Determine an item's current market value using eBay's Completed Items search and set your price accordingly.
On eBay, research is money. A seller who knows how much an item is worth will be able to choose the selling options more appropriately, and as a result, get more money for it. And a buyer who knows the worth of an item will more readily recognize a good deal, and as a result, spend less money. Fortunately, there are tools at your disposal to help determine an item's worth in about 20 seconds.
Any item on eBay is worth only what someone is willing to pay for it. Fortunately, for almost every item sold on eBay, an identical or similar item will have been sold within the last month or two. And given the public nature of eBay's past auctions, it's easy to find out the health of the current market for your item before you list it.
Start with a standard search (see Chapter 2), and locate any auctions for items similar to the one you're selling. Click "Completed items" in the Display box as shown in Figure 4-1, and then click "highest priced" to sort the listing by final price in descending order. Note that eBay's Completed Items search is a title-only search (descriptions of closed auctions aren't indexed), so you'll typically want to use simpler (broader) search queries than you'd use for active items.
Only the closing price of a successfully completed auction matters, so pay attention only to auctions that have received at least one bid. Even if the seller had a reserve that wasn't met (see [Hack #35]), the closing price will give you a picture of what buyers might be willing to bid for your item.
It's important to realize that some markets will be more stable than others. For example, there's always an extremely healthy interest in laptops, PDAs, digital cameras, and other popular consumer electronics, especially since there are retail stores to help set prices. But markets for collectibles are typically more volatile, since the value of a given item is influenced more by its rarity and the people who happen to be visiting eBay that week than the item's original price or its quoted value in some collector's handbook.
An item's perceived value is the most important factor of its market value. If you're selling a rare antique toy, and yours is the only one like it on eBay, then it will likely fetch a fortune. But during a week in which several examples of a supposedly rare item are being sold, its perceived value will be lower. If your research shows that the market for your item appears to have bottomed out, it usually pays to wait two or three weeks until those items currently on eBay have been sold off, and a new batch of hungry buyers makes their way to the auction block.
Inexperienced sellers often make the mistake of setting the starting bid of an auction equal to the amount they expect ? or hope ? to get for their item. Other sellers forgo research and set the starting bid at a single dollar, relying on the market to set the price. Of the two, the second approach is the better choice for the lazy seller, because you're virtually guaranteed to sell your item.
The key is to remember the empty-restaurant syndrome. When strolling down the street looking for a good restaurant, are you more likely to enter an empty restaurant or a crowded one? If you're like most people, you'll go for the crowded restaurant, even if there's a wait.
Bidders on eBay think the same way. Consider two auctions for the same item, one starting at $20 and other starting at $300. Assuming the market value of the item is at least $300, the first auction may receive 20 bids and close at $330 while the second may get only two bids and close at a measly $305. Why? Not only will the lower-priced auction attract more bidders early on and appear higher in search results sorted by price, its perceived popularity will buoy its perceived value toward the end of the auction.
So, by that logic, should you start all your auctions at a single penny? Of course not. Instead, you'll want to temper this approach with the following concepts:
When selling an item of limited appeal ? when you might expect only one or two bidders to be interested ? you'll want to set your opening bid much higher. Remember, if your starting bid is $5 and you get only a single bidder, the closing price will be $5, even if the buyer entered a maximum bid of $150.
If you don't know how much your item will sell for, but you don't want it to sell for too little, you can use a reserve price auction. See [Hack #35] for details.
Use the Buy-It-Now option to set two prices for your auction: the artificially low starting bid price, and the full amount you'd like to get for your item. Hint: an especially eager bidder might be willing to pay a few extra dollars to get the item sooner. See [Hack #36] for more information on the Buy-It-Now option.
The Buy-It-Now price disappears once the first bid is placed, but there are ways to get around this. The most common method is to use a reserve price, which will keep the Buy-It-Now price visible until the reserve has been met. The problem with this is that your bidders may mistake the Buy-It-Now price for your reserve price, and as a result may simply be scared off.
Another workaround ? which is not recommended ? is to simply state your Buy-It-Now price in the auction description, instructing bidders to contact you directly if they're interested. Not only does this violate eBay policy, but it may also appear to bidders as though you're trying to scam them (see [Hack #20]).
Of course, if you choose your Buy-It-Now price wisely, keeping it around longer won't be much of an issue.
eBay's listing fees are based on the starting bid you choose: the lower the starting bid, the lower the cost to list. Fees are not calculated proportionally, however, but rather according to a tiered pricing structure. For example, a fixed fee of 30 cents is charged for all auctions under $10, which is why you see so many auctions starting at $9.99. The next cut-off is at $25, so $24.99 is also a common starting price. Note that it rarely pays to use a lower starting bid just to save a few cents on eBay fees, however. Go to pages.ebay.com/help/sell/fees.html for descriptions of all current fees.
Setting a starting bid of $1.00 or even $0.01 is a clear sign to the more experienced bidders that you expect heavy bidding for your item, and some bidders might pass it up as a result. Instead, a slightly higher, arbitrary starting bid like $20 might be a better choice. This is low enough to encourage healthy bidding, but looks like a starting bid entered by someone who doesn't know what they're selling. Auctions like these tend to especially catch the attention of advanced eBay members who will wait until the end of the auction to bid (see [Hack #21]).
If nothing else, these examples should illustrate why it's so important to know the market value of your item before you sell.