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Ebay Reserve Prices- why?

Jules

Formerly known as "nachoman"
Messages
4,450
Location
brighton by the sea
there's something I just don't get- ebay reserve prices (well, to be honest there's a lot I don't get, but the ebay one is currently bugging me).

Why set a reserve price when auctioning? I just cannot get the logic of this- why not just place the start price at the level you'd have set the reserve at? The frequency of "item ended/ 15 bids/ reserve not met"- the seller would have paid listing fees, the whole bidding would have been a complete waste of time for all concerned and there's a chance that - had they put the start price same as the reserve, one of the bidders might have offered it (or at least those who didn't want it at that price would have stepped away).

Can anyone explain the existence of secret reserve pricing to me- I feel I must be missing something in the logic of how/why this works? Or is it just an annoying hurdle to have to jump through for no good reason?

Yours- totally baffled- Mr Lawrence of Brighton....
 

rhysonsax

Well-Known Member
Messages
3,518
Location
Surrey, UK
Not completely sure of this, but one view is that setting a really low starting price sets off a frenzy of bidders who think they can win the auction for a low price. The frenzy is more likely to drive the final price high than an auction which has a "realistic" starting price. Once bidders have got involved in the auction they are thought to be likely to carry on competing "just a little bit more" than they should.

From a seller's standpoint, it's a bit of a punt as to whether their auction catches the attention of a group of competitive bidders.

Rhys
 

Phil Edwards

Senior Member
Messages
1,335
Location
East Sussex
Rhys is right. That's certainly the way it works in 'real' auctions where the auctioneer may start at say £50 for something, get no interest, bring it down to £30 and within a minute it's shot past the £50 as the interest mounts.

Whether that really translates to the more sterile situation where you're sat in front of the computer I really don't know.

I'm not sure that many people get carried away with the excitement nowadays - perhaps just a few newcomers who get excited in the last few minutes and think "oh, it's only another couple of quid".

Where ebay of course differs is that the auction is blind - you can't see your fellow bidders and have no idea how much they're prepared to spend. That can work very well if you have a vlauable item.

But for the most part people use it as a general shop nowadays, and just set the price they're prepared to pay and bid that - you might get it for less, you might have to pay what you think it's worth, but no more. If you win, great - if you don't, fair enough, it went for more than you were prepared to pay.

Phil
 

half diminished

Senior Member
Messages
1,361
Location
Buckinghamshire
Yeh, been involved in running auctions.

In most cases, you get the best price by getting more interest and hopefully finding 2 or 3 bidders who really want it. The danger with no reserve is that you only get one keen interested party and so it goes at a very low price. Put your reserve too high though and you may put someone off.

Ideally, you entice four or five bidders who then get 'caught up in a bidding war'. I've seen people pay 2 or 3 times what an item is worth when you get 2 bidders where neither will give way to the other :w00t:

So it's a juggling act. I tend to start my ebay sales a little lower than I want and have a BIN a little higher than I expect to sell at. I do find it irritating wen someone start a £1,000 item at 99p with a reserve at maybe £800 though. You obviously don't know the reserve until you hit it!
 
Messages
41
Location
Shetland Islands
Isn't it also something to do with eBay selling fees? I hate paying to list an item and then paying extra once it has sold. I know 'Buy it Now' attracts a small fee and 'Reserve' may also, but it may be that it is cheaper to set a reserve price than start off with the starting price at your reserve price - if you get my drift!
 
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