I must admit when I first heard the term Dutch auction I giggled like a 4 year old due to the pricing model sounding very close to a flatulence based stunt you pull on a girlfriend when you’re feeling mean. However, when all the giggles were out, the more I learned about the pricing model the more impressed I became as it has every quality needed to solve qualms both buyers and sellers have on larger auction sites. The Dutch auction’s history has an extensive one dating back to the Dutch tulip traders who traded the flower that was at one time as valuable as gold. What makes this auction format revolutionary is the way in which the price literally falls (hence pricefalls.com) until it reaches the top bidders price, thus insuring the maximum profit from whoever wants the item the most.
That being said, this form of auction is prevalent in our daily life and I was treated to a first-hand example at the very first tradeshow I went to this week. As I arrived at the IWJG or International Watch and Jewelers Guild tradeshow I was immediately shown the intensity of the event as the membership fees were explained to me. $10,000 to get in the door without a membership, memberships ranging from $10,000 to $50,000 dependent on the time in which you wanted to enter the trade room floor, the earlier the more expensive. I was slightly uncomfortable for the first time in a few years (the last time being woken up after surgery and being told I was telling the nurse how hot she was as she was wheeling me to the operating room, under anesthesia of course) and I needed to step back and take a serious, non-time wasting approach to my pitch as the vendor next to me counted stacks and STACKS of $100 bills.
I was at the trade show with my fellow intern Andrew, the CEO of the company, Elliot, and a former intern now full time employee, Jake. Jake was a very skilled speaker at these events and for a while I shadowed him, taking notes and trying not to look like I was uncomfortable. It then happened right in front of me. A buyer was looking at a watch priced at $16,000 and asked to see it. The vendor took it out handed it to him and proceeded to tell him about the watch. The Buyer looked up and responded, “I am beginning to like the watch but the price is a tad high for my liking.” The vendor in an attempt to make a sale responded, “I can drop the price to $15,000 for you.” “See that is still somewhat high compared to what he (pointing to a table) offered.” The vendor following his gesture immediately responded, “Well $13,000 is the lowest I can go.” The buyer thought for a moment, consulted his notes and responded yes.
There it was, the Dutch auction model happening in real life without those in the transaction even being aware. It was then when I realized just how easy this pricing model would be able to sell. All I needed to do was relate my pitch to real life. I currently have 4 client possibilities and rising and my pitch is drastically learning and changing daily.
Until next time buyers, sellers, and friends,
Josh ‘the intern’ Weaver