Do 1 dollar eBay auctions make any difference?

I am a casual eBayer, both buying and selling. For most of my sales auctions I use a reasonable minimum starting price (usually between $50 and $100) and no reserve. My starting price is usually a bit above what I payed for the item, and I just hope that auction competition will drive it even higher. Many of the items go for above the starting price, some are sold exactly at that price, and a few don’t go at all. A couple of times just to experiment I listed the auction with a $1 starting price and no reserve. They all sold, none of them for a massive profit and a couple for actually well below what I paid for them.

So maybe I am missing something here, but what is the point of having an arbitrarily low starting price in an eBay auction? I don’t really see how it can result in a greater profit margin, and there is always the chance of losing significant money. Yet lots of people use them. Any insights?

The listing fee is lower.

Lets say you have an item you’re reasonably (or absolutely) confident will sell for somewhere between $50 and $100 - you could list it at $50 and pay $2.40 listing fee, or list it at 99c and pay 20c listing fee.

It just depends on whether you can be sure it will attract enough bids - and for some items - notably small gadget-y things, that’s a fairly safe bet.

I know there are some sellers out there who start an item worth 50 at .99 (or have that be the buy-it-now price) and simply charge $49 for shipping. They get the low listing fees and still make their money.

Ebay is trying to crack down on that kind of behaviour - not only because it often goes hand in hand with dishonesty (if you need a refund - for example if the item you buy turns out to be a shitty Chinese bootleg, guess what part of the total cost the seller doesn’t have to refund), but mainly because it means they’re not getting their slice of the sale value (there’s no fee on the shipping element).

If you list something and it sells for less than what you want simply say it’s broken and can’t complete the sale. Yes it’s against ebay rules and you’ll lose the listing fee but people do it all the time.

I tell you, the theories among sellers about how to price their merchandise are endless.

One idea behind the $1 opening price, beyond saving on listing fees, is to encourage early bidding, on the theory that potential buyers are more likely to click on something that somebody else has bid on. Plus you’re taking advantage of buyer psychology, where you hope that by getting a buyer engaged in the bidding, you will hook them. At that point their competitive instincts will come into play, and they’ll be determined not to stop bidding until they’ve won.

That’s the theory, anyway. But in fact, for commodity items, it seems to me that they get what they get, regardless of whether the opening price is five dollars under the market price, or a hundred dollars under the market price. If that’s the case, you might as well start the bidding at a dollar and save on the listing fees.

You forgot to mention that such a practice is also dishonest and sleazy.

I just talked to a co-worker who frequently sells clothes on eBay and she almost invariably goes for the ‘low listing price to start, hope competition drives the price to its expected value’ strategy. And she has never pulled an item that sold for less than what she wanted - ‘what a lousy way to do business’ was her take on it.

Also, if you list it at 99 cents (note: listing at $1 costs more than at 99 cents), it usually takes more bids before it hits market value. This means other people will see that it has a lot of bids, which might imply it’s a quality product or a reputable seller. Of course, that gets into the whole psychology of online auctions, and I don’t know if it has any merit. On the other hand, I don’t see how having lots of bids can hurt.

Did ebay change things? It’s been a while since I actually took a look at my billing statement, but it used to be that the listing fee was a % of the final sale price, or a % of the listing price if the item didn’t sell. So if it sells for $50, it doesn’t matter if you listed it at $1 or $45. Of course, if you post a lot of items that don’t sell, you could conceivably save a lot of money by starting things at $1.

I don’t think so… I’ve always remembered it to be a set listing fee, depending on a variety of things such as the initial price, and add-ons or listing enhancements (bolding, etc.), and some other stuff which may or may not include the reserve price. Then, after it presumably sold, they tacked on a final value fee or whatever.

I usually start my items out at $.99 if I know they’re a popular eBay item and the price will raise rather quickly.

No, there is a listing fee that is separate from the final value fee. The listing fee is based on the listing price, and the final value fee is based on what the item sold for.

I generally, when selling on eBay, set my starting price at $0.99. Then take my “profit” out of my S&H charges.

(Before anyone castigates me, though, let me emphasize my S&H is reasonable (An average of $5 for US shipping, for lots under 1 lb) and always clearly published in the auction.)

I’ve had a few auctions where I knew the items I were listing were likely to get up to a high value, and I’ve never had the experience of feeling that my listing underperformed because the initial bid price was too low.

I have sold on Ebay using almost all the different starting bid methods and found little difference in results. I should say though, that what I sell is in a very small niche market that is quite soft these days.
When I see an item I might be interested in start at .99, I either put in a first bid at .99, and wait to see where it goes, or put it on a watch list. Sometimes I win the item at the starting price.
ALWAYS be aware of the shipping charges and such before bidding!

eBay newbie speaking here. One of my first items I put up for sale was a digital camera, starting at £10. No bids.

Relisted the item, same description and picture, changing only the price. Started at £0.01, got a first bid within an hour, and sold it for £16.