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 ?
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!