Pricing: Competitive Bidding

In a B2B market, competitive bidding is a process where multiple vendors submit bids to provide goods or services.

The buyer then selects the best offer based on factors such as price and quality.

Closed bidding involves suppliers submitting sealed bids unaware of other's offers.

The buyer usually gives the contract to the lowest bidder, provided they meet all specified criteria, including quality and delivery time.

This process can also be conducted online, with only the buyer and each supplier seeing their bid details.

In open bidding, suppliers can see competitor's offers, encouraging direct competition.

Bids can be submitted informally, online or offline, focusing on lowering prices.

Open bidding, especially online, can harm buyer-supplier relationships by revealing pricing information and prioritizing price over long-term partnerships.

In reverse auctions, the buyer posts a need, and suppliers compete to offer the lowest price.

To avoid unprofitable bids, suppliers carefully calculate all costs and establish a minimum offer price.