Wednesday, April 11, 2012

Buy It Now or Auction? How To Choose The Right Selling Format For Your Items

So you want to sell your items on eBay and you're sitting at your computer and are ready to list.  You may have noticed that eBay offers several options on how to sell your items. Choosing the best format for your eBay auction is an important part of making sure your item sells for the best price. There are several different platforms; so let's look at all of your options so that you can pick the best one.

Starting Price
First, let’s look at the starting price. You should have an idea of the average selling price from your item research. However, it’s always worth double-checking with the most recent Completed Listings before selling your item.  If you are unsure about market research, please refer to my post on market research.

When you first start listing, eBay will offer to look up an average price for you based upon your keywords. Do NOT use this. eBay only looks at items that have similar keywords to yours. If you are trying to sell a camcorder, for example, eBay will not only factor in camcorders, but will also include auctions for camcorder batteries, cases, and so on, not just the camcorder unit itself. That can skew your results dramatically.  The best method is to look at the items that have sold.  You do this by entering a keyword, then click the advanced tab and go down to completed listings, and hit search. You will then be able to see the completed listings yourself. You can then adjust your starting price accordingly.

Reserve Price
Here's the Golden Rule of eBay: Lower starting prices attract more (and earlier) bids. In general, a low starting bid will increase your chances of success. However, if after you do your research and find that the averages are too low for you and your pieces, then you will want to protect yourself by setting a reserve price. There is a non-refundable fee for setting reserves, so proceed with care.  Once you've set a reserve price, and if the bidding doesn’t reach the reserve price you set, then you’re not under any obligation to sell the item to the highest bidder. You can offer it to them if you want to (using a Second Chance Offer), but you don’t have to.

When setting your reserve price, consider both the average selling price and what you want to get for the item. Be realistic, though. At the end of the day, your objective is to sell the item, so don’t list a ridiculously high reserve price. You won’t end up with a bidding war at the end of your auction if the reserve has still not been met.

Buyers expect to see reserve prices on expensive items, but not on cheap ones. Most buyers prefer auctions with no reserve, but that is more risky for you. On expensive items, I recommend that you always use a reserve. On less expensive items, use your discretion to weigh the risk versus your expected selling price. The more popular an item is, the less risk you take by not using a reserve. Hot-selling items or highly collectible pieces usually get enough bids to end up selling at their true value. Slower-selling items or obscure goods that have a limited market can be very risky to start at a low price without a reserve.

Most buyers bid in whole increments ($15, $50, $200, $325, and so on), so it’s wise to list your reserve price just below one of those increments. If you want to set your reserve at $700, instead set it at $689; instead of $75, use $68. Once someone meets the reserve, the real bidding begins.

To add a reserve, click Change next to No Reserve price set for this item and enter your reserve price. Remember: the fee for adding a reserve price is nonrefundable.

Buy It Now Pricing
You don’t have to set a Buy It Now price. If you choose to, it will cost you between 5¢ and 25¢, depending on the price you set.  You can avoid these fees by starting an eBay store, or wait until eBay offers Free Buy It Now Listings, which is quite often.

If the first bidder chooses to place the starting bid instead of using the Buy It Now option, the auction usually reverts to a standard auction and the Buy It Now price disappears (unless there is a reserve price on the auction). Just like the reserve price fee, the fee to add a Buy It Now price is nonrefundable, whether or not the buyer uses it.

When you are setting your Buy It Now price, you should always set it significantly higher than your starting price; otherwise, there is really no point. eBay requires the Buy It Now price to be at least 10 percent higher than the starting price, but I recommend that you go higher and list it around the average selling price, or possibly a fraction higher.

Here's a little pricing tip for Buy It Now:  Let's say you have an item you want to sell for $300.  Try pricing it a couple of dollars lower that the $300 price.  Using $297.70 rather than $299.99 for the Buy It Now price may seem a little pointless, but there is a logic to it. Buyers will always see $299.99 as $300 because of retail store prices. $297.70 is only $2.19 lower, but it seems much lower because it’s not a common price point. So you are more likely to get the buyer over another seller who priced his item at $299.99.

One tactic that can really attract sellers to use the Buy It Now price is offering free shipping. Simply add the shipping cost to your desired Buy It Now price, and add another 50¢ to pay for the subtitle. Then say “Free U.S. shipping with Buy It Now” in the subtitle.

Fixed-Priced Listing
Determining the difference between a Buy It Now auction and a fixed-price listing can get a little confusing. Buyers can make an instant purchase on either listing type, but a fixed-price listing does not have an additional bidding option. The Buy It Now price is the only option. The buyer either buys it for that price or doesn't.

If you want to sell in a fixed-price format, click the Fixed Price tab. The only amount you need to enter here is the Buy It Now price. Use the same reasoning as you do for a Buy It Now option in an auction to determine the price you set. You can also use the free shipping tactic to increase your fixed-price sales.

If you have easy access to your computer, consider using Best Offer. If you want to use this option, set your Buy It Now price a little higher to allow for haggling down with your buyer. That way, she feels like she got a deal and you don’t actually lose any money.

If you select the Best Offer box, you will be given an opportunity to enter an amount that you want to be automatically accepted and an amount to automatically reject below. Going back to my $300 item example from earlier, I might set it to automatically accept an offer at $275 or higher, and automatically reject anything below $245. I will still receive notification of offers submitted with a Best Offer of $246 to $274 for my own review.

In summary, there are a variety of ways that you can choose to list your items.  My best advice is to try them all.  Experiment with different listings and tactics and see which ones work for you. Soon you will find your personal formula for getting the maximum prices out of your items.

Be sure to check out my eBay store, featuring vintage jewelry items starting at a ridiculously low 49 cents!

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