I’m not quite clear on this so perhaps someone can straighten me out.
Lets say there is an item with a starting bid of $10.
The reserve on this item is $50
Then lets say I find the item 2 hours after it was listed. I place my max bid at $60.
The proxy bid should say something like $10.50 on the page.
If no one bids on this for the next 7 days does my bid jump to $50 at close?
Yes.
I was under the impression that if you bid higher than the reserve, the price jumps up to the reserve immediately.
The proxy bid will jump to $50, not $10.50.
I’m sure glad (it sounds like) they fixed that problem. IIRC, my s.o. was trying to bid on items with reserve prices and gave up because of not being able to jack the proxy bids up any higher. This was definitely a topic of discussion in our household.
I’ve never actually bought anything through Ebay, but I have sneaked a peak every once in a while.
What is the purpose of having a starting bid that is below the reserve bid?
Is there actually a benefit to bothering to post a bit below the reserve?
Reserve bids are entirely to the benefit of the seller - the item is displayed at the starting price, but the seller is guaranteed to get no less than his reserve price.
You, the buyer, gain nothing from it. It is only there to con you. Honestly, I find the practice distasteful, and respond by not buying from reserve auctions.
I too ignore reserve-auctions. When I sell, I set the starting bid at the minimum I’m prepared to accept. It’s fairer to the buyers (and browsers), and it’s worked fine for me so far.
You catch people’s eyes with a low starting bid, although, as InquisitiveIdiot mentioned (and I discuss below), there’s a whole host of people you’re going to turn off with this process.
If you’re going to make the starting bid the same as your reserve price, there’s really no point to it; reserve price auctions cost more to list.
Like I said, a low starting bid will attract eyeballs. Remember, the reserve price is secret (although some sellers will occasionally hint at or flat out tell you what it is in the item’s description), so you’re really trying to play a mind game with your potential buyers.
You make the reserve price high enough that you’ll make what you want if the auction goes through, but set the starting bid low enough to encourage a large enough cross-section of the bidder population to catch at least one customer who will pay what you want.
You’re not the only one who feels this way. Reserve price auctions can be a real double-edged sword.
On the one hand, the seller is guaranteed to get at least his reserve - or nothing at all. OTOH, he risks losing (I’d say he atomatically loses at least some) potential bidders who don’t like reserve price auctions.
Same thing with PayPal. As a seller, you trade the convenience of being paid automatically and quickly for the small fee PayPal (now owned by eBay) charges for their service; the buyer does not pay any fee there. I’ve found that a lot of buyers have feelings that are the inverse of InquisitiveIdiot’s feeling towards reserve auctions: if you don’t offer me the opportunity to pay via PayPal, I’m not bidding on it!