What is Bidding?
Bidding is competitively offering a price that the bidder or the person offering a bid is willing to pay for a commodity this commodity can be anything, cars, bikes, properties, etc. The price offered is called a bid, the person offering the price is called the bidder and the entire phenomenon is known as bidding. In fact, bidding is used by various economies, various industries as bidding define demand and hence the value of a particular commodity. It is one of the most normal ways of the formative price of a commodity in a free market.
Many more similar concepts have been used recently, for example, social bidding and reverse auction, etc.
What is a Bid?
The highest price a marketer is will to pay for a commodity at a given time for given security. Or the product that is in an auction is offered a specific amount in exchange for that product is also called a bid. In some cases, a bid is also a term that refers to the maximum a company is willing to pay to take over a specific target.
In business, bidding is a way of competing with other businesses for a contract in order to do win the contract of a project. The companies that hire the contractors to compare the proposals of different businesses and choose the best bid bases the business offered to the company. Remember only a company that is interested in the lowest price for a product or a service will select this process of choosing a contractor. A Bid is a price or a fee that is quoted by a contractor or a vendor to give the required product or service that is required by the company. To be precise and upfront, bidding is pure competition.
What is Auction?
Auction, what is this term? it sounds quite similar to the word ‘Bidding’? The difference here is that auction is a process of buying and selling of goods and services by submitting them up for a bid, and finally the product or the service is then sold for the highest bid. The auctioneer announces prices and the bidder calls out the bids. Here the auctioneer calls for the highest prices for the commodity, he is looking for the highest bid or the highest price for his product or service.
You can also say that auction is a different type of sales where the price of a commodity is neither pre decided nor does it arrive by negotiation; however the price is set by competitive and open bidding process.
Types of Auction
There are two types of auctions:
1. Forward Auction: This type of auction is where many types of buyers bid for single sellers products and services.
2. Reverse Auction: In this type of auction many types of seller bid for a single buyers order. This process of the auction is said to be complete when the buyer and the seller of the product accept the bid. Since the internet and the media have advanced bidding and auction has become an open process as every this is auctioned for from books to ships and of course services from air tickets to legal advice can be bided by anyone from anywhere and anytime from different websites.
Many auctioneers choose auction over sale for a number of reasons. Because auction is a good marketing plan, auction brings people looking for items being sold, and the more people you have at the auction the better chances you have of earning the highest bid for your products and services. The motive of an auction is getting a better price for your goods and services that you want to sell. Here you need to have two or more people competing for a single product or service this pulls up the price or the value of the commodity. This serves you motive of getting the highest price for your sales.
Head to Head Comparison between Bidding vs Auction (Infographics)
Below are the top comparisons between Bidding vs Auction.
Mostly in auctions requires two people to handle the bid the 1st person gets a bidder number and the 2nd person identifies the items before bidding. The bid for a commodity usually starts at a low price and the commodities price is raised by the auctioneer every time someone bids until the auctioneer receives more bids on that particular commodity. When the auctioneer receives the highest bid the commodity the bidding process is on. Once the highest is received the commodity is sold to the person with the highest bid.
Auction is going against the most common practice of printing an MRP of a commodity in order to sell it in the market, it is an idea of creating enthusiasm amongst people regarding a product and letting them become a part of an open auction where they can place a bid in order to acquire or own a product. By now we know that placing a bid is known as bidding and the person who wins the bid is the owner of the product or the service. A small percentage of the bid is also given to the auctioneers.
If you go back in time you will know that the word auction comes from the Latin word ‘Augeo’ which means I increase or an argument. Long long ago in time in ancient India in the era of the kings in our tradition we had Swayamwars where our beautiful princesses choose their life partners from amongst a number of princess that gathered for the ceremony. This was a form of auction where the princess displayed their abilities and the princesses would choose the one they liked the most. So after analyzing the qualities and abilities of the princess the princesses garlanded them as her life partner. This is where auction came into being where the weddings of the princesses were auctioned and the prince the princess liked the most, the prince here is the highest bidder of the princess. Similarly people bided for life time labors. In Rome auctioning for someone who could not repay debts was an extremely common practice. During the 17th century in the UK an auction started with lighting a candle and ended when the candle went out.
