Determining Your Opening Bid on eBay
Increase your eBay profits with this quick guide to pricing your products correctly.
One of the toughest things to figure out when you're getting ready to sell on eBay is how to set your starting and/or "Buy It Now" price. People break into a sweat about making this decision, but it's really not that urgent an issue--unless you price your item too low and it sells at a loss!
Your goal here is to make money, not lose it. So the first thing you need to consider is how gutsy you should be when it comes to your business. In the business world, this is called measuring your "risk tolerance." (I, for one, have an incredibly low risk tolerance!)
There are those who say that the greater the risk, the higher the chances for success. And this may be true. Certainly when you're in Las Vegas, you have a better chance of winning big if you're betting big. But your eBay business may be your livelihood. So pricing an item is important, and being glib with the money you need to pay next month's rent is probably not prudent. You can increase your chances of eBay success with this breakdown of the three most popular ways to set your starting price:
1. Set the starting price at $1--with no reserve. There's been much talk about the attraction of starting your items at just $1. There's certainly a definite benefit to that, as prospective buyers will see your listing and think they're the only ones to see your low-priced item--and that they'll be win it at a bargain.
But instead of $1, I recommend you list for 99 cents--see the list of listing fees below to understand why. Once you list an item at 99 cents, prospective buyers will perceive the deal and begin to bid. The item will generate competition, and bidders will hopefully drive up your selling price in a flurry of (possibly last minute) bidding. One caveat here: If your initial bidder gets no competition, your item may have to sell for your starting bid of 99 cents!
How do you avoid that? Before you list your item, follow one of my cardinal rules by running a "Completed listings" search on the item. To do this, type the keywords for your item in the search box that appears in the upper right hand corner of every eBay page. Once you get your results, scroll down the page, and on the left, you'll see a "Search Options" area defined in yellow. In this area, there's a "Completed listings" box you can check to narrow your results.
Once you have the completed listings results, click the "Sort by" drop down menu in the upper right hand corner above the list and sort your results to show "Price: highest first." Prices for items that have successfully sold will appear in green, bold text. Now you know the highest price you may expect to get for your item. If the price is close to your target, feel free to start the bidding at 99 cents. But if no one on eBay is buying your item, or if the selling price is below your cost, you might consider not selling the item at this time. eBay is cyclical--your item may be in demand in the future.
2. Start the bidding at your cost. A more popular tactic is to start the bidding so the opening bid will cover your investment in the item. Use the listing fees schedule below to help you gauge your best starting price. For example, starting an item at $25 versus $24.99 will double the item's listing fee from 60¢ to $1.20. Over time, those pennies add up and eat into your profits.
3. Start the bidding at a discount price. For new items, another option is to start the bidding at a discount to the "street value" of the item. The street value is the common, discounted price for the item in general commerce. To get an idea of this price, go to a site like www.google.com and enter the name of your item and the model number (if that's applicable). I like Froogle in particular because it lists website's product pricing right along with the pricing on many eBay stores, so you can get a good idea of the going value of your item. After you know the going street value of the item, you can choose a price that's somewhat less--this way, bidders who've done their homework think they're getting a deal on your item.
You can also use the information you gleaned from your street value price research to set your "Buy It Now" (BIN) price. (This is the price you set so a prospective buyer can purchase your item immediately if they're so inclined.) I usually make the BIN price a few dollars more than the discount price--this strategy works very well for my items.
Doing your research--even before purchasing an item to sell on eBay--is an ideal business practice. Because it's the time you spend on your business that can move you closer to eBay success.