WebRing's Blog -  - 
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Fri, Nov 28th - 9:51AM
Minimum Bids Are Negotiation Starters
The question was raised: "Why not make the minimum bid the same as the reserve?"
Sure seems like that's the way it should work, but it's not. In terms of auctions, transparency is not beneficial to a seller. Highest bid amounts act more like a gauge for the seller. Here are some examples:
- 20 people bid on an item, but the reserve is never met. The seller can look at the highest bid and determine whether or not they can get more if they extend out the auction period.
- The highest bid is just shy of the reserve. The seller can choose to short-sell if the bid comes pretty close to the reserve.
- Only 1 person bids on an item that the seller really wants to move. Based on the sole bidder's bid, the seller can begin negotiations for a price that works for both the seller and the bidder.
Of course, these are all just examples of possible scenarios, but you can see how the "minimum" bid helps a seller decide how they should proceed when they don't get the minimum asking amount.
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