How to Inspire Bidding Frenzies

How do you get top dollar for your eBay items? Try tactics the pros use--and guide the bidding frenzy in your favor.

By David Worrell

Opinions expressed by Entrepreneur contributors are their own.

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

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

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

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

You might not think that one seller could move very manydesigner garments and handbags priced at over $1,000 each, butyou'd be wrong. Serbin is a Platinum PowerSeller, selling morethan $25,000 worth of designer apparel and accessories on eBayevery month. "I was lead designer of a large jewelry firm inthe fashion industry, but I quit my job just two weeks afterstarting 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 apparelcategory. In fact, a rare luxury handbag recently sold on eBay for$59,000.

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

To minimize the risk of not selling the item at all, Serbinunder-prices some pieces. "If I get it for a great price, Itry to pass it on at a great price," he says. Most of hisitems sell for 60 percent to 80 percent less than the comparableretail price--but they sell fast. "Probably 40 percent of myitems 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 priceset by the seller without bidding--is perfect for high-priceditems, says Ben Hanna, eBay's senior manager for business andindustrial categories. Hanna coaches sellers of high-priced itemsto use both the Buy It Now feature and a new option called"Best Offer." The new feature is getting a lot of use atthe high end of the market. "We've had a lot of demand forthis," says Hanna. "It lets bidders make an offer. If Ihave a tractor and want $10,000 for it, I could check 'AcceptBest Offers' during the listing process. The listing shows a'Submit Best Offer' link and it allows me to negotiatedirectly with each potential buyer."

Although managing best offers is not part of Serbin'scurrent strategy, he always uses a Buy It Now price to capturethose buyers who are purchasing on an impulse or who want an itemright away.

Serbin's other pricing secret is to be accommodating tobuyers from around the world. "Thirty percent of my businessis international--South Korea, Japan, Australia, Morocco and theFar East," he says. Those customers tend to be willing to payhigher prices for goods that are relatively scarce in their homemarkets. They are also loyal, says Serbin: About 50 percent of hisoverseas customers come back for repeat purchases.

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

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

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

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

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

This very simple approach to selling has several benefits forDyscern, one being that the company never has to relist a productthat doesn't close. "For a long time, there were justthree 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 internationalshipping and listing a few items to close every hour of the day.That way, she explains, unsuccessful bidders on one item can skipdirectly to the next, building a strong momentum for all herlistings. Dyscern's listings are all three days long, whichCanty feels helps her meet the expectations of bidders who wantimmediate results.

Collectibles and Low-Priced Items

Probably the most difficult items to price correctly areone-of-a-kind collectibles or very low-priced items. And when youhave a low-priced collectible, you've got a realpredicament.

That's the challenge faced by Gail Hubbuch, 59, who sellshistoric postcards. Hubbuch (eBay User ID: snowhub) started severalyears ago from her Columbia, Kentucky, home with an inventory ofmore than 100,000 postcards, for which she paid an average of just26 cents each.

"I've sold postcards to the Guggenheim, theSmithsonian, and several historical societies," she says. Butpricing is still more art than science for Hubbuch. "My mainselling strategy is to make money on obscure places that no longerexist. I never know what the price will be--it has to do withpeople's emotional attachments to those places," saysHubbuch.

It's that emotion that drove one of her postcards--a pictureof 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 hercollection will probably never sell.

With more than 700 coins, 300 stamps, 15 Pez dispensers and9,675 other collectible items sold every hour, according to eBaystatistics, eBay is the perfect market for collectibles.Nonetheless, it takes a keen marketer to optimize profits onlow-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 abuyer," 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 inoffering attractive shipping rates. "When you get down tolow-priced items, you're balancing shipping costs vs. sellingprice," he points out. "For example, people are sellingcabinet 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 buya lot of units."

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

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

"Unless you have a reserve, an item can sell for less thanyou're willing to sell it for," she explains. "But Idon'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 typicallysell for more than those with reserves.

Although Wood admits that reserve pricing is the norm in somemarkets, such as antiques, she prefers instead to simply set areasonable opening bid. "My general guideline, when I'mnot certain what it'll go up to, is to start the item at aprice I'll be happy to get even with just one bid," shesays. That simple strategy guarantees she'll get a fair pricewith the minimum fee.

How to Find Prices From CompletedListings
"Pricing starts with research," says Ann Wood (eBay UserID: willow-wear). When she's listing an item, she lets themarket tell her what it's worth. "I look at active itemlistings first, then at recently completed sales," shesays.

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 registeredusers.
  • Click on the "Advanced Search" link at the top rightof 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.

David Worrell is Entrepreneur magazine's"Raising Money" columnist.

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