eBay Auctions, Beginners Guide to Pricing Your Items

There are always two questions asked at my eBay Education Specialist workshops, "how do I determine the price for my items and what are my options?"

 The eBay Price Formats can seem confusing particularly if you are a new or inexperienced Seller. You hope to set a price that will give you a profit - but you also want to sell the item. Fortunately it takes a  little practice and knowledge to put it all together. It is not too different than offline merchandising.

 In offline retail businesses prices are usually marked 2 to1 from wholesale to retail (referred to as keystone).

Purchase at Wholesale $10.00, mark up 2 to 1= Retail of $20.00

In real-time auctions prices are set by the bidding demands of the audience through the auctioneer. And the auction continues until there are no more bidders, the highest bid wins the item.

"Bid n'a buy, I have $5, do I hear $10".

eBay is a combination of (deciding on) a starting bid, adding other options as needed, and letting the bidders determine the final bid (the highest bidder wins the item - usually).  It is important to remember to do your homework by researching ongoing auctions, closed auctions, and checking offline prices before you make pricing decisions for your eBay auctions.

Site Map:  First I would like to introduce you to the Site Map. When I teach workshops I introduce students to the Site Map as a useful tool to find information and eBay tools. The Site map link is located at the top of each eBay page (easy to find). Everything and anything you want to find on eBay can be found by scrolling through the links. I encourage you to do it when you have time.

Seller Central  and Seller Education:  Two more excellent sources of  information for learning more about successful Selling on eBay as well as eBay's Best Practices.

                

The links and tutorials in Seller Central and Seller Education provides effective tools to use in your eBay business. And just a reminder, when you see  Blue underlined text  it links to more information about the application or item you are currently looking at. Be sure to click on those links, particularly if you have unanswered questions or do not completely understand what is being presented to you.

Auction Pricing Formats and How They Work

• The Starting Bid.
• The Reserve Bid (if any)                           
• The Buy It Now BIN 

Starting Bid: The starting bid in this illustration is $14.95. Starting Bids are:

• Mandatory: The starting bid is mandatory
• It can be set as low as $.01 or as high as you like
• Should cover your basic cost of item plus fees

Reserve bid in the illustration is hidden until it is met (but is: $300.00).

• Reserve price on an auction is optional and is best used when you wish to set a lower starting price but expect or need for the final price to be higher to meet expectations or cost factors. An auction with a Reserve Price is not a contract until/unless the Reserve Price is met. If the auction ends and the Reserve is not met, the item is not sold and the bidders do not expect to complete the auction. The auction item may be relisted. When the  Reserve Price is met it becomes a binding contract the same as any other auction.
• The Reserve Price will be hidden until met throughout the bidding process. It will say on the auction listing - Reserve not met.  When the reserve is met: it will say - Reserve met.
• There is a fee for the Reserve bid but it is refunded if reserve is met. If the reserve is not met, the fee is NOT refunded.  Your fees are shown when you have completed your auction listing and before it is submitted live on eBay. Therefore you can go back and adjust your fees if needed. Anytime you see a blue underlined link there will be a brief tutorial that will explain the fees or give other information you need to know.

Buy It Now (BIN) on the item in the illustration is $299.99.

Buy it Now is a good option when you know the exact amount you want an item to sell for. You can set the BIN now price and the Buyer can purchase it for that amount before the Auction bidding begins and/or Reserve is met.

• Buy it Now is an instant sale once the buyer clicks on it - the item is sold. Once the BIN has been selected the auction stops and the item is sold.
• If you put up a regular auction (no Reserve) the BIN option remains until the first bid. Once the first bid is made the BIN disappears and the auction continues as a regular bidding auction.
• If you have an auction with a Reserve Price, the BIN option remains until the reserve is met?then the BIN disappears and it continues as a regular auction.
• There are qualifications for sellers who wish to use the BIN option. To create a Fixed Price listing with a quantity of one, you must have a feedback rating of 10 or more (or be ID Verified ). If you have a PayPal account and accept PayPal as a payment method on the listing, your feedback rating only needs to be 5 or more. To create a Fixed Price listing with a quantity of two or more, you must have a feedback rating of 30 or more and be a registered user for at least 14 days (or be ID Verified). If you have a PayPal account and accept PayPal as a payment method on the listing, your feedback rating only needs to be 15 or more.

