Chapter 3 - eBay Auction Pricing & Strategy

The initial asking price for an item that is up for auction on eBay is called the Start Price. As shoppers submit bids, the Start Price is replaced by the Current Bid Price.

Bidding is possible until the end of the scheduled duration of the listing or until the listing is cancelled. Each competing bidder submits the high value they are willing to pay, and the Current Bid Price automatically increases incrementally. The price will increase as often as necessary and by as much as necessary to counter any other bids placed until the high value indicated by the highest bidder is reached.

When the auction ends, the highest bid becomes the End Price. (Unsuccessful auctions have an End Price of zero).

A Reserve Price is an option which prevents a sale from occurring if the bidding does not exceed the threshold set by the seller. The reserve price may not be visible to shoppers. Although the reserve price ensures a satisfactory end price for the seller, shoppers may not be motivated to participate in an auction which they cannot win.

Strategy

Normally auction start prices are well below what a seller would ask for in an immediate purchase situation. The expectation is that bid activity will raise the price to meet or exceed the standard value of the item. The flexibility of auction pricing is ideal for situations where the item for sale is potentially valuable but difficult to identify or evaluate.

Start Prices which are close to the expected End Price an item will deter bid activity. There needs to be room for a little bidding in the price.

99 cent auctions have been a popular convention on eBay for years. It is thought that the lowest possible start price will attract maximum interest from shoppers, though this approach is more effective with some types of products than others.

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