Open auctions let bidders react to each other. Sealed bids stop collusion and protect sensitive pricing. The right choice depends on how many bidders you have.
Both formats are honest. They simply behave differently depending on how many people are in the room, and choosing by habit rather than by situation is what costs money.
Bidders see their rank live and can improve while the window is open. With enough participants, this produces the best result available, because the contest is real and visible. It also gives bidders a reason to attend: they can win by responding rather than by guessing.
Every bidder submits once, blind, and everything opens together at the deadline. Nobody can react, which removes both the benefit of competition and the risk of coordination. With three bidders who all know each other, a sealed bid frequently beats an open auction — because in a small open auction, the temptation to hold back together is real.
Sometimes the issue is not the price but who sees it. In a sealed bid, no bidder learns anything about another’s position, even a rank. For sensitive categories that is the deciding factor regardless of how many bidders there are.
Five or more genuine bidders: open. Three or fewer, or bidders who share a trade association: sealed. In between, look at last year — if past open auctions produced clustered bids with little movement, that clustering is telling you something.
Use an open auction when you have enough genuine competition that bidders reacting to each other will drive the price your way — usually five or more. Use a sealed bid when bidders are few, when they know each other well enough to coordinate, or when the pricing itself is commercially sensitive.
Read more about Purchase Bidding on BidBegin.
Ten minutes is enough to see whether this fits how you buy or sell.
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