Reverse Auctions: Bid Evaluation

When doing a reverse auction, how do you handle internal or other costs to effect an accurate ranking?

Here are two hypothetical examples:

1. There are five companies who offer a solution. Some may host the data and software, while others may require you to buy and maintain the data and software on your company's servers. This creates a difference in internal costs to your company, and in some cases you either do not want to disclose that cost or cannot really have the bidder absorb or include that cost in their bid. If an externally hosted solution has an internal cost to you of $100k and the one implemented on your own servers will cost you $500k, how do you accomplish accounting for the $400k difference in the ranking?

2. You are doing an auction for used vans. You have the specifications you want, and one may meet all of the specifications, while some others may need some enhancements that a bidder may not be willing to do. You are willing to bring them up to spec after the fact, but you want to account for this difference in the bids. It may be adding a step bar and a governor that keeps the vehicle from traveling at excessive speeds. You know what the costs are for each specific item being bid. Your goal is to get the most participation, keeping it simple for bidders and having the control to ensure the additional work is done correctly. How do you reflect this in the rankings while the auction is open?



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