The term bid can be defined from a seller perspective or a buyers perspective. From a sellers point of view, a bid is the price quoted by the buyer for his or her item on sale. If the seller appreciates the price then he can close the auction and complete the sale. From a buyers point of view, it is the price he or she is willing to pay for a particular item on sale or auction. Hence, the buyer can choose whether to go above the asking rate or stick with his initial offer.

Quite often an auction is won by the highest bidder. This is often referred to as an English auction. On the other hand, website based auctions are played in the form of a penny auction where the last bidder wins regardless of the price. Moreover, price per bid is fixed most of the time and the player only needs to come in as the last bidder to win. Such a bid does not have any influence on the final price as sellers make money from the total number of bids placed.

Both the systems have their own advantages and disadvantages. Sellers generally opt to place items on penny auctions that have a low value while preferring to go for English auction on items that are expensive or in great demand but low in supply.