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Combination bidding increases interest in groups of related lots

If you’ve been reading our auction glossary, you may have noticed a method of auctioning termed “combination bidding”. In combinatorial auctions, a collection of items is up for auction both as a package (all the items that make up the collection together) and individually (each individual item making up the collection is a separate lot).

If the package attracts a higher price than all of the individual lots together then the highest bidder for the package wins the collection, and the highest bidders for the individual lots lose.

However, if the highest bid for the package is lower than the highest bids for all the individual lots added together then the highest bidders for the individual lots win the item they bid for, and the highest bidder for the package loses.

Confused? Here’s a simple diagram of how it works:

When carried out online all the lots in a combinatorial auction are auctioned simultaneously. In a live auction the individual lots are auctioned first, followed by the package. The opening bid for the package is often the price achieved for all the individual lots together.

We’ve already implemented this form of bidding to great success for some of our clients. It’s an innovative and interesting style of auction, which has plenty of useful advantages when it comes to selling groups of related items:

  • It increases interest, as bidders who are not interested in the package as a whole may well be interested in bidding for one of the components of the package
  • Items are more likely to sell for their full market value
  • The increases in the ensemble price of the individual lots spurs bidders for the package to bid higher amounts than would be the case in a conventional auction
  • As prices escalate, bidders for an individual lot may decide it is more worthwhile to bid for the package – this may raise the price even further

You can read more about the different formats of auction that exist in our glossary.

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