What is the minimum bid in the Auction House?

Note: Question is outdated due to the closure of the Auction House

I have noticed often when going to bid on an item, the minimum bid is some seemingly arbitrary number. I currently can't even bid on an item, even though I have more gold than the current bid, because I don't meet this limit.

It would also be nice to know how this limit is picked because I might be able to strategically take advantage of it when determining my max bid to know what someone else might have to bid in order to win the item from me.

Solution 1:

The minimum bid for any item is always 5% more than the current bid. This way, as the price increases, you don't have people nickel and diming their way to victories bidding 100 more gold on top of your 1-million gold bid. If they really want to take that 1 million gold item from you, they're going to have to put up a significant chunk of change (in this case, 50,000).