Dutch Auction

A Dutch auction opens at a set starting price that steps down at fixed intervals until a supplier accepts it — the first supplier to accept wins, rather than bidding continuing until a fixed close time.

In procurement, a Dutch auction favors speed of price discovery over multiple rounds of competitive bidding — useful when the buying team wants a fast outcome and is comfortable setting the starting price and step-down rate themselves.

The auction opens at a high price that is lowered in steps until a participant accepts it. The first to accept wins, so participants must weigh waiting for a better price against losing to a competitor.

Because the price falls rather than being bid down by competitors, a Dutch auction is a different mechanism from a standard reverse auction.