URL: http://www.entrepreneur.com/ebusiness/ebaycenter/article79564.html

An eBay item listing is a beautiful thing. It magically combines the best of free markets with a sense of competition and excitement that almost guarantees you'll get a fair price--perhaps even a generous price--for the product you're selling.

But the magic starts long before the first bid is placed. In fact, in most eBay sales, it is the seller who is the magician--deftly mixing various pricing strategies and tools to ensure that the most buyers bid the highest price they can.

How you conjure the best prices, of course, depends on what you're selling. So here are a few tricks for items of all prices--from $10,000 tractors to 10-cent postcards.

Getting Top Dollar for Luxury Goods
Many people mistakenly believe that eBay is only for small, mass-market items. In fact, there are successful sellers in the luxury goods market as well. Take Ricky Serbin (eBay User ID: ricysue) of San Francisco, for example. Serbin left a successful career in the fashion industry to sell designer garments and accessories on eBay.

You might not think that one seller could move very many designer garments and handbags priced at over $1,000 each, but you'd be wrong. Serbin is a Platinum PowerSeller, selling more than $25,000 worth of designer apparel and accessories on eBay every month. "I was lead designer of a large jewelry firm in the fashion industry, but I quit my job just two weeks after starting on eBay," he says.

Serbin is part of a hot eBay market for upscale apparel. According to eBay's own statistics, brand names like Coach, Gucci and Louis Vuitton are the top search terms in the apparel category. In fact, a rare luxury handbag recently sold on eBay for $59,000.

With such wild variations in price, the risks are high--but potential rewards are higher. "I'm willing to pay $1,000 for something to triple my money," says Serbin. "It is a gamble, but I take the risk." And indeed, most of Serbin's pricing strategy centers on making money by reducing the chances of losing money.

To minimize the risk of not selling the item at all, Serbin under-prices some pieces. "If I get it for a great price, I try to pass it on at a great price," he says. Most of his items sell for 60 percent to 80 percent less than the comparable retail price--but they sell fast. "Probably 40 percent of my items sell within 12 hours at a Buy It Now price," he says. And that keeps him in business with a locked-in profit.

Buy It Now--an option for buyers to purchase an item at a price set by the seller without bidding--is perfect for high-priced items, says Ben Hanna, eBay's senior manager for business and industrial categories. Hanna coaches sellers of high-priced items to use both the Buy It Now feature and a new option called "Best Offer." The new feature is getting a lot of use at the high end of the market. "We've had a lot of demand for this," says Hanna. "It lets bidders make an offer. If I have a tractor and want $10,000 for it, I could check 'Accept Best Offers' during the listing process. The listing shows a 'Submit Best Offer' link and it allows me to negotiate directly with each potential buyer."

Although managing best offers is not part of Serbin's current strategy, he always uses a Buy It Now price to capture those buyers who are purchasing on an impulse or who want an item right away.

Serbin's other pricing secret is to be accommodating to buyers from around the world. "Thirty percent of my business is international--South Korea, Japan, Australia, Morocco and the Far East," he says. Those customers tend to be willing to pay higher prices for goods that are relatively scarce in their home markets. They are also loyal, says Serbin: About 50 percent of his overseas customers come back for repeat purchases.

Managing the Middle Market
Well below the price of a couture dress or a custom-made designer handbag is the vast market for midpriced items, such as the consumer electronics sold by Jennifer Canty's company, Dyscern (eBay User ID: dyscern).

Canty, 33, started her Great Falls, Virginia-based business on eBay to spend more time at home with her family. She admits now that the idea may have backfired: Her business has evolved to Titanium PowerSeller status, with over $150,000 a month in sales and 14 employees. Every bit of Dyscern's revenue is made from selling consumer electronics like iPods and Palm Pilots. The company sells 300 to 400 units each week at prices ranging from $30 to about $300.

There's a consistently strong demand for iPods, says Canty. And that makes finding a buyer a pretty sure bet. But from the buyer's perspective, one iPod looks pretty much like the next, so an auction-style listing with a low starting price can create buyer excitement.

"We do everything at auction," admits Canty. "We found that we could get higher prices if we just let the market decide the price." She's not kidding. Every one of Dyscern's listings starts at just one penny, and on average, Dyscern's own testing shows that they earn about 10 to 20 percent more from that format than any other.