Pricing Options and Strategies 

Make your decisions based on  some of the following suggestions:

• Current Market Value(CMV): Determine the CMV of items by checking eBay:

                       1. Completed listings and current listing to see what they have sold and are selling for 
                       2. Offline retail outlet price to get an idea of what the market value is.
                       3. Then determine what your bottom asking price will be. 

The research you do will help considerably.  Marketing your item is important:  Good pictures, good descriptions, excellent customer service policies and promptness in answering emails will all add value to your auctions.

• Calculate your price point (PP) by adding: Item cost + eBay fees=Price Point
• Reserve option?
• Buy It Now option?
• Make an Offer option?  
• Shipping: In most cases the buyer pays shipping and handling, but if you make the decision to include them in your auction, make certain you know what they are before putting up your auction.
• Handling: For a better perceived value it might be better to include your handling in the Price Point rather than list it separately. Higher handling fees tend to bring fewer bids.

Pricing is not an exact art or science, you learn from experience and research

Determine what similar items are selling for through research, then calculate your Price Point and determine exactly how much you need to sell the item at a profit.

Bidding can be started as low as $.01 or as high as you need it to be for a profit. Several things to take into consideration are:

• The lower the starting bid the lower the eBay insertion fee, but often the higher the risk that your desired bid will not be reached. Sometimes it is better to save a few cents by starting at $1.99 rather than $2.00. Or $9.99 rather than $10.00. A little experience will make this simpler for you
• If you are a new seller with less than 20 feedback starting low to save on fees may not bring the results you hope for.  It takes higher feedback to build buyer confidence.
• One way to help with Buyer confidence when you have low feedback is to offer the option of payment with PayPal.  PayPal has built in buyer protection that gives Buyers confidence their purchases will be protected.
• Another is to become ID Verified when you sign up for your eBay account. It is a simple process but allows you to use more of eBay's tools from the first day.

Let's look at some of the options eBay has for setting your Auction Prices
In addition to the auction bid there are other considerations you might think about.
There might be a time when you want to start an auction with a low beginning bid
to encourage bidding, but simply can not let the item be sold at the bid price. 

The Reserve Bid:  When you use a Reserve Bid you are not obligated to sell unless the Reserve is met.  (There is an extra fee for a Reserve Bid, but it is refunded if your item sells and a Final Value fee is charged). The Reserve Bid dollar amount does not show up on the auction listing.  It remains hidden and you only see "Reserve Not Met" or "Reserve Met" indicating what the status is.

Reserve auctions are a good solution when you have an expensive item such as a diamond ring.
You do not want to accept less than $500 for it but you would like to start the bidding lower--the solution is to set the Reserve for the $500 and start the bidding at $10. There is no risk to your decision to have a lower starting bid. You will pay the extra reserve fee if the reserve is not met.

Do you tell people who email you asking what the Reserve price is?  It is your decision, but for the sake of good customer relations, it is probably a good idea to disclose it.

You might also consider:

Buy It Now (BIN) option. The BIN option allows you to set your price a for an instant sale if someone is willing to pay the price (there is an extra fee for using this option). The Buy It Now option compliments the regular auction starting bid. Keep in mind that once there is an Auction bid the Buy It Now option disappears and it becomes a regular auction. 

Remember:

• The Starting Bid is  the the lowest price you are willing to sell for unless you have a Reserve, then the Reserve becomes the lowest price you are willing to sell for and you can start the bidding anywhere since it is protected by the Reserve.
• The Buy It Now (BIN)  is your retail or the price you would like to get for it (often people are willing to pay it and do not want to wait for the bidding process).
• There is also the Best Offer option: Which is exactly as it sounds, on the Fixed Price items a buyer can make you an offer and it is your option whether you accept it. (Like negotiating a price at a store).

The lower the starting bid the more apt you are to receive bids:  You can make adjustments anytime before the auction is submitted live on eBay and after up to the time a bid is placed.

So how do you determine what your starting bid will be? 
Factor in:

• Your cost
• eBay fees 
• The lowest amount you are willing to let the item sell for.

Make certain you do some research for comparable items and include the Completed Listings option in the left column of your screen when you are looking at an Auction listing page.   Completed Listings will give you an idea of what similar items are selling  for and how the auction was handled.

Once you have done that you can determine which options are best for a successful auction: Auction, Reserve or Buy It Now (BIN)

Here is wishing you great and successful eBay sales.

Remember to visit eBay Community Pages,and eBay Workshops for a wealth of information and interaction with eBay Pinks (staff) and fellow eBay users. Happy Auctioning. 

Joyceb/danse eBay Education Specialist