|
If
you want to unload an expensive item, you might consider listing
it as a reserve auction. This auction format allows you to set
the minimum price at which you will sell the item.
Reserve prices safeguard you against having to sell the item at
a price that is lower than you intended, which is always a
danger in a straight auction. Still confused? These tips will
get you up to speed fast.
Why
Reserve?
Well, a couple of reasons. First, you might specify a reserve
price if you are unsure of the real value of an item. By setting
a reserve price, you reserve the right to refuse to sell the
item if the market value is below a certain price. On a related
note, more crafty sellers will set an extremely high reserve to
do a little "market research." The auction thus
becomes a way of finding out what people are willing to spend.
Second, if you deal in high-end collectibles you can use
reserve auctions to ensure that you don't take a financial hit.
For example, a seller who puts up a $1,000 item up for auction
without a reserve price runs the risk of having to honor an
extremely low bid. Not surprisingly, sellers like reserve
auctions, whereas buyers favor straight auctions.
First
Things First
So how does it work? At the start of the auction, you simply set
the reserve price (the minimum price you'll accept for the item)
and the opening bid price. The reserve price will never be
revealed; however, the auction listing will be amended when the
reserve price is met. Although the reserve price is not listed
per se, it can be extrapolated when a bidder bids at or above
the reserve price.
If the reserve price is not met (in which case a fee is
sometimes charged to the seller), you are under no obligation to
respect the high bid. In this situation, you have the option of
relisting the item and setting a slightly lower reserve price,
or switching to a straight auction in hopes of attracting more
bidders.
Guesswork
Be aware that many bidders prefer straight auctions (in which
there is no mandatory bid) and will not bid on an auction with
an undisclosed minimum price. Some bidders also prefer to see
the reserve price set as the opening bid in a straight auction
because it eliminates guesswork on their part and indicates how
realistic their maximum bid is. Bidders might raise their
maximum if they see that it is not too much lower than your
opening bid. They'll never know that, though, if you use a
hidden reserve price.
Conversely, setting a market value reserve assures you'll get
the price you want even if you get only one bid! Of course, that
bid may not ever come. Finally, as counter-intuitive as it
sounds, some sellers set a reserve and then reveal it in the
item description in hopes of eliciting a first bid that meets
the reserve.
High
Starting Bid vs. Reserve
The argument goes like this: Why bother with a reserve if you
can just set a high starting bid? From the seller's perspective,
it's quite simple: high starting bids can scare off bidders.
Some folks might be less inclined to consider an item if the
amount seems out of their price range right off the bat. High
starting bids can potentially halt an auction before it even
begins.
Sure-Fire
Hit
If you feel there is genuine interest in your item, then it's
best if you don't set a reserve. In general, you will generate
more excitement and interest for your merchandise if you go with
a straight auction. Reserve auctions can reduce competitive
bidding. In addition, straight auctions are great PR for you as
a seller, indicating to bidders that you believe your
merchandise is so strong that it will eventually command a
legitimate, if not high, price. If you feel a reserve is
absolutely necessary, one strategy is to set the reserve price a
little below the amount you actually want. Perhaps set the
reserve at a price you think will be reached on the second- or
third-to-last day of the auction. That way the reserve is hit in
stride. This will generate interest in your auction and still
protect your investment.
Reasonable
Reserve
Sellers who use the reserve auction format must decide what
constitutes a reasonable reserve. The reserve amount a seller
chooses is extremely important because a high reserve and a low
starting bid can alienate bidders. For example, if the bidding
begins at $1 and closes out at $500 without the reserve being
met, bidders are likely to feel as if they're wasting their
time. (A general rule of thumb: the reserve amount should be
about double the starting bid amount.) The common assumption is
that the reasonableness of a reserve is based on the ratio
between the opening bid amount and the reserve amount.
Nevertheless, as a seller you should also consider the ratio
between the reserve and retail prices.
Revealing
the Reserve
Finally, if you opt for a reserve, don't be surprised when
bidders send emails asking you the reserve amount. Some sellers
will provide this information with no qualms, while others will
not, claiming that a bid is necessary even if it does not reach
the reserve and that bidders can decide the maximum amount
they're willing to pay anyway (proxy bidding will take care of
the rest). Whether or not you're willing to reveal the reserve
is completely up to you.
Back to Auction tips &
tactics
by Vendio Services
|
