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What's the best starting bid for an eBay auction?

I'm just starting out with eBay auctions and one thing that I just can't figure out is the best strategy for setting an opening bid on my auctions. Do I set it to be the same as other auctions of the same item? To be lower than my competitors? Or ?

Dave's Answer:

While a surprising number of eBay sellers operate from gut instinct, the most successful spend a lot of time analyzing sales results so they can set realistic expectations of their own about what percentage of items should end with a winning bid, and how much different items should fetch.

I think that there are three basic strategies for finding an optimal opening bid price for your auction, actually. I'll call them Average Closing Price, Lowest Realistic Bid and Trusting the System. Here's my thinking:

Average Closing Price is calculated by searching for other auctions that have sold the same item you're offering, limiting your search to only those items that closed and actually sold (the results from auctions that ended unsuccessfully aren't useful data in this regard, though they are worth studying). Let's say you were selling batman pez dispensers. A search on eBay for batman pez dispensers on auctions that have ended and were successful might reveal that the average price for a "mint" or "still in package" or "original packaging" is $37. If that's the case, then the ACP strategy would suggest that your opening bid be $37. People who don't know the value of the dispenser won't bid, but the serious collectors will know that it's worth at least the opening bid, if not more.

On the other hand, many of the most successful auctions on eBay are because neophytes or enthusiasts get caught up in the passion of bidding and bid up an item far beyond it's actual value. A sweet success for the seller, but you don't attract that kind of enthusiasm with a high starting bid. Instead, sellers sometimes us Lowest Realistic Bid, which basically uses what we math types call the 'floor', the lowest value in the set of all successful, comparable auctions. So while the average price of a batman pez might have been $37, the lowest winning bid for a mint condition item might have been $18, say, so that'd be your opening bid.

Trusting the System is the strategy I am most intrigued by, because it's the eBay equivalent of closing your eyes and jumping off stage into a crowd. You just have to have faith that people will catch you. In the auction sense, this appears with sellers who set their starting bid at $0.01 or similar. At one cent, the item is a steal, an unbelievable deal, something that even the biggest rube going would bid on. So they do. And then it rapidly zooms up to $5, $10, $20 and higher, all the while garnering more bids and more attention because it's dramatically below the market price for the item. Finally, the attention has encouraged people to overbid out of their passion to be the "winner", and the auction ends with a higher than average closing price.

There are other strategies for picking an opening price, including the simple approach of having the starting bid be your cost for the item: anything above that is just pure profit. I've also used different strategies for different types of auctions at different times too, significantly when I have something with perceived scarcity involved.

Hope this helps you get started successfully on eBay!

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Comments

As you have pointed out, some research into the "past performance" of a similar item makes sense, and this determine whether "Trusting The System" is a wise thing to do. Another factor to take into account is the Listing Fee. If you know that your item will likely sell, the crazy-low price has two benefits... first, you stand to save on the listing fee for such a low start price. Second, as you have pointed out, you will likely get more watchers if you list crazy-low, as people Saved Searches will pick up your listing and they will watch it... if you list at the Average Closing Price, you stand to disuade the bargain hunters.

Posted by: Jon Grieve at June 26, 2005 4:32 PM

Thanks for your comment, Jon. Of course the lower listing fee is another big incentive for using the "Trusting the System" strategy, but explaining how eBay figures out end-of-auction fees is frustratingly complex. Maybe it'd make a good question, if someone wants to submit it? :-)

Posted by: Dave Taylor at June 26, 2005 5:35 PM

I put up collectables I,M not getting enough bids can I change the price. The auction is almost over I,M going to be losing a lot of money.I,m new at this selling on Ebay. Thanks

Posted by: deanna at January 29, 2006 5:08 AM

If you haven't received any bids yet, you can change your starting bid, but I suggest that you just let the auction run its course. If you don't get any bids, you can relist your items, change the price, and eBay doesn't charge you for the relist, so you'll get your stuff out there for a longer period of time using that strategy.

Good luck. Always make sure you search for other people selling similar products and make sure you can see what the going price is for a given item.

Also, you might find Ina Steiner's new book "Turn eBay Data Into Dollars" (check Amazon) quite helpful. I contributed a bit to the book, btw, so I know it's splendid. :-)

Posted by: Dave Taylor at January 30, 2006 9:50 AM

Hi Dave,
thanks for the informative web site. I am bidding on an item on ebay motors and would like to find the average selling price, and the highest and lowest closing prices. how do I find these?
Rob

Posted by: robert Bernier at November 29, 2006 5:12 AM

Rob, the short answer is to do a search for what you want to sell on eBay Motors, then make sure you click on the "Completed Auctions" button on the left column and do the search again. Between those two results, you should be able to ascertain good closing prices, average opening price, and so on. Be sensitive to nuances of auctions and on the auctions that have completed well, compare their starting bid prices too.

Posted by: Dave Taylor at November 29, 2006 10:14 AM

Dear Dave,
Thank you for your advises on how to list.

Btw, I'm an active bidder on eBay and Yahoo auctions, a lot of times, I practice "last-sec-bidding". However, some sellers, when they see nobody is bidding on the item, they suddently increase the starting bid, sometimes increase the starting bid by several times if the starting bid is under $10.00, which makes it really frustrating for me. I wonder in this case, is it because they see there are not many watchers, so they are afraid that they are going to lose money on the items? I'm not sure if this action violates the rules, but it appears not. When I really want to get a bargain(I'm a collector on certain things, they always get bidded up to quite high), it angers me. What can I do with it?

Posted by: Tara at February 28, 2008 8:36 AM

I have a lot to say, but ...

I have a lot to say, and questions of my own for that matter, but most of all I'd like to say thank you for all your efforts on this Web site by buying you a chai!

I do have a comment, now that you mention it!