Dutch auctions are a unique and great way to save plenty of cash, but it is easy to miss out on a good deal by not having the right strategy in place.

BidGrid are a specific kind of online penny auction where the lowest unique bid wins every auction. See how it works.

Source: http://articles.submityourarticle.com/the-basics-of-a-dutch-auction-297203

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