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Reverse auctions are often confused with the likes of lowest unique bid auctions and even standard auctions. They are actually a completely different kind of auction format. Each website that offers this method of auction will operate in a slightly different fashion. The reality is that the end result is the same. Generally, the buyer is looking to pay the lowest price possible and that means when an irresistible price arrives, they are going to take it. Reverse auctions (even though many sites might not classify them as auctions) are becoming increasingly popular. You'll see many service websites where the buyer offers the seller an opportunity, rather than the other way round. Instead of approaching sellers and offering a price, they offer a proposition or contract instead. The sellers or service providers will then bid on this contract in order to try and gain new business. Typically, the sellers will be able to see what other sellers are offering, which is why a lot of the time, the prices tend to decrease rather than increase, as one continues to undercut the other. What this has managed to achieve is a reduction in cost for many businesses. Before, they had little choice but to agree on the price that the seller gave them. Of course, there was often little room for negotiation around the price. Now the buyer has a firm set of offers and the seller needs to choose whether to stick to their original pricing, or reduce the pricing for this particular project in order to get the work or make the sale. Many people actually make a living from working on these sites. For instance, tradesmen such as plumbers and carpenters, not to mention online marketing freelancers are big fans of this particular service. Don't think that all other variations of auctions are necessarily reverse auctions. Before getting involved with any type of auction, you should always consider the pros and cons of entering into that deal. Of course, you'll only know the pros and cons of that deal when you understand the deal itself, but also the site that you are using as a platform. A lot of people waste lots of time and money on reverse auctions, because they think it is something that it is not. The best place to go to get an overview is definitely the frequently asked questions or how it works section of any website. This will answer the most common questions relating to what is and what is not on offer. If you are looking to get items for an extremely low price, such as an iPod, then you might be better off looking at something like unique bid auctions. This is where the lowest unique bid wins the item and huge discounts and more are easily achieved. For instance, if you bid a few pence, then you will not automatically win. If someone else bids that amount, then the next highest unique bid is the current leader. Make sure you understand the strategy in full before starting as it will save you both a lot of time and a lot of money at the same time. Reverse auctions are one of several different auction formats which can be easily found online along with other models such as the popular pay per bid auctions.
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