By now, anyone who has been reading this blog daily is probably getting sick of being fed this line repeatedly. But it's an important distinction, and a mistake that both rookies and veterans make before they head into an auction.
The simplest way to put this is that a prediction is what you think a player will earn and a bid is what you are willing to pay. Just because you predict that a player will be worth $40, doesn't mean you should necessarily bid $40.
In general, there are two ideas behind differentiating between predictions and bids. First, if there is a player you believe is going to have a huge year, particularly if he's your own personal sleeper, your bid should generally be lower than your prediction. For example, if you believe that Coco Crisp is going to bounce back and put up a $25 season like he did in 2005, that's great. However, you probably don't want your bid price to equal $25. It is likely that your league is probably thinking high teens or low 20s, so you probably want to move your bid down at least a couple of bucks.
The opposite side of this coin is when your prediction gives a player a thumbs down. You might think someone sucks, but there's probably a price that would be a flat out bargain if your opponent grabbed the guy. Let's use Joe Crede as an example. Everyone is once again whining about poor ol' Joe's back. For the sake of argument, let's assume you are one of those people who also believe that Joe is an injury waiting to happen. Your projection says he'll earn $13, because he's only getting 350 AB in your mind. However, you don't feel comfortable letting another owner get him for $13. So you set a bid price of $15. You might take a slight loss if you get him and he lives down to your expectation, but you also don't want Joe to duplicate last year's $20 line and give your rival a $6 profit.
So bids can, and should, be used to express preferences. But you should also be sure not to be too radical one way or the other. You might believe that Matt Cain is going to win the Cy Young award this year. But you would never put a $35 bid limit on him. Your bid takes all of the risk involved with a young pitcher like Cain into account.
Here are other examples of when you might tweak your bid versus your projection:
Position scarcity - adding a dollar or two to a catcher or middle infielder.
Proven stars - adding a dollar or two for reliability. Albert Pujols might have "only" been a $44 player last year, but you put a $46 bid on him because you believe in paying for definite production.
Category bias - Cheating closers and speed guys who do nothing else but add to one category.
Rookies - Hedging your bets with rookies. Too many owners have been caught spending $20+ on a rookie because "that's what the projection said".
Part-timer bias - Not paying full-price for someone whose role is limited. Ross Gload earned $8 last year in a mere 156 AB and, if Mike Sweeney is hurt, Gload could easily get enough AB to duplicate this. But my bid for him sits at a mere $2, since he could also get buried behind Sweeney, Reggie Sanders, Joey Gathright and heaven only knows who else. Don't pay full price for part-timers: their playing time could melt away at a moment's notice. Their limited AB also means their earnings fluctuate wildly. Shave 5 hits off Mike Redmond's line last year, and his value drops $2.
All of this advice is very general. What's most important is that your bid limits work for you. If Alex Patton has a bid limit on J.D. Drew you believe is too high, by all means push it down. Just make sure that you don't push it down to a point where you'll wince if your rival gets him at that price.
One final point: your roster and your needs will influence your bid limits quite a bit. If you own Huston Street and J.J. Putz at rock-bottom prices, your closer bids are obviously going to be low...you might want to price enforce to make sure that Mariano Rivera doesn't go for $20, but you're also not going to push him too high. If all of the quality SS in your league are going to be frozen except for Miguel Tejada, you might push him up a few ticks to make sure you either get him or make the guy who gets him pay through the nose.
You should be comfortable with your bids. If you're bidding $20 on Mark Teahen because Rototimes or John Benson or Alex Patton says he's worth $23, but your gut tells you he's a bum, then you need to start setting bids that work for you. It's your team, and you have to feel good about the squad you put together in your auction.