Understanding Dutch Auctions

Dutch Auctions can be an excellent method of liquidating large quantities of identical items, but can be a little tricky. Insertion fees are based on the value of the items times the quantity of items available. In any case, the fees will not exceed $4.80, as this is Ebay’s maximum fee for items listed at over $500.00.

The important thing to remember with Dutch Auctions is that all bidders pay the same price – the lowest successful bid. Successful bids must have a total higher bid value than previous bids. For example a bid of $6 for 8 units ($48) is considered higher than a bid of $4 for 10 units ($40). As a further example consider this scenario with a listing of 10 items:

• Bidder A bid for 7 items @ $5.00 each = $35
• Bidder B bid for 4 items @ $6.00 each = $24

The lowest succesful bid is $5.00, and bidder A has the highest total bid value. The results would be:

• Bidder A wins all 7 items @ $5.00 each
• Bidder B wins 3 items at $5.00 each

Bidder A had the highest total bid value, and thus gets all items bid on. Bidder B gets the remaining 3 items. Both bidders will pay the lower of the successful bid prices. ($5.00) In the event of two bids at the same price, the earlier bid gets priority. It should also be noted that winning bidders have the right to refuse partial quantities.