Advice to Bidders in Open Descending-Price Fee-Per-Bid Auctions

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Open descending-price fee-per-bid auctions, also known as Kyrano auctions, have characteristics not found in other types of auctions popular on the Internet. They require enrollment for a fee before bidding starts, bidders are competing for discounts on the items they wish to buy, the product price and discount are known to all bidders at all times, bidding starts at a discount from the listed product price and the discount increases with each bid. Once bidding starts new bidders are not admitted. Enrolling and bidding is done with bidding tokens purchased form the auctioneer. The auctioneer provides the service but does not sell any products. Winning bidders buy the products from any merchant of their choice applying the discount they won in the auction.

It is important for participants to understand how these auctions work and develop bidding strategies specific to these auctions. Strategies that work in other types of auctions may not be effective. To get the most benefit from these auctions, consider the following advice:

1. Enroll in an auction for a product only if you plan to buy the product, whether or not you win the auction. If you don’t need the product, you are better off not bidding on it.

2. Enroll early before the minimum number of bidders is reached to earn double reward points. Points can be exchanged for bidding tokens. If the auction is canceled because there are not enough bidders, your enrollment tokens will be refunded. Enrolling early also ensures that you will get in before enrollment is closed, as the number of bidders may be limited to a specified maximum.

3. Decide ahead of time how much you are willing to spend for bidding. A good goal is to spend no more than 5 to 20 percent of the cost of the items on which you bid. You may decide to spend no more than $15 on a $300 item. If you don’t win the auction and buy the item, your total cost is $315. On the other hand, you may not want to spend $150 bidding on a $3,000 item, but you may be willing to bear a total cost of $3,060 if you don’t win the auction. The extra $60 is the amount of risk you are willing to take to earn a possible discount of perhaps $2,000 or more.

4. Estimate how many bids you can make. Divide the amount you are willing to spend by twice the initial cost of bidding. For example, you decide to spend $18 bidding and the initial bid is eight tokens, or 80 cents. Divide $18 by $1.60 and you see that you can bid about 11 times.

The initial cost of bidding is disclosed in the auction enrollment period. As bidding progresses and there is no winner, the cost of bidding will increase. By the end of the auction the cost of bidding may be about triple the initial bid cost. The product price may also decline more slowly than in the beginning. This is necessary to eliminate some bidders and eventually for a winner to emerge.

5. Make sure you have enough bidding tokens so that you don’t run out in the middle of an auction. Tokens you buy at face value are refundable so having an extra supply in your account is a good idea. You can always get your money back for tokens you don’t use.

6. Bid early but not too often. Free bids are available in the early bidding and you may win a free bid. Early bids also cost less. Don’t be too anxious to bid frequently in the middle of the auction. Let other bidders build up the discount. If you miss and the auction ends, you will not have lost much and you can enroll in the same auction again.

7. Don’t wait until the last two or three seconds on the timer to bid. If your bid is late because of a slow connection or other delay, it may not register before the timer runs to zero and the auction ends.

8. Observe the bidding to see who bids often and who bids rarely, to get an idea of your competition.

9. Until you become proficient with your strategy, stay with auctions in the lower price ranges, i.e. below $1,000. Auctions for high-priced items such as expensive automobiles, homes, and large mortgages require larger investments and are intended for serious buyers. Learn before you dive in.

10. Until you become a proficient bidder and develop your own strategy, bid on auctions designated as Refundable. If you don’t win the auction, the bidding tokens you used for which you paid full face value are refunded with tokens that you can use in other auctions.

You should not participate in auctions for anything you don’t need. But bidding on a bundle of bidding tokens is always a good idea. If you win, it’s like buying money at a discount and using it at full face value for bidding in auctions for products you plan to buy anyway. And if you don’t win, the bidding tokens you used are returned to you for use in another auction.

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