Starting Prices and Reserve Price on Ebay
Many Ebayers seem to confuse starting price with reserve price, or maybe just do not realise these are two different things.
We explain the difference and more...
Starting Price
When listing an item for sale on Ebay, one of the choices which needs to be made is the starting price for your item. This can be as little as 1p or 1¢, or as high as you want.
Obviously if you pitch your starting price too high you may not get any bids. If you pitch your starting price too low, you may find buyers expect to be able to steal it at a ridiculously low price. some potential bidders might be influenced by a low starting price into thinking your item is not worth its true value.
For example lets assume you were hoping to sell a Vangough Sunflowers for £22 million. If you use a staring price of £30 million, it probably will not sell. If you use a £10 million starting price, some people might be influenced by this into thinking your item was only worth half its true value. The answer might be to start it at £0.01, which obviously does not indicate its value, however its runs the risk that some idiot who thinks he should be able to buy it for £1 will probably complain if you cancel the action before it closes.
Reserve Price
Ebay do have a reserve price ssystem which allows sellers to start their auction at a lower price than their minimum, to encourage bidding, but to use an undisclosed reserve. The item listing indicates whether the reserve has yet been met.
If you think clearly about this, there is probably no real benefit from using a reserve price. the big disadvantage is that Ebay charge much more for a reserve price than they charge for using a similar starting price.
We will give an example. Let's say you want to sell an item, and your lowest price is £1,000. You have three basic choices,
- Starting Price £0.99
This will cost you £0.15 in listing fees, or £0.30 with a gallery picture. If the item doesn't reach £1,000 cancel in the last minute, and all it has cost was your listing fee.
- Starting Price £1,000
This will cost you £2 in listing fees, after which you don't have to do another thing. If it sells, it sells, and if it doesn't, it doesn't. Obviously you will pay commission if it sells.
- Starting Price £0.99, Reserve Price £1,000
This will cost you £2 in listing fees, and also £20 in fees for using a reserve price. If the item fails to sell, it will have cost you £20 extra for nothing. If the item does sell, however, your reserve fee is credited against your commission.
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Obviously, you could construct more choices than the above, but they serve to illustrate the point clearly and simply.
To our mind it is stupid and pointless to use option 3 above. Neither buyers nor sellers benefit, Ebay is the only winner.
The advantage of option 2 over option 1 is that you do not need to waste time monitoring your auction. One disadvantage is that you will not learn how much people were prepared to pay, which may have been useful and valuable information for you and others.
Option 1 has many advantages, cost being one of them. You will also learn, even if your item does not sell, how much other people are prepared to pay, which may influence you to reduce your price expectation for future attempts at selling. In the evnet that you cancel early, you may disappoint some over-optimistic bidders, you may even get e-mails and complaints about it, but the only people you are likely to alienate are a minority of stupid ignorant and selfish people who cannot or will not realise that you as a seller have every right to cancel your auction early. Fortunately most people are reasonably inntelligent and can understand the other party's viewpoint, unfortunately, it can be frustrating receiving e-mails and complaints from the idiotic or selfish minority.
Chard's Starting Price Policy
We try to be flexible in our use of starting prices, and use whichever seems to works best for any particular item. We never use the reserve price option which is clearly just an option which Ebay provide for sellers with more money than sense.
As dealers and professionals, we try to sell our items in the most efficient way. We are also happy to make our policies as transparent as possible which is why we have provided this, and many other information pages.
Economics of Selling Gold Bullion on Ebay
If you do not understand why we sometimes cancel auctions, or disagree with our policy, you may learn from reading this page.
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Company name | Chard (1964) Limited
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Address | 521 Lytham Road
Blackpool
Lancashire
FY4 1RJ
England
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Telephone | 01253-343081 & 316238
International 0044-1253-343081 & 316238
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Opening Hours | Monday to Saturday
10 a.m. to 5 p.m.
Closed Bank Holidays
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Bankers | Royal Bank of Scotland
87 Bond Street, Blackpool, Lancashire, FY4 1BW
Sort Code: 16-14-12
Swift Code: RBOSGB2L
Account Name (Sterling): Chard (1964) Ltd
Sterling Account Number: 10046146
IBAN Number: GB67 RBOS 16 14 12 10046146
Euro Account Number: CHAR1964 EURA
IBAN Number (Euro Account): GB29 RBOS 16 10 85 10037427
US Dollar Account Number: CHAR1964 USDA
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