Thread: Telebid
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Unread 14 Jan 2008, 14:12   #15
CjC
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Re: Telebid

This made some sense to me, I like the example:

Quote:
As I write this, Telebid has an auction running for an Apple MacBook. A quick Froogle search indicates a 'normal' price for that particular model of £822. On Telebid the bidding is currently at £222.46 and the bid increment is 7p: each time a user bids, the item price increases by 7p.

A quick bit of maths tells us it took 3,178 bids to get the price up to £222.46. Each one of those bids cost the bidder 50p to make. Are we starting to get the picture here? That's £1,589 of revenue Telebid has made from the auction so far, without actually selling anything.

For the sake of argument, let's say the auction ended at that price of £222.46. £1,589 + £222.46 = £1,811.46. So Telebid has made almost £1,000 of revenue in excess of the revenue it would have made if it had sold the MacBook in the normal way.

It is most interesting to consider the actual costs to the buyer: remember that bids have no value when it comes to actually buying the item. The money that the winning bidder spent on their bids has only permitted them to buy the item at the final price.

If we oversimplify this example and say that the auction has been a bidding war between seven individuals, each making an equal proportion of the total bids (454 bids per person), then the winning bidder will have spent £227 on bids to win. Once they have won, they can buy their MacBook for £222.46. So their total costs are £449.46. Still a hefty saving on the purchase price.

But spare a thought for the other six poor saps, who spent £227 on bids and walked away with nothing at all.

Don't spare any thoughts at all for Telebid, who are laughing all the way to the ****ing bank.
Hmm, think I'll personally give this one a miss...
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