3. How to calculate and set bid decrement?


Concept

In Reverse Auction, Bid Decrement is the MINIMUM difference between the supplier’s new bidding price and previous bidding price. This is their minimum movement and the supplier can always lower their bids by larger amounts if desired.


Bid Decrement Rules
  1.  Applied to Bidder’s Own Bid: Applies the Bid Decrement to the bidder’s own bid. 
  2.  Applied to Best Bid: Applies the Bid Decrement to the current lowest bid (Rank 1).

According to our best practice, the bid decrement is generally between 0.25% and 0.5% of the historical price or market price. For example, if the market price of item A is $1000, the bid decrement amount is between $1000  *0.25% and $1000 *0.5%, i.e $2.5 to $5. You can select a user-friendly value within this range.

How to set bid decrement?

Step 1: Access Add/Update Items, input the item information first and save. Generally, the buyer often sets this part according to the Reference/Historic Price in the RFX. Here you need to input the reference/historic price first. Then select detail.





Step 2: Move to Bid Constraints. Set a Decrement% and click the calculator icon at the right side. The system will calculate out the actual amount.



*Note: Of course you can directly input the amount in the field of Bid Decrement, which is workable even if you do not input the reference/historic price. 



Step 3: Select the Bid Decrement Policy. 

*Note: If a supplier violates the policy, his bidding prices will be rejected by the system.




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