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What Is A Bid Increment (Everything You Need To Know)

Author: Adie M.

Starting a bidding war is about much more than simply putting an item on auction and hoping you get a fair price for it. If you’re running an auction, whether it is silent, virtual, or live, you’ll want to make sure that you are doing everything you can to create traction on the item and up the final bid!

Now, what are some of the factors that affect engagement and revenue during your auctions? Well, price is everything. So, two of the main things you need to think about are: starting prices and bid increments. 

In this post, we’ll tell you all you need to know about fixed bid increments and what makes them so important - even more important, arguably, than starting prices. We’ll also give you some tips and tricks on how to set them in a way that drives engagement and revenue way up!

what is a bid increment - calculator

What Are Bid Increments?

Simply put, a bid increment is the set amount that can be added to the starting price or, later, the current bid. For example, if the starting price for an item is $100, and the bid increment is $5, you can only raise the bid by either $5 or a multiple of $5. The winning bid, then, will always be $100 plus a multiple of $5. 

We’re all used to the way that live auctions use their auctioneers to keep raising the bid. When an auctioneer asks the crowd who is willing to raise the bid for an item, they often suggest what the bidder should raise. Most of the time, these are multiples of the same number. 

So, how do bid increments work when it comes to mobile bidding or online bidding? It’s much the same, except instead of an auctioneer, there is a computer keeping track of bid increments and the current bid. If you’ve ever placed a bid for something online, you’ll know that there is often a minimum amount that you can add to the current bid. This minimum amount is the bid increment. 

How Should You Set Bid Increments?

When setting your bid increments, you need to think about how you can make sure that engagement on the item is high. At the end of the day, you want to make as much money as possible on it. Keep reading to find out how best to set your bid increments! 

First, determine a fair starting price

Determining a fair starting price is extremely important to the overall functioning and success of your auction. If your starting price is too high, you may find that fewer people are willing to raise the bid. 

Make sure that your starting price is low but fair. This can increase engagement and competition and actually make you more money on your items in the long run. There’s no point in setting a good bid increment if bidding on the item isn’t attractive to bidders in the first place. So, always remember to determine a fair starting price.

Then, set a low bid increment

Studies have shown that bid increments actually impact the overall performance of an auction and its revenue - often even more so than the starting price does. So, what kind of increments should you set? Our advice, especially online, is to keep them low! 

A low increment will always generate more engagement. People are more likely to place a low bid more than once than they are to place one very high bid. 

You can either calculate your bid increment by setting it as 10% of the fair market value, or you can set an amount you feel is reasonable.

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Now, start your bidding war!

If someone has a specific number they are willing to bid, and the first increased bid exceeds that number, they may be discouraged from bidding at all. Keeping the increment low means that fewer people are priced out. So, more bidders will engage and compete against each other for the item. 

As a result, you create more traction on the item, and a bidding war begins! Competition will always increase engagement. People love to feel like they are winning! And, being the person to have placed the highest current bid is no exception. 

How Can You Optimize This For Mobile Bidding?

Mobile bidding is very different from live bidding. Virtual auctions can actually be way more lucrative and successful than traditional auctions. This is because of the ease that comes with being able to bid from wherever you are. Mobile bidding means more people can connect to the auction, resulting in more bids, engagement, and revenue. 

What’s more, time restraints aren’t as strict. If you are running an online auction, try to keep them open for as long as possible. This allows more people to bid or up their bids. With low starting prices and low bid increments, you’ll see people using the time they are given to really engage and compete. At the end of the day, this will always mean increased revenue for your nonprofit!

Get Started With BiddingOwl!

If the process of starting an online auction seems daunting - don’t worry! BiddingOwl has got you covered. 

BiddingOwl is an online platform that provides its users with free auction management software for nonprofit and charity organizations. Not only this, but we also offer free tools, education, support, and more! 

For nonprofit and charity organizations, this is a great way to make money for your cause, without the worry of extra and unnecessary overhead costs. We’ll only ask for 5% of your highest bids if you’re running an online auction fundraiser. 

Just take a look at our reviews and you’ll see how BiddingOwl can support you through the entire process.


Final Thoughts On Bid Increments

Keep all of our tips in mind when setting up the bid increments for your online auction. So, keep starting prices and bid increments both low and fair. Focus on increasing engagement and competition. Lastly, always take advantage of the benefits of mobile bidding! 

You’ll see the advantages of setting good, fair bid increments in no time.