Getting the Price You Want
Saturday 07 November 2009
by SaleHoo.com
Hi, my name is Arthur Stotts. I have been a member for a few months now, & I have had an awesome time. eBay is the best place to be able to purchase just about anything! The prices are extraordinarily low!!! You might have to search, but in the end-it's worth it. There is nothing better than the satisfaction of winning a bid (even in the last 10 secs). I also look forward to selling my merchandise in a few short weeks. So join me and many others like yourself, & become a member of the fastest growing business on the web!!!
Want to be the next SaleHoo success story?
Have you done some research on the value of your item? If so, then you'll know how much people are usually willing to pay for it. In this lesson, we'll be taking a look at how to go about getting the HIGHEST possible price for it. It's all about strategy There are a number of different pricing approaches that you can experiment with to get the best price.
1. Set the price as the minimum you are willing to sell for.
This is the safest option with the least risk to you - you don't lose, but neither do you win big. If you would rather not part with your item at all rather than see someone else purchase it for too little, then this option is a good one.
2. Start the bidding for your auction at $0.99.
At the lowest listing fee, this option certainly won't break the bank and it will definately catch eBayer's attention. Amazingly, items starting at a dollar frequently achieve higher prices than those with a high minimum bid. Although, as we shall discover, it is not by any means an infalliable technique.
Did you know?
As soon as someone places a bid on an auction, they immediately feel a strong sense of ownership. This is what causes people to bid far beyond the original price limit they had in mind. Once they bid for something, they imagine it is already theirs, and the thought of losing 'their' item to someone else drives them to keep bidding higher and higher!So go on then, use the psychology of ownership to your advantage!
If you aren't too sure of the value of your item, setting your starting bid at a dollar is a good way of finding out the market value.On the other hand, this method requires a significant amount of interest for it to work to your advantage. And if there aren't enough people interested in your item beware! A few bids may not be enough to create a fair price. A low starting bid can also be dangerous if your item is clearly undervalued. Particularly if you are a new seller, bidders may be suspicious if you start a big ticket item at $0.99 with no reserve. They may wonder what is wrong with it that you aren't telling them about!
When I first started using online auctions, I listed a piano in fair condition that I needed to get rid of as quickly as possible because my storage had come to an end. I set the starting bid at $0.99, expecting the bidding to be furious on this incredible bargain. But, at the end of the auction I had hardly any bids at all! Potential bidders seemed to think that it must be a piece of junk to be selling for such a low price. In the end, someone purchased the piano for $2 - including the piano stool! I had paid $200 for this same piano and $50 for the stool only a year before!
This taught me an important lesson: Sometimes $0.99 is just too low.
A $1 starting price can also be a bad idea if you are selling multiples of the item. For a while, a $1 starting price can work quite nicely for you. But as you increase your inventory - hoping to increase your profits - you will start to encounter a major problem of supply and demand. If the supply is greater than the demand, and potential buyers are aware of the flush, then will not want to pay very much for the item.So rather than a $1 starting price for your new designer-brand saucepan set eventually climbing to a final bid of $60-$100, flooding the market will drop your price right down.
Seller beware: New buyer sophistication
Sniping can also ruin the $1 no reserve. Buyers on eBay are becoming increasingly sophisticated in the methods they use to get a bargain on eBay. Often, bidders will wait until the last few minutes of the auction to place their bid (a technique known as sniping), meaning that other bidders don't have time to compete and the winning bid ends up very low indeed.
Now I realize I've probably overwhelmed you with both the benefits and the disadvantages to the $1 NR! Because the value of the $1 NR depends greatly on circumstances, I've designed this comparison chart to make the benefits and downsides clear:
Your situation or objective |
Selling Strategy |
Why? |
|
| $1 No Reserve | Starting price closer to market value? | ||
| You sell a lot of unique items and have little competition | Yes | No | Because there is a small supply, demand is high. Bidders know they only have one opportunity to buy so they will bid more competitively. |
| You are selling a big ticket item | No | Yes | Buyers may be suspicious of the condition if a big ticket item is at a ridiculously low price. Sometimes a low price can indicate low value. |
| You want to create a buzz | Yes | No | A low starting price with no reserve gets a lot of attention. |
| You profit on shipping | Yes | No | It doesn't matter what price you sell it for if you make your money from shipping. |
| You are selling several hundred multiples of the item per month | No | Yes | If buyers realize there is a big supply, and they are in control of the price, then they won't want to pay much. |
| You have a lot of competition | No | Yes | You will need to price in accordance with your competition and choose another point of difference. |
***Top Tip***
Use auctions with a low starting price as an advertising tool.Low-priced items work like discount sales. While you mightn't make much of a profit on this item, but it should create a lot of traffic, which will hopefully translate into increased attention for the other items you have for sale (at more reasonable prices of course!).
3. Reserve auctions with a low starting bid
A reserve auction is where you start the bidding at a low price but have a secret reserve. In affect, none of the bids count unless they reach and exceed your reserve price. eBay charges you 1% of your reserve price for taking advantage of this option, but they will refund it to you if your reserve it not met.
As a seller, this is a safe option, but as a buyer, reserve prices are extremely frustrating.
The psychology of ownership, so very important in driving the prices higher in regular auctions, is often crushed at the outset with a reserve - for a very simple reason. Bidders feel they are scrabbling around in the dark with their bids, they are not at all certain of whether their bid has any chance at all of reaching the reserve, so they remain emotionally detached from the item.Items with a reserve essentially go against the popular perception of eBay as a bargain hunter's paradise.
A reserve immediately suggests that the seller knows the worth of the item and has priced astutely (or perhaps even too highly) - and this is NOT what most people are hoping for on eBay! All buyers long for the day when they find the blundering fool who is unwittingly selling a rare painting with a starting bid of $10! Sometimes, out of desperation, buyers will email the seller and ask outright for the reserve price.
If this happens to you, I suggest giving them the price as you may find interest disappears completely if you don't tell them!Recently, eBay have announced that sellers will be able to lower their Reserve Price, even after bids have been placed. This means there is a lot more room to experiment with reserve prices as you can always change your reserve if it appears to be just too high. Bidders will receive notification about the change through email, so you can re-ignite interest. Some eBay Price Principals
- No reserve auctions with a low starting price create a buzz.Most bidding in eBay auctions occurs in the last hours or minutes before the auction closes.
- Studies have proven that auctions with no reserve are not only more likely to sell more items, but also at a higher price.
Nevertheless, despite the many downsides to reserve auctions, there is at least one minor benefit for you. If you set a low reserve and get bids over the reserve, you may get a strong indication of the market value for your item. You can use that knowledge in your next auction.
4. Buy It Now
Buy It Now is a great combination of auction and reserve. It allows people who are impatient, or want to negate any risk, to buy straight away. But that's not all. There are a number of different ways of using Buy It Now as a strategy for getting the best price and the most interest for your item.
- Get rid of 'reserve-a-phobia' by combining a reserve price and a Buy It Now price. By starting the bidding at $1, with a reserve of $20 and a Buy Now of $30, you will still attract buyers, as the Buy Now price gives them an indication of where the reserve price will be - so their fear disappears.Try setting the minimum bid close to the Buy It Now price. This is a good way of ensuring that you get a sale. The buyer is more likely to pay the Buy It Now price rather than risking losing the item for a small amount of money.
- For time-sensitive items, Buy It Now is a great way of getting a quick purchase and getting the item off your hands.
Some people actually prefer to ONLY purchase Buy It Now items. In response to this demand, eBay have a Buy It Now tab on category listings and search results pages that shoppers can click on to view these items only.
So what is the Perfect Price?
The perfect price is one that gives you a profit yet is a bargain to your buyer
The perfect price must be high enough so that you are not losing money and low enough to lure people into bidding for it. Ultimately, it should send the message that you are serious about selling the item and that you are a reasonable seller.
***Tip***
It's always a good idea to look at where your price increases occur against eBay's listing fees. If your minimum bid is just above one of the cutoffs, you can save money by changing it to just below the cut-off.
Ebay's Listing Fees
Workbook
Do some research on your item: what pricing strategies have other sellers used? Can you see a way to differentiate?. Try selling two of the same item: one with a $1 starting price, no reserve and the other with a slightly higher starting price (how much higher it is will depend on the item). Which strategy was most effective?
Helpful Links
- Ebay Fees: http://pages.ebay.com/help/sell/fees.html
- Ebay Pricing Help: http://pages.ebay.com/help/sell/starting_price.html