Now I hope the confusion is sorted and the difference between auction and bidding is clear. It is normal to be in a dilemma because auction has a number of processes and types and bidding sounds like one of its types. Let get clarity on this topic by focusing on the differences of the two.
Key Differences between Bidding vs Auction
Let’s discuss some of the major key differences between Bidding vs Auction:
1. Difference in Meaning
Bidding: Bidding is competitive offer of a price for a product or a service in order to own the same. It is the willingness the buyer shows in buying the commodity for a price by offering a bid or a price to buy the same. It is used in buying anything from books to ships and from tickets to advices. Bidding determines the value and in return the demand of the product and service offered by an auctioneer and also the determination of the bidder to buy the commodity.
Auction: Whereas auction is a process where buying and selling of goods is up for a bid. Usually an auction is held in order to get the best value of the goods and services to be sold. Many times marketers put up their goods and services up for an auction in order to get the best value for their sales. The reason for putting up commodities for an auction is to get the highest price.
In the language of marketing auction is also a sale where the price of a commodity is neither pre decided nor is it set after negotiation. The price is with the help of a competitive and open bidding.
2. Traditional Difference
Bidding: Traditionally bidding is placing a bid or a value of a product or a service up for a sale. Or you can also say that bidding is nothing but an act or a process of placing bids in order to show value or demand of asset product or a service.
Auction: Auction is placing the goods and services for a bid where it allows the person who places the highest bid get to own the goods and services this has been an ancient tradition and has been practiced since ages.
3. Successive Difference
Bidding: A bid is complete by the bidder when he or she accomplishes his/ her desire of acquiring the product and service. Bidding goal can also be accomplished when the bidder is successful in winning a contract or a bid of a job put for auction by an organization.
Auction: The motive for an auction is to call for the highest price for a good or a service. It is said to be successful when the auctioneer receives the highest bid to sell his goods and services to the bidder. So receiving the highest bid for a product or a service makes the auction successful.
4. Motive Difference
Bidding: The motive of bidding is to create competition. In simple business the contract or the object or the service can be handed over to the buyer of the property, bidding creates competition in order to increase the value and the demand of the given object be it a product or a service. The motive here is to create competition amongst the buyers in order to increase the demand of the particular commodity.
Auction: The motive of auction is to change the marketing plan of a commodity in order to increase its value. Auction is a different and a more demand creating mode of marketing. It helps in understanding the value of a particular commodity. Auction increased the demand of a commodity. The motive here is to create a different marketing plan for the commodity. Commodity can be anything a product or a service.
5. Value Difference
Bidding: Mostly a bid is made to achieve the highest value for a commodity be it a product or a service. However some bids are made for business contracts. In such bids the organizations create an auction for contractors where the lowest price bid with the correct quotations and appropriate work is selected. However, here the bidding is to get the best work done in the lowest rate.
Auction: An auction is arranged by an auctioneer to get the highest bids for his goods and services that he has put up for sale in an auction. Here the motive is to receive the highest value for the product and the service offered. A number of time the companies or organizations also organize auctions in order to determine the value of a commodity that needs to be sold in the market, in order to know its right value and also its demand.
It is all about getting the right price for the product and the services offered by the companies or individuals. Be it a forwards bid or a reverse bid the motive is to determine the real value and demand of a product and service offered by the auctioneer.
Some bids offer products and services for sale to highest bidder or to the person who pays the highest price for the goods and services sold. Where as in a few auctions that is held for selling contracts to vendors by organizations the organizations look for the best job offered at the lowest price in order to hand the contract over to the concerned vendor.
Bidding is offering a competitive price for a product or a service in order to get or to own the product or the service offered. It can also be reverse in order to gain the product or the service the organizations can and might chose the lowest bid offered. Similarly auction invites competitive bidding in order to understand and sell a product and a service offered at a competitive and a high value and price. Auction can also be in order to receive a competitive low price for a product or a service offered by a vendor to an organization in order to win the bid and so as to get to contract.
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