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Holding a Reserve-Price Auction on eBay

When you sell an item on eBay, you can set a reserve price for the item to protect yourself from losing money. The reserve price is the lowest price that must be met before the item can be sold on eBay. eBay charges an additional fee for this feature that varies, depending on how high your reserve is.

Because sellers are protected from losing money with a reserve price, they are able to list big-ticket items like Ferraris, grand pianos, and high-tech computer equipment with a starting bid of $1.00. This low starting bid, in turn, brings more potential bidders to the auction.

For example, say you list a first edition of John Steinbeck’s The Grapes of Wrath. You set the starting price at $1.00, and you set a reserve price at $80.00. That means that people can start bidding at $1.00, and if at the end of the auction the bidding hasn’t reached the $80.00 reserve, you don’t have to sell the book.

As with everything in life, using a reserve price for your auctions has an upside and a downside. Many choosy bidders and bargain hunters blast past reserve-price auctions because they see a reserve price as a sign that proclaims “No bargains here!” Many bidders figure they can get a better deal on the same item with an auction that proudly declares NR (for no reserve) in its description. As an enticement to those bidders, you see lots of NR listings in auction titles.

If you need to set a reserve on your item, help the bidder out. Many bidders shy away from an auction that has a reserve, but if they’re really interested, they will read the item description. To dispel their fears that the item is way too expensive or out of their price range, add a line in your description that states the amount of your reserve price. "I have put a reserve of $80.00 on this item to protect my investment; the highest bid over $80.00 will win the item." A phrase such as this takes away the vagueness of the reserve auction and allows you to place a reserve with a low opening bid.

If bids don’t reach a set reserve price, some sellers e-mail the highest bidder and offer the item at what the seller thinks is a fair price. Sending a Second Chance offer through the eBay system makes much more sense. Here are two caveats if you try to circumvent eBay fees and contact the bidders:

  • eBay can suspend the seller and the buyer if the side deal is reported to Trust & Safety. This activity is strictly prohibited.

  • eBay won’t protect buyers or sellers if a side deal goes bad.

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