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Reserve auctions - the point?

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  #1  
Old
Web Hosting Master
 
Join Date: Jun 2000
Location: Southern California
Posts: 12,121

Reserve auctions - the point?


I would have commented in this thread, but it is an ad thread and I didn't want to take it OT:

http://www.webhostingtalk.com/showth...threadid=53071

I have to admit though, I'm a bit lost and any explanations would be appciated...

Ok, so I get the point of auctions (duh!), however I don't get the point of the 'secret' reserve price. Thing is, that why is the opening bid set below the reserve price? What's the point? Why bother having people bid amounts that are below the minimum amount you're willing to accept for the item (what the reserve is, as I understand it).

In other words, if the reserve is say $700, what the heck is the point in setting the opening bid to $400 when you won't take $400. If someone doesn't bid at least $700 at some point, then the whole auction was a waste of everyone's time, right?

So you might as well start the bidding at the minimum you'll accept ($700 in this case), and let the first bid be the minimum bid. Wouldn't that make sense?

I just don't get the point of having 30 people big up from $400 ($425, $430, $440, etc.) when the minimum you're going to accept is $700 and you'd like to go up from there. Seems like an excercise in futility until the $700 mark.

Agree? Disagree? Explanations? I really don't get it.

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• Chicken



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  #2  
Old
Web Hosting Master
 
Join Date: Oct 2001
Location: California, USA
Posts: 1,316
I guess the idea is to get people to bid on something they wouldn't usually bid on.

For instance, a $700 server.
Maybe nobody would bid on the server for $700, but then people start bidding at $400 then somebody bids higher, then they get in some sort of competition with other bidders to get the server at any rate...eventually the server goes for $700 or more.

It works very weel in real life, because people get carried away. I don't know how well it applies to the Internet though...

-Chris.

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  #3  
Old
Junior Guru Wannabe
 
Join Date: May 2002
Posts: 70
To allow people to just put a small bid on the item so that it is easier to keep track of the item in the 'my ebay'. However if the item is not popular, there is no risk they have to sell it. Letting people put a bid on the item is especially helpful if one is keeping track on a few items. If they just click on the 'watch this item' without bidding, the current bid amount is not shown in 'My Ebay' so they would have to visit each bid to see what the current price is .

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  #4  
Old
Aspiring Evangelist
 
Join Date: Dec 2000
Posts: 371
I really don't like unknown reserves (especially if much higher than starting bid) because it ties my money up for a week when if I knew the real minimum I might move on to another auction.

What I really like is the "buy it now" because, again, I can buy and move on. I don't have to check back in a week.

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Last edited by projo; 06-03-2002 at 03:58 PM.
  #5  
Old
Eternal Member
 
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Location: Toronto, Canada
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Also, I believe that the starting bid will determine how much you pay for the listing. So if you want min $700 for something, starting the opening bid at $9.99 will cost you less for the actual listing if it does not end up selling. Although, they do charge extra to have a reserve bid.

The ones I can't understand are, for example, starting bid $200, and they have a "Buy It Now" price of $200. If I was going to bid on it, why in the world would I just bid on it, with the possibility of seeing the price go up? I would just "buy it now". Then again, that's probably what they want me to do... Sneaky, sneaky.

Vito

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  #6  
Old
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Yes, well buy now is certainly easier than checking back, however it isn't an auction exactly.

I suppose if it makes every feel good to bid $2 on something that they won't get because the reserve is $700, well, then it is sorta like playing the nickle slot machines. You might win a quarter back, whooo-hooo!

To me a reserve is bogus. It is hidden so no one knows what it is. I don't want to waste my time checking back at an auction only to find out that 2 days later everyone who has bid hasn't even crossed the reserve line. Also there's overtime... I mean this just isn't how it works in non-online auctions is it? I've never been to one, but I had thought, you had a starting bid, people bid up from there and when the auction was done, it didn't continue on. Just odd.

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  #7  
Old
Eternal Member
 
Join Date: Jan 2002
Location: Toronto, Canada
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I've been to alot of auctions over the years (machinery-related). Very few of them had reserves. And when they did, they would just start the bidding at whatever the reserve was. Sounds logical, huh?

And at auctions with no reserves, somehow the prices of items "found their own level". It seemed a reserve price was never necessary for the final bid to be up where it should be.

In fact, I remember a few where, for example, a 10 year old piece of machinery sold for $12,000. Crazy thing was that a brand new one would have cost $11,000 !! Sometimes 2 newbie bidders get emotionally caught up in the moment and end up going waaaaaaay too high. Amusing to watch...

Vito

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  #8  
Old
TheXception.com
 
Join Date: Apr 2002
Location: Canada
Posts: 382
I completely agree with you Chicken.
I think reserve auctions are only there because Ebay probably listens to the requests of their power sellers. Some savvy sellers probably wanted a way to decieve people and attempt to get more sales, as well as eliminate the possibility of losing money on an auction.

Those are my thoughts.

  #9  
Old
Web Hosting Master
 
Join Date: Dec 2001
Posts: 1,029
It's all about psychology. More people are willing to bid when the starting price is lower. It also allows you to see how much people are willing to pay, and if it's not at least your reserve price, then you don't have to sell it.

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