To understand the calculations, let’s take an example of a Money Club named ‘Dosti4ever’. It is a club of 4 friends – Amit, Karan, Tarun and Vijay. Here, everyone is contributing Rs.1000 per month. The total club amount is Rs.4000 (Rs.1000 x 4 members).
In the first round of bidding, Tarun bids the highest amount among all and wins the bid.
His bid amount of Rs.300 is equally distributed among his 3 club members (Amit, Karan and Vijay). So each of these 3 members gets Rs.100 (Bid of Rs.300 divided among 3 members).
Amit, Karan and Vijay had to send Rs.1000 to Tarun but now they will send only Rs.900 (Rs.1000 – Rs.100) as they have received Rs.100 from the bid amount of Tarun.
So, in the first round of Dosti4ever Money Club, Tarun will get Rs.900 from 3 members i.e. he will get a total of Rs.2700.
Tarun needs to transfer 10% of his bid amount i.e. 10% of Rs.300, which is Rs.30 to the Money Club as service charge or commission.
Now, Tarun will not be able to bid in the remaining 3 rounds but he will keep paying his contributions.
Note: Same process will repeat in the further rounds.