There are plenty of online auction sites that are based on a descending price model – also known as the ‘Dutch auction’ model – that allows bidders to purchase items only when it drops to a price they’ve indicated are willing to pay for it.
Adding another one to the fray, Las Vegas-based Pricefalls is emerging in public beta today with $400,000 in seed funding from a number of private investors and a 21-year old CEO who founded the company as a junior in college.
The student/entrepreneur in question is Elliot Moskow, who started the site out of frustration when he noticed his eBay storefront wasn’t actually generating a lot of sales for items he listed although he was still paying listing fees to put them up there. Moskow teamed up with Peter Schaefer and Chad Casey, alumni from the Bates College in Lewiston, Maine where he is a junior, and launched the service in private beta in January 2009. Today, the site is launching in public beta.
Here’s how it works: sellers can list items free of charge in a variety of categories ranging from books to real estate property and determine a price ceiling, which is the highest price they think someone will purchase an item for. The bid starts at this price, and sellers can set a time from 1 to 7 days during which buyers can ‘catch it’ at that price. After that timeframe, the price will gradually decrease at set intervals until it reaches a price floor, which is the lowest price the seller is willing to have his or her item purchased for.
Listing and relisting items is free, and if an item isn’t sold the seller doesn’t pay Pricefalls anything. Depending on the ultimate selling price, Pricefalls makes money by charging fees on completed sales.
Pricefalls received $400k from private investors, the second largest being Gary Jacobs, President, Corporate Strategy, General Counsel and Secretary of MGM MIRAGE. The startup has recruited Mike Inman (an former senior exec at MGM MIRAGE, Entertainment Publications and IAC/InterActiveCorp) as well as real estate investor turned entrepreneur Matthew Jacobs to their Board.