What is Max Bidding?

Max bidding was popularized by eBay who introduced it to the masses with their online auction platform.  By placing a max bid, the bidder is essentially telling the auction platform to bid on their behalf up to a maximum amount.  This maximum amount is never reached unless another bidder sets a max at a level higher than the first bidders max bid.  I am sure it sounds confusing, so lets go through a few scenarios with Jack and Jill as our bidders.

We will present the logic as it currently works in Handbid.

The item in this case will be a round of golf for four at "The Links Golf Course".  The current bid is $50 and the bid increment is $5.   

  1. Jack places a proxy bid at $100.  The system records the max and places a bid as Jack at $55 (current bid plus bid increment)
  2. Jill comes along and bids $60 (minimum current bid).  She is immediately told she is outbid as the system places a bid as Jack at $65.
  3. Jill realizes that someone has a max bid on this item, so she decides to just put in her max value as a proxy bid of $120.  
  4. The system immediately sets the current bid at $105 with Jill as the current high bidder.  
  5. Jack gets a notification that he has been outbid.    

Wow, seems like a lot happened there quickly.  In fact it did.  If this were being done on bid sheets, it would resemble a number of back and forth bids between Jack and Jill (55-60-65-70-75-80-85-90-95-100-105) assuming that neither one of them jumped the bid up by more than the bid increment.  That process is not efficient and it also frustrates the bidders who need to camp out by the bid sheets to maintain their position. Instead, the max bid mechanism is much more efficient and beneficial to the auction and the bidders:

  • Bidders can set their max value and walk away, knowing that the system will bid on their behalf.  They can socialize, get a refreshment, or participate in other aspects of the event.
  • Bidders are pleased because they are able to purchase an item efficiently at an acceptable value
  • Note that Handbid DOES NOT process all of the intermediate bids.  There is no point.  Once a higher max bid is set, Handbid will set the current price of the item to the LESSER of the highest max bid or the 2nd highest max bid/bid + the minimum bid increment.
  • Revenue is maximized at the auction as max bidding insures that the item sells for the 2nd highest bid price + the bid increment (theoretically) 

Max bidding is integrated into Handbid and is a great feature for your bidders to use.  Auction managers should encourage bidders to place max bids that reflect their MAX bid amount for that item so that they are assured they will either win the item for an acceptable price or at least know they went as far as they were willing to go. 

Max bidding is also very handy for those who are not using a smartphone to bid.  They can place max bids on the iPads and be assured that they are in the race until the auction closes or until they are outbid.

 

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Comments

1 comment
  • So what happens if you are the winning bidder and then add a Proxy Bid?

    Nothing will happen to your winning bid. Handbid will record the proxy bid and also see that you are the winning bidder. So it will not increase your current bid. If someone comes in at a later time and outbids you, then Handbid will step in and bid on your behalf.

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