Proxy bid is an auction technique in which the winning bidder pays the amount the second bidder is offering increased by the bidding increment. This has an advantage that the final offer is consolidated, since more bidders are willing to pay the price around the final price. Also, it has the advantage that a bidder can set the highest offer in advance and then the bidding increases automatically in case other bidder places an offer. It has its drawback as well: the auction site or the seller might try to push up the price illegally by making offer just below your maximum bid (shill bidding).
Almost all domain auction sites support proxy bidding, namely GoDaddy auctions, Snapnames, Namejet, Dropcatch etc.
Proxy bid example
Starting bid: $20
Your proxy bid: $250
Then your bid is set to $20.
Second bidder: $170
Your automatic bid: $175 (in case the increment is $5)
In case no other offer is placed, the final price will be $175 instead of your original offer of $250.
Proxy bidding in GoDaddy auctions
