How to Set Bids, Prices, and Reserves on eBay
What do a baseball autographed by JFK, a used walkie-talkie, and a Jaguar have in common? They started with a $.99 minimum bid. eBay requires you to set a minimum bid, the lowest bid allowed in an auction. You may be surprised to see stuff worth tens of thousands of dollars offered for auction starting just a under a buck.
These sellers haven’t lost their minds. Neither are they worried someone could end up tooling down the highway in their $100,000 sports car for the price of a burger. They protect their final sale price with a reserve.
Before you set a minimum bid, do your homework and make some savvy marketing decisions. If your auction isn’t going as you hoped, you could end up selling Grandma Ethel’s Ming vase for a dollar.
How to set a minimum bid — how low can you go?
Setting an incredibly low minimum is a subtle strategy that gives you more bang for your buck. You can use a low minimum bid to attract more bidders who will, in turn, drive up the price to the item’s real value — especially if, after doing your research, you know that the item is particularly hot.
The more bids you get, the more people will want to bid on your item because they perceive it as hot.
If you’re worried about the outcome of the final bid, you can protect your item by using a reserve price (the price the bidding needs to reach before the item can be sold). This ensures that you won’t have to sell your item for a bargain-basement price because your reserve price protects your investment.
The best advice is to set a reserve price that is the lowest amount you’ll take for your item, and then set a minimum bid that is ridiculously low. However, use a reserve only when absolutely necessary because some bidders pass up reserve auctions.
eBay’s Buy It Now (BIN in eBay-speak) is available for single-item auctions. This feature allows buyers to purchase an item now. Have you ever wanted an item really badly and you didn’t want to wait until the end of an auction? If the seller offers Buy It Now, you can purchase that item immediately.
When listing an item this way, just specify the amount the item can sell for in the Buy It Now price area. If you choose to sell a hot item during the holiday rush, for example, you can make the BIN price as high as you think it can go. If you just want the item to move, research the average BIN price for that item and set it appropriately.
After your item receives a bid, the BIN option disappears and the item goes through the normal auction process. If you have a reserve price on your item, the BIN feature doesn’t disappear until a bidder meets your reserve price through the normal bidding process. To list an auction with Buy It Now, the price needs to be at least 30 percent higher than the starting price.
The Buy It Now price will remain, if there is a bid that doesn’t reach 50 percent of your BIN price in certain categories:
Motors, Parts & Accessories (eBay Motors)
Clothing, Shoes & Accessories
Cell Phones & Accessories
Your secret safety net — reserve price
Here’s a little secret: The reason sellers list big-ticket items such as Ferraris, grand pianos, and high-tech computer equipment with a starting bid of $.99 is because they’re protected from losing money with a reserve price. The reserve price is the lowest price that must be met before the item can be sold.
It is not required by eBay but can protect you. For this feature, eBay charges an additional fee that varies depending on how high your reserve is.
For example, say you list a first-edition book — John Steinbeck’s The Grapes of Wrath. You set the starting price at $.99 and the reserve price at $80. That means people can start bidding at $.99, and if at the end of the auction the book hasn’t reached the $80 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 items. Many bidders figure they can get a better deal on the same item with an auction that proudly declares NR 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 $75 on this item to protect my investment; the highest bid over $75 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.
On lower-priced items, consider setting a higher minimum bid and no reserve.