Private, Dutch, Reserve Price. What is the best?

Private auction

Useful, but not complicated is “Private auction“, the same as regular auctions except you can not see who you are bidding against. All users who participate in these auctions are completely unknown to each other.

The first time I bid in a private auction I was a little skeptical, after all it would be very easy for the seller to take advantage of the privacy factor & bump up the auction price though the practice of shill bidding. I’m guessing I’m not alone here, as a recent survey I conducted amongst my website visitors showed 22% of buyers would be unlikely to bid in a private auction.

I’ll tell you very good reasons for using a private auction. Firstly, it provides privacy to both parties – the seller and the winning bidder. If your auctioning off something that may be considered embarrassing or perhaps something of an adult nature bidders may not want this item shown on their feedback profile. With a private auction, both parties can still leave feedback but the item number will be unavailable to click on.

Dutch Auctions

Before you get confused and lose focus (just kidding, this tutorial is made to not confuse you, is made to help you)

I’ll introduce you another type of auction in which you have more than one quantity of an identical item to sell. It’s great if you have a dozen Packs of lego’s from your baby brother(easy money, lol), 10 books of Harry Potter, or a hundred two units of white extra large boxer shorts to sell.

It’s called Dutch auction, you going to specify both the minimum bid and the number of items available in the auction. As in a normal auction, bidders bid at or above that minimum bid for the item although, in a Dutch auction, bidders can also specify a specific quantity that they’re interested in purchasing.

Rules of game in a Dutch auction is a little different from rules of game in a normal auction. Dutch auction, the highest bidders purchase the items, but all buyers pay only the amount that matches the lowest successful bid.

bidding

  • I’ll give you an example.

    Assume you are selling 10 identical copies of a particular Harry Potter t-shirt. You indicate the number of items available (10), and the minimum bid (let’s say $3). When the auction start potential buyers enter their bids, which must be equal to or higher than the minimum bid of $3; each buyer also indicates the quantity (from 1 to 10) that he or she is interested in purchasing.
    Interesting, hah.

    Assume 11 people bid $3 each (for one t-shirt), the first 10 bidders will win the auction, each paying $3 for their items, and the last bidder will be out of luck. But if the 11th person had placed a higher bid—$4, let’s say—then that 11th bidder would be listed as the #1 bidder, and the last $3 bidder (chronologically) would be knocked from the list. All 10 winning bidders, however—including the person who bid $4—would only have to pay $3 for the item. Highest bidders, lowest bids.

Get it?

This is not all I have more about Dutch auction.

The minimum price ends up being raised only if enough bidders place bids above the minimum bid. In previous example, assume 9 bidders bid over the minimum, but the 10th bidder bid $3, all bidders would still pay $3. Otherwise if the lowest bid was $4 (and the other bidders bid from $4 to $9), all 10 bidders would pay $4 (the lowest current bid). So posting a higher bid increases a buyer’s chances of winning an item at a Dutch auction, but it also increases the risk of raising the price for everybody. eBay’s take care of that and you can’t change it.

Reserve Price Auction

A reserve price auction is one of my favorite in which your starting bid price really isn’t the minimum price you will accept. Even though bids might exceed the initial bid price, if they don’t hit your reserve price auction, you don’t have to sell.

I saw many people who just starting with eBay don’t like reserve price auctions, and shy away from them. This is common for rookies and on the beginning you just don’t feel how many good auction you missed. In my case, I didn’t liked because of lack of guts. In other hand is because they appear more complicated than regular auctions (and they are, just a little), and also because the reserve price is never disclosed to bidders. In this case, lack of familiarity definitely breeds contempt, at least from a certain class of bidders.

As a rookie you will be confused some time, but that is natural state just keep doing it.
You will make few mistakes before you learn it.

  • Here is a one example:

    Let’s assume you set a minimum price of $7 for an item (really low, to get a buzz going and attract some early bidders) but a reserve price of $45 (because that’s what you believe the item is really worth). If the high bidder bids $22, that bid doesn’t win—because it’s less than the $45 reserve. Here is the thing, bidders have no idea how much more to bid to hit the undisclosed reserve price.
    How you going to deal with it, I’ll show you where you going to make mistake and why.

Remember you need to try by yourself.



What’s the advantage of Reserve Price Auction?

Why would I used reserve price?

    I’ll give you a couple of possible cases where you’ll ask yourself these two questions:

  • When you’re unsure of the real value of an item and don’t want to appear to be asking too much for an item you can reserve the right to refuse to sell the item if the market value is below a certain price.

  • When you want to use a low initial bid price to get the bidding going more quickly than if the true desired minimum price (now the reserve price) was
    listed, the reserve price still guarantees that you won’t have to sell below a minimum acceptable price.

Just to remind you, if no one bids the reserve price or higher, no one wins.

WOW! Rocket science. No it’s not even close. Common sense, right.

When you start auction you will build your own style and how to use it and take advantage of it.

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