What does "bidding increment" refer to in an auction?

Bidding increment refers to the minimum amount by which a bidder must raise their bid over the previous bid during an auction. This concept ensures that the bidding process is orderly and allows for incremental increases that can help prevent confusion and facilitate a competitive atmosphere among bidders.

In practice, establishing a bidding increment helps all participants understand the minimum threshold that must be met when placing their bids. For instance, if the current highest bid is $100 and the bidding increment is set at $10, the next bid must be at least $110 to be considered valid. This framework encourages a structured bidding environment, allowing participants to gauge their bidding strategy effectively.

Understanding the bidding increment is essential for both the auctioneer and participants, as it directly influences the pace and dynamics of the auction.