The title should speak for itself. I was looking for a horse saddle for my daughter a few minutes ago. I found one that I liked with a starting bid of only $25. I thought that maybe I could get a really good deal. When I read the description carefully however, they stated that their reserve was $125. What is the point of reserves?
So that if the item sells for less than they think they can get for it, they don’t have to part with it at the lower price.
It has to do with the eBay fee structure. Starting an item at a higher price costs more. For example, if the item you mention had been listed starting at the reserve price, it would have cost the seller $2.40 for just the insertion fee, but starting it at $25 only cost $1.20. The reserve price gurantees an acceptable minimum to the seller if the item sells.
I used to list antique advertising items for my dad years ago. We never set a reserve, but we did discuss it when we started doing e-bay. Our theory was that if your reserve is $150, you’re less likely to have someone START bidding at that price. If you set a starting bid of $25, you’re more likely to be able to get two or more bidders into the auction and into a bidding war to reach your reserve.
There’s a few reasons like the ones mentioned above, but here is why I do it:
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even though the reserve is not met the seller can still choose to sell the item, so if they only get 75% of the reserve they still might take it
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ebay’s insertion fees like QED said
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to get people bidding on the auctions…with many bids you can reach “hot” status and get a little extra icon in the results page. Also I think it might email people if they’ve been outbid, so getting them to initially bid on an item with a low starting price is a way to keep them linked to the auction through emails or their “items I’m bidding on” section
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if I want $100 for an item and start at that I might get zero bids, but if I set the reserve at $100 and the opening bid at $25 people will bid on it and might be pushed into bidding over that $100 mark more easily than if the initial bid was $100
Jayjay is right.
Yes, indeed, the listing price is less, but there’s extra fees involved in using a Reserve price, so with a Reserve it actually slightly more. And, yes, the Reserve does guarantee them the minimum they want, but so does a minimum starting bid at the right amount.
AFAIK, the seller can NOT chose to sell th eitem (legally, though eBay) if they get a bid less than that. If fact, ebay will make that clear if your bid is the highest but less than the reserve.
There are two big reasons- one, it sucks you in by using false advertising. Two- sometimes they do ont want to sell the item at all, but they just want the biddders on eBay to give them a free estimate.
Reserves are crocks. Sellers who use them are of questionable business Morals. They are the eBay equivilant of the tiny asterisk at the bottom of an ad with a great price- that the asterisk mades nigh worthless.
Some sellers are so sure of the bids on ebay that they will start an action at one cent with no reserve. Those auctions often end up higher than those with high starting bid or with reserves!
I agree with DrDeth. The reserve is a useless leftover from the real-world auctionhouse. Sellers who use reserves (particularly for low-value items) are losing bidders right from the start. I don’t ever bid on reserve listings, and I know plenty of people who do the same, because it’s just not worth the hassle of nine times out of ten being told that I haven’t met the reserve.
Same here, I’m bidding on stuff I want, not participating in a guessing game about the reserve price.
I’ve never bid on an item with a reserve price, and I can’t imagine starting to do it.
This is incorrect. For reserve auctions, the insertion fee is based on the reserve price, not the starting bid. Plus there are additional fees for reserve auctions, so there is no savings for a starting bid that is lower than the reserve.
From Ebay’s Glossary:
“If your maximum bid is the first to meet or exceed the reserve price, the effective bid displayed will automatically be raised to the reserve price.”
The way I read that, it’s a way to force the price upward, even when the bidding wouldn’t naturally support a final price that high.
I think that, just like reserves in conventional auctions, it exists to guarantee a minimum price (or no sale) for the item, at the same time as starting the bidding low enough to generate interest and get things moving at a decent speed - people don’t apply clinical methodology to auction bidding and so it’s possible for them to get whipped up into a frenzy of bidding that maybe wouldn’t even have got started if the opening bid was higher.
This may be a good or bad thing (or more likely a mixture of the two).
E-bay also has some type of automated reply system that continuously suggests that you should “lower starting bid”.
When I posted my motorcycle with a reserve of $8000 and a starting bid price of $7750 it continually told me to lower the starting bid. It did it repeatedly till I got the starting bid down to $5000.
Should I have forgone the reserve amount and had a starting bid at $8K?