Changing the dynamics of fundraisers
In a classic auction setting, there are rounds of bidding and the highest bidder gets the prize. The last bid is the amount paid, and no one else is charged anything.
This creates an interesting and outdated dynamic in which all participants are able to express their desire for the item in monetary terms. In these auctions, the price paid will represent the highest utility among the bidders because “the market has spoken.” The classic auction isn’t quite a zero sum game, but it’s close.
The final price of an item in an auction is determined by the bidding behavior of participants. If there is intense competition among bidders, the final price may exceed the item’s intrinsic value, resulting in a surplus for the seller.
And on the opposite hand, if bidding is less competitive, the final price may be lower than the item’s overall value, giving the bidder one hell of a discount and hurting the seller in the process.
The positive auction model
That’s where the positive auction model comes in.
The idea is that every bid is a donation with an introduced new concept called “free bids” which are predetermined by qualities you select and define.
Bidding begins at $10 and increments by $10/per bid.
Bidders are not permitted to skip a step.
Formula for the Positive Auction Model is:
S=(n/2)(2a+(n−1)d)S is the final sum. a is the first number and d is the increment.
S = total sum raised
n = number of bids
a = starting bid amount
d = bid increment
The classic auction model requires a healthy dose of arrogance, ego, status, and alcohol to be efficient in its principle.
“When bidders have an understanding of the nature of the bidders in the room as well as their options, bidding is skewed. For things like spectrum, this can cost the seller billions of dollars.
”The positive auction model transforms the dynamics of a charity gala auction by two distinct ways:
1. Every bid is a donation
2. The concept of “free bids” are introduced
"By incorporating two key innovations — treating every bid as a donation and introducing free bids — the positive auction model aims to increase total funds raised for charitable causes while maintaining an engaging and competitive bidding environment."
You decide how you want to implement the predetermined qualities of what a “free bid” looks like.
Seth Godin uses the example, a free bid could be rewarded to anyone who recruits someone who bids in an auction. The fun part is figuring this out. When used, the free bid helps the auction move forward even if they don’t have money (because they have a free bid instead).
Even if a free bidder wins the auction, they haven’t decreased the overall amount raised. They actually increased it. It’s a win-win-win scenario.
“The organizer of the auction can offer free bids to bidders at no cost to the seller. In fact, free bids can actually increase the amount raised."
You (the charity) win because you’re still raising money.
They (the bidder) win because they’re still able to bid without money.
And we (the event industry) wins because this isn’t boring or egotistical.
If there is one thing event professionals love it’s telling other event professionals that they went to a networking event or charity gala and donated towards the fundraiser — without the idea of “losing the bid” so transparent they feel inclined to talk about the event experience.
In theory, a positive auction model creates unstable footing for everyone involved and gives them something new to experience while increasing the amount raised by the fundraiser/charity.
Why this model>?
The positive auction model demonstrates the exponential growth potential of total funds raised increasing significantly as the number of bids grows.
GOODBIDS is the tool providing this, and is explained in detail here.
It’s like that one really smart guy said, “the most powerful force in the Universe is compound interest.”
– Albert Einstein
It also touches on the pareto principle (80/20 rule).
If you apply the principle here, it might mean that a significant portion of your donations will come from either a small group of people or small group of high-value items and the rest are fillers.
Changing the dynamics of fundraisers
In a classic auction setting, there are rounds of bidding and the highest bidder gets the prize. The last bid is the amount paid, and no one else is charged anything.
This creates an interesting and outdated dynamic in which all participants are able to express their desire for the item in monetary terms. In these auctions, the price paid will represent the highest utility among the bidders because “the market has spoken.” The classic auction isn’t quite a zero sum game, but it’s close.
The final price of an item in an auction is determined by the bidding behavior of participants. If there is intense competition among bidders, the final price may exceed the item’s intrinsic value, resulting in a surplus for the seller.
And on the opposite hand, if bidding is less competitive, the final price may be lower than the item’s overall value, giving the bidder one hell of a discount and hurting the seller in the process.