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Should I Use eBay Reserve Price Auctions?

Approaches to 'set' a minimum without turning off buyers
ebay-expert-r-miller

Q: Do you have any advice for using eBay reserve price on auction listings? I sell high-end watches, and I want to preserve my investment, but I’m worried about scaring away bidders by setting a reserve.

A: Setting an eBay reserve price is one way to ensure you don’t take a loss on a listing, but reserve pricing can be tricky business. As you point out, bidders tend to avoid auctions with reserve prices.

If you want to ensure your items don’t sell for less than a certain amount, try experimenting with fixed-price listings using the Best Offer option.

The best way to use ‘Best Offer’

If you decide to go the fixed-price with Best Offer route, list the item at a price slightly above the eBay reserve price you would have used. Then on the Best Offer settings, set it to accept an offer over the amount you want to get.

Here’s an example. Before, you may have listed something with a starting price of $50, but set an eBay reserve price of $75. With the fixed-price, Best Offer option, you could instead list the item for $85 or the best offer, and set it to accept offers of more than $75.

Buyers might be more inclined to make an offer because they think they could get it for less than the asking price

This way, potential buyers won’t be put off by the “mystery” surrounding your reserve price. Plus, if they see the Best Offer option, they might be more inclined to make an offer because they think they could get it for less than the asking price. It’s a win for you and the buyer.

Another alternative is to simply start the bidding at the price you want to get and not to bother with the reserve at all.

A word about fees

If you’ve been taking advantage of eBay’s 50 free auction listings per month, switching to fixed-price will cost you more in listing fees. But remember that it costs $2 per listing to add an eBay reserve price.

Final value fees differ from auction to fixed-price, too, so it’s a good idea to do some cost modeling to figure out what’s going to make the most sense for you. I would even suggest running a few listings side by side in each format to see which perform best for your products.

I hope this helps. Good luck.


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About the author

Rebecca Miller
Having been an eBay seller for more than 13 years, Rebecca Miller is tuned in to the needs of online sellers. As the product manager for Auctiva.com, the largest third-party provider of eBay tools, Rebecca works closely with eBay's product development team, and is an internal advocate for Auctiva's customers. Opinions expressed here may not be shared by The Online Seller and/or its principals.

  • Jimbo

    I haven’t used reserves in years, buyers simply do not like them. I also rarely use the “Best Offer” option, because when you set the hidden price parameters, it really is a de facto reserve.
    Then when the buyer cannot buy it for the price they want, they e-mail you with an offer for the price they want to pay (which is usually a “lowball” number). This ain’t craigslist, it costs money to list and sell on ebay!!
    I list my items for market value, dictated by the past sales history prices. Sure, it costs more, but if a buyer is seriously interested, I will get my full value for the item. There are just too many instances lately where one can leave an item to the ebay “auction gods”, and sell something worth $150 for $50 (or less).
    If the item dosen’t sell as listed, I then look at how many watchers were on the auction, and then move the merchandise to my ebay Store (usually for a higher price to offset the Store final value fees). The item will eventually sell for my asking price, and I never accept offers- I even list it in my sales terms.
    It seems ebay is not really an auction site anymore, and most everyone wants to use the Buy It Now option instead of waiting for auctions to end (and being outbid after 7 days by a “sniper” bidder at the last minute).
    I sell most of my goods in my Store- even though it does take longer, it’s much like the rule of thumb of selling or trading in a used car (“More Time, More Money. Less Time, Less Money”).

    • http://www.facebook.com/megdipaolo Meg Whitmore DiPaolo

      When I was selling, I used Buy It Now or Best Offer exclusively. It took awhile to work out a good formula, but eventually felt like I got the hang of it. I could never risk my stuff selling for next to nothing in an open auction, and s a buyer myself, I know I don’t like Reserve auctions. Buy It Now takes away the “I have a certain price in mind but I’m not telling you!” tease of Reserves. It’s more honest.

      It caused some frustrations, when, after carefully setting a Buy It Now price on a NWT item 50% of its retail value, I would receive offers that we’re 80% or even 90% off the *Buy It Now* price! I felt insulted. For a time I would decline each such offer myself, or counteroffer, always trying to explain why an offer of $10 for an already greatly reduced $80 asking price was unacceptable and a waste of their time. 

      I got over my initial indignation, understood the futility of my approach, and just set automatic declines. There’s no reasoning with someone who thinks $10 is a fair price for a $120 item. 
       
      However, when Buy It Now or Best Offer did work, it worked really well. I sold 1-3 items a week, which was great for only having 25 listings at a time. It was brisk business at a pace I could keep up with. 

      So I felt it ultimately worked best for me – I could never risk an item going for next to nothing in a risky auction.  Despite the complexities and headaches of Buy It Now or Best Offer, I found it to be the safest method for getting a reasonable sale price. 

  • http://www.facebook.com/Srivasu.Yogi Don Eric Wagner

    I have been on eBay since 1998 and in all that time, have only bid once on an item that had a reserve (long story). I wouldn’t set foot in a brick & mortar auction that advertised ‘we have secret reserve prices on all of our items’, so way bother with such a clueless seller and pointless sale on eBay.

    I love to sell at auction, low starting bid, no reserve – that is the spirit of selling that appeals to bidders. But must admit that since the economic slowdown, I use mostly Buy It Now – however – to keep the ‘spirit’ moving, I try to price an item so that it should sell within 3 weeks, and I lower prices often, or add a Best Offer option when a potential Buyer messages me with a fair offer.