How To Create An Auction Dividend Chit
In an Auction Dividend chit the amounts are not fixed in advance. Each cycle, members bid for how much discount they will accept, the best bid wins, and the discount is shared back to every member as a dividend.
Because each month is priced from its winning bid, there is no schedule to preview. You create the chit, then run each cycle.
At A Glance
How It Works
- Every cycle starts as Awaiting Bid. You record the bids members call out.
- Find Best Bid shows the highest bid and what it means for the month: your commission, the dividend each member gets, what each member pays and what the recipient gets.
- Fill Cycle makes the winner the recipient and sets the amounts from their bid. If two members bid the same, the app says so and you choose who wins.
- The highest bid allowed is capped by the Maximum Discount you set.
One Cycle, With The Commission On Either Side
A ₹1,00,000 chit with 10 members, 5% commission (₹5,000) and a best bid of ₹15,000. The first column is the app’s own Best Bid sheet; the second shows the same bid with the commission taken from the winner instead.
| Commission From: Dividend | Commission From: Payout | |
|---|---|---|
| Best bid | ₹15,000 | ₹15,000 |
| Your commission | ₹5,000 | ₹5,000 |
| Dividend per member | ₹1,000 | ₹1,500 |
| Each member pays | ₹9,000 | ₹8,500 |
| Recipient receives | ₹85,000 | ₹80,000 |
The base payment is ₹10,000 (the chit amount over 10 members). The dividend is rounded to ₹10.
How The Calculation Works
The rules ChitsApp applies each month, with the numbers from the example.
- Base payment = chit amount ÷ members. ₹1,00,000 ÷ 10 = ₹10,000.
- Dividend shared = best bid − commission when Commission From is Dividend (₹15,000 − ₹5,000 = ₹10,000), or the whole bid when it is Payout.
- Dividend per member = dividend shared ÷ members, rounded to ₹10, and the winner gets a share too. ₹10,000 ÷ 10 = ₹1,000.
- Each member pays = base payment − dividend per member: ₹10,000 − ₹1,000 = ₹9,000.
- Recipient receives = chit amount − dividend shared − commission: ₹1,00,000 − ₹10,000 − ₹5,000 = ₹85,000.
The Settings You Fill In
Each one in plain words, in the order the form shows them.
- Chit Name
- What you and your members call the chit. ChitsApp gives every chit its own code as well, built from your organisation code.
- Chit Amount
- The full value of the chit, which is what the monthly pool is measured against.
- Duration (Months)
- How many months the chit runs. Each month is one cycle and one member lifts the chit, so the chit has as many units to fill as it has months.
- Start Date
- The first cycle. Pick it from the calendar.
- Commission
- Your fee, as an amount or a percentage of the chit amount. 5% of ₹1,00,000 is ₹5,000.
- Commission From
- Dividend: the members bear the commission, out of the discount. Payout: the winner bears it, out of what they receive.
- Maximum Discount
- The highest bid a member may make, as an amount or a percentage of the chit amount. 30% of ₹1,00,000 is ₹30,000.
- Bid Step and Round To (Advanced)
- Closed by default. They set how bids step and how the dividend is rounded.
Steps To Create It
From the Chits tab to a live chit, in the Android app.
Choose Auction Dividend
In the Chits tab choose Create New Chit and tap Auction Dividend Chit: bid each cycle, discount returns as dividend.
Fill in the chit
Enter the chit name, amount, duration and start date, then your commission, where it comes from and the maximum discount.
Add your members
The flow has three steps, Create, Members and Confirm, because there is no preview. Add members as for any chit until every slot is filled.
Confirm and publish
Confirm says there is no schedule to check: each cycle is priced from its winning bid. Publish Chit creates every cycle, each awaiting bids.
Record the bids for a cycle
Open the chit’s cycle and choose Record A Bid. Pick the member, enter the Bid Amount and Record Bid. The bids so far are listed under the cycle, and Home’s Auction shortcut lists the cycles awaiting a bid.
Find the best bid and fill the cycle
Find Best Bid opens a sheet with the highest bid and what it works out to. Fill Cycle asks you to confirm: the winner becomes the recipient and the amounts are set from their bid.
From here the cycle runs like any other: activate it, record the payments and close it.
See the terms on the chit
The chit’s Details screen shows the commission, where it comes from and the highest bid allowed.
Common Questions
What if two members bid the same amount?
The app tells you the bids are tied and you choose who wins.
Who can bid?
Only members who still have a unit that has not won. Recording a bid for anyone else is refused.
What changes if the commission comes from the payout?
The members share the whole bid as dividend and the winner bears the commission. On the example’s ₹15,000 bid each member pays ₹8,500 instead of ₹9,000 and the winner receives ₹80,000 instead of ₹85,000.
Is there a schedule I can preview?
No. Each cycle is priced from its winning bid, so the amounts are only known once the bid is finalised.
Keep Reading
Free tools for this model:Chit Discount Calculator
Run your chits in ChitsApp
Start with up to 2 running chits free. No card needed. ChitsApp records payments; it does not hold or collect your members’ money.