Price calculations and bid implementation

Purple Wave’s bidding system is straightforward. Item prices are calculated based on direct bids, maximum bids and bidding increments.

Direct bids
A direct bid is a bid placed in the your bid field. So long as this bid meets or exceeds the next required bid, the price immediately becomes this amount.

Maximum bids
A maximum bid placed in the your maximum field is the highest amount a bidder is willing to pay for an item. The system will bid automatically for the bidder only the amount required to win the item so long as it is less than or equal to the maximum bid.

Bidding increments
The bidding increments are used to calculate the current amount and the next bid required. For example, the increment for prices between $250 and $1000 is $25. Bids that are less than the next required bid are not accepted.

Calculations
The currently winning bidder on any item is always the bidder who has placed the highest maximum bid or a direct bid that is greater than any other bid. The current price is always calculated as one bidding increment above the last highest bid from another bidder or a direct bid if it is higher than any other bid.

Ties
There are no ties in an auction, but when a bidder places a bid that is equal to a maximum bid that has already been placed by another bidder, the first bidder remains the currently winning bidder at a price that is equal to the maximum bid. In the event that either bidder places a higher maximum bid, the current price is again calculated as one increment above the next highest bid, causing the current amount to be raised by one increment.

Bidding histories
Purple Wave makes the complete bidding history available for every active item. In our pictured example above, we know that the item has received 15 bids. Clicking on the number of bids displays a page that contains the complete bidding history of the asset with the exception of the current winning bidder’s maximum bid which is never disclosed.

These bidding histories facilitate an open and transparent marketplace by allowing both bidders and sellers to view the number of active bidders, see when each bid was placed and understand what effect on the current price each bid had.

Posted on Monday, May 28, 2012 at 6:36 am and filed under Internet bidding, technology, website
Tagged as bidding engine, maximum bids, price calculations
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