|
by
Nancy L. Hix
You
want your auctioned items to earn you a profit. Well, some of
you want to clean out the garage by listing the stuff on eBay,
but admit it--you also want to line your pockets with a little
cash. And if you're a high-volume seller or run a small
business, the need for profit is even greater.
When listing items at
online auction, the success of your sales begins with
determining the opening bid price. Where you start the bidding
is pivotal to whether your items will sell. To follow is a
discussion of setting the right opening price so your auctions
close with at least one successful bid.
The
Object of the Game Is…
Successful online auction selling is all about making more for
an item than you paid for it. Not many serious sellers list
auctions and hope the items don't sell. The whole object of
listing an online auction is to exchange goods for cash. Some
auction sellers scarf up treasures at yard sales for a quarter
and earn great profits, while business sellers typically
purchase goods at or below wholesale to list online. Whether you
want to break even or make a profit, the object is the same--to
attract successful bids. One way to do that is with a strategic
minimum bid amount. This requires a little research.
Know
Your Price Floor and Price Ceiling
Your item might sell with only one bid, so think of your minimum
bid as your asking price. You don't want to price your items so
high that nobody bids on your auctions, but you also don't want
to incur losses or you won't be a successful online auction
seller. Where you set your opening bid is an important online
auction strategy. Two terms to consider here are cost and price:
Cost is the
total amount of the expenses you incur to obtain the item,
create your auction listing, and sell your item.
- Price is the selling price per unit that your
customers will pay for it. Researching closed auctions is a
great way to determine a competitive price. Doing a
completed auction search allows you to see what customers
are willing to pay for the same (or similar) item you're
selling.
Two other terms define the least amount
you can charge without taking a loss and the most you can
charge while staying competitive:
- Price floor is the lowest amount at which you can
offer your product and still cover your cost and expenses.
If you set the price at or below cost, you should have a
specific intent--like wanting to get rid of something that
possibly makes you ill just by looking at it.
- Price ceiling is the most that a customer will pay
for the item. Think of the price ceiling as the customer's
perceived value of the item. Several factors create this
perception, including the product's popularity and the
quality of the one that you're selling, as well as the
comparison your bidders make between you and your
competitors.
Now, consider how much you paid for the
item. Add in any other expenses, such as your auction site
fees, and figure out how much you hope to earn from the
listing. This all helps you determine your starting bid. A
few circumstances might tip this amount in either direction.
What
Are You Selling?
If you're selling common items that show up at online auction
every five minutes, check recent closings. If you see a
consistent average winning bid amount, you safely can set your
starting bid as low as you want and incur a lower insertion fee.
As long as you include a photo of the actual item you're
selling, the odds favor that your auction will bid up as high as
the others will--maybe higher if you do a great job with your
auction description.
If you're listing an
item that's not all that common, you need to consider a few
factors when you set your minimum bid. For instance:
Is it valuable? If you
have a rarity that for enthusiasts represents a sip from the
Holy E-Grail, start the bidding wherever you want and run the
auction for seven days. If the item carries a high secondary
market value and its seekers hunt for it online, write a good
title and description, and start the bidding low. Then work the
room a little. Announce your auction at the collector forums and
don't be bashful about contacting folks whom you know might be
interested. (When I listed rare artist prototypes for charity
auctions, my starting bids of $1 drew a few astonished stares,
but the bidding usually exceeded $500 within the first 24 hours.
I nudged this along by emailing the auction URL to several
collectors whom I knew would place high bids.)
- Did you pay a lot for the item? If you pulled it out of
your attic or rescued it from the neighbor's trash, then you
probably don't have a lot invested in it. To draw bids you
should price the item competitively. If you paid a tidy sum
for it, then factor that into your price floor.
- Are your potential customers watching? If you start your
bidding at a penny and nobody knows that your item is up for
sale, you might lose out unless you actively promote your
listing. If you know you can coax your deep-pocketed bidders
to your auction, then you're OK to start with a lower
amount. If you're not sure, then you'll need to consider
your price floor and the item's current value. Set the
minimum bid somewhere in the middle.
Anticipate
One Bid
Always assume that your minimum bid--the amount at which
your auction starts--will prove to be the winning bid when
the auction closes. In other words, count on drawing only
one bid. This mirrors the phrase "expect the least and
you won't be disappointed" because the bidding might go
higher than that one bid. Don't assume that a bidding war
will drive the price wildly high. Great if it does, but it
won't always happen. Depending on your expected outcome of
the sale, set your minimum bid far enough above your price
floor to generate some profit and make the whole effort
worth your time. Expect some variation in the results.
AW member Freddy57 offered this
perspective in a Message Center thread: "I sell
computer parts that are in high demand. I start my auctions
at $1 and watch them climb. It's more fun for the bidders
that way and it creates more excitement for everyone. Once
in a while I end up crying while I ship something that sold
for much less than I paid for it, but then sometimes I'm
laughing as something goes out for much more that I thought
it should. It kind of evens out that way."
Since your listings often appear right
along with those of your competitors, bidders usually
descend on the best value at the greatest bargain. It's your
right to entice them.
Back to Auction tips &
tactics
|