"I've never had to sell an iPod for a penny," she laughs. "After a three-day listing, pretty much everything ends up as it should."

This very simple approach to selling has several benefits for Dyscern, one being that the company never has to relist a product that doesn't close. "For a long time, there were just three of us," says Canty, "so we had to keep it simple. The beauty of eBay is it's a natural marketplace."

Canty's other strategies include offering international shipping and listing a few items to close every hour of the day. That way, she explains, unsuccessful bidders on one item can skip directly to the next, building a strong momentum for all her listings. Dyscern's listings are all three days long, which Canty feels helps her meet the expectations of bidders who want immediate results.

Probably the most difficult items to price correctly are one-of-a-kind collectibles or very low-priced items. And when you have a low-priced collectible, you've got a real predicament.

That's the challenge faced by Gail Hubbuch, 59, who sells historic postcards. Hubbuch (eBay User ID: snowhub) started several years ago from her Columbia, Kentucky, home with an inventory of more than 100,000 postcards, for which she paid an average of just 26 cents each.

"I've sold postcards to the Guggenheim, the Smithsonian, and several historical societies," she says. But pricing is still more art than science for Hubbuch. "My main selling strategy is to make money on obscure places that no longer exist. I never know what the price will be--it has to do with people's emotional attachments to those places," says Hubbuch.

It's that emotion that drove one of her postcards--a picture of a small-town gymnasium--to a final selling price of $263. "I've sold many cards for over $100," says Hubbuch. But she concedes that most go for about $7, and many in her collection will probably never sell.

With more than 700 coins, 300 stamps, 15 Pez dispensers and 9,675 other collectible items sold every hour, according to eBay statistics, eBay is the perfect market for collectibles. Nonetheless, it takes a keen marketer to optimize profits on low-priced items.

John McDonald, eBay's director of Home & Garden, recognizes the unique challenge that sellers like Hubbuch face. "You're trying to make this a great value to a buyer," says McDonald. "If it's a low-priced item, how can you make the whole price they're paying a great value? At a low average selling price, you want quantity."

McDonald says the answer to both value and volume lies in offering attractive shipping rates. "When you get down to low-priced items, you're balancing shipping costs vs. selling price," he points out. "For example, people are selling cabinet pulls for 99 cents, but the shipping is typically $4 to $6. You want to make it obvious that you want buyers to bundle and buy a lot of units."

Pricing for Value
Whether you're selling postcards or Prada, the right pricing strategy will attract new buyers and maximize profits. The key in all situations is value--that magical mix of right price, right time and right place. With a little practice and experimentation, you can start making the eBay magic work for you.

To Reserve or Not to Reserve
Like many sophisticated eBay sellers, Ann Wood (eBay User ID: willow-wear) strives to get the highest price while paying the lowest fees to eBay. As a Gold PowerSeller, Wood has experimented with reserve pricing, but finds it counterproductive. Adding a Reserve Price prevents an item from selling at anything less than the minimum price you set, but costs about 1 percent of the Reserve Price.

"Unless you have a reserve, an item can sell for less than you're willing to sell it for," she explains. "But I don't like to use a reserve--it really racks up my fees. Reserves also dissuade people from bidding."

eBay also notes that on average, items with no reserve typically sell for more than those with reserves.

Although Wood admits that reserve pricing is the norm in some markets, such as antiques, she prefers instead to simply set a reasonable opening bid. "My general guideline, when I'm not certain what it'll go up to, is to start the item at a price I'll be happy to get even with just one bid," she says. That simple strategy guarantees she'll get a fair price with the minimum fee.

How to Find Prices From Completed Listings
"Pricing starts with research," says Ann Wood (eBay User ID: willow-wear). When she's listing an item, she lets the market tell her what it's worth. "I look at active item listings first, then at recently completed sales," she says.

To find out how much similar items have sold for in the past, try this simple search procedure:

• Sign in--this information is available only to registered users.
• Click on the "Advanced Search" link at the top right of most eBay pages.
• Enter keywords for the item in the box on the search form.
• Check the "Completed Listings Only" box in the "Advanced Search" form.
• Add any other criteria, and click the "Search" button.