I’ve never used a reserve price in any of my auctions so far, but when our halogen kitchen light bar sold for about $10, I wish I had.
The auction had a few watchers and an early opening bid at the minimum price. I was certain there would be a few closing bids to push the price up to a decent level.
I was wrong.
The guy who won the auction got an incredible price on a great light fixture. I told him so in the note I sent him when I waved goodbye to my fixture down at the Post Office. To add insult to injury, I had to buy a pack of packing peanuts to properly pack the package (say that five times fast). By the time I paid for the peanuts, I think I made about a buck three eighty off the light fixture.
Enough whining, back to the subject of reserve prices. Unfortunately there’s an extra fee that comes with setting a reserve price and it’s not cheap. For reserve prices set at less than $200 the fee is $2. Above that, the fee is one percent of the reserve price.
That’s the bad news. The good news is that if your item sells, you get the reserve fee back. You only pay the extra reserve fee if your item doesn’t sell. So, from one perspective it’s a gamble but from another point of view it’s an insurance policy.
Hmmm. Ambiