Reverse Auction: When to Stop and How to Avoid a Loss

Set your floor price before the auction starts

A reverse auction starts with a step you take voluntarily. Until you press the button, the price is yours. Once you start, there is no way back. So before the auction, decide the lowest price you will accept. Not by gut feeling — by calculation.

Take your cost. Add taxes, logistics, bank guarantee, possible penalties. Add the minimum profit that makes the project worth doing. You get a number. Write it down and keep it in front of you during the auction.

Example. You supply furniture to a school. The cost of the batch is 80 million soum. Logistics and installation — 10 million. Taxes — 12 million. The minimum profit you want is 8 million. Your floor price is 110 million soum. If the starting price of the lot is 130 million, you have a 20 million buffer. If the bidding reaches 110 million, you stop. Even if a competitor offers 109 million.

Why bidders go below cost

The main reason is excitement. In the heat of bidding, it seems like one more step won't change anything. But step by step, the price falls below cost. The win brings a contract you cannot fulfill without losses.

The second reason is a calculation error. A supplier forgets VAT, transport costs, or labor. Or hopes the procurement volume will be larger than stated in the documents. In the end, the actual cost turns out higher.

The third reason is pressure. A manager says, "We need this contract at any cost." Or a salesperson is afraid to miss the deal. But a loss-making contract is not a win — it is a problem that will drag on for months.

According to TenderLabs data, as of late October 2026, there are 11,529 open lots in the system. About 15,000 new procurements appear every week. You have plenty of choice. Don't cling to one lot if it goes below your floor price.

How to set your step and exit point

The auction step is usually set by the organizer. It can be fixed or calculated as a percentage of the starting price. Check the exact rules in the documents for each specific lot. Don't rely on general memory.

A simple strategy. Decide in advance how many steps you are willing to take. For example, if the step is 1% and your buffer is 20 million with a starting price of 130 million, you can take about 15 steps. After that, the price will approach your floor. Then stop.

But you don't have to go all the way to the limit. Sometimes it's better to stop earlier. If you see a competitor cutting the price aggressively and seems ready to work at a loss, skip this lot. Let them get the contract and the problems. You save your resources for another procurement.

Another tactic — don't start bidding at all. If the starting price is already below your floor, don't waste time. Just skip the lot. That is also a strategy.

Account for costs you don't see right away

In a reverse auction, price is not the only factor. Delivery times, payment terms, and quality requirements matter. If the customer requires deferred payment for 60 days, you need working capital. That is also a cost.

Check whether delivery, unloading, installation, and staff training are included in the price. Sometimes these items are in the technical specification but not included in the starting price. Then your actual cost will rise.

Separately calculate the bid security and contract performance security. This is either frozen money or the cost of a bank guarantee. If you cut the price by 10%, the security may stay the same. The burden on your finances grows.

When to stop: three clear signals

1. 1The price has reached your floor. Further bidding means only a loss. Stop and don't return to the auction.
2. 2A competitor has made a sharp drop that is clearly below cost. Don't try to outbid them. Most likely, they miscalculated.
3. 3You have used up the number of steps you set in advance. Even if the floor is still far away, don't increase the limit on the fly.

If you stop, don't regret it. According to TenderLabs data, in the last 30 days alone, 36,858 new procurements appeared in the system. There will always be another lot. Your reputation and finances matter more than one deal.

What to do if you are already at a loss

Sometimes a supplier realizes the price is below cost, but the contract is already signed. In this case, there are several options. First, renegotiate terms with the customer. Sometimes you can change the volume or deadlines if the documents allow it. But don't count on this in advance.

Second, find internal reserves. For example, optimize logistics or negotiate a discount with your supplier. But this should not be the basis of your calculation.

Third, walk away from the contract. This is a last resort and may lead to being included in the register of unscrupulous suppliers. So it's better not to let it come to that.

How to build discipline

Start small. Pick one lot where you are confident in your calculations. Set your floor price and don't go below it. Even if you lose, you gain experience.

Keep an auction log. Record the starting price, the step, your floor price, and the winner's final price. After a month, you will see how often those who go below cost win. And how often such contracts end in problems.

Talk to colleagues. Many suppliers have already learned these lessons the hard way. Their experience will help you avoid mistakes.

Where to find lots

TenderLabs collects procurements from all over the country. As of late October 2026, the most open lots are in Tashkent — 2,192. In Tashkent region — 930, in the Republic of Karakalpakstan — 863. You can filter procurements by region, industry, and amount. This helps you choose those where you have an advantage.

The TenderLabs service sends notifications about new lots. You won't miss a procurement that fits your profile. That means you can prepare for the auction without rushing and calculate your floor price correctly.