You may have heard of reverse auctions, which are offered by online sites such as Dubli, and have wondered how these sites actually make any money. Reverse auctions are like traditional auctions but instead of the price going up with each bid it goes down. It is clear how this would be beneficial to the consumer, but it may not be clear how a company could sustain this business model while remaining profitable. The fact is that thousands of people are taking advantage of this shopping opportunity and online auction sites are able to profit thanks to a unique sales structure.



When you enter a web site such as Dubli to utilize the reverse auction, you will see numerous different products that range from electronics to house wares to designer fashions. Each item for sale will have a start price as well as a hidden current price, and the only way to view the current price is to use a "credit" that can be purchased from the site for under a dollar. The value of the credit is deducted from the current price of the item each time someone views it, and the customer can decide whether that price is low enough to make a purchase or not.

When people use their credits at a site like Dubli they drive down the price of the items for sale each time, but they are still contributing to the profitability of this reverse auction model because they have to purchase credits to shop. The cost of each credit is so minimal that it doesn't really affect the shopper, but they add up over time so they make up for the low prices that these reverse auction sites charge for the products they offer. It is a win-win situation for buyers can sellers.

Reverse auctions continue to thrive because they offer the best quality and hottest selling genuine merchandise and the business model was designed to continue attracting new customers through word of mouth advertising.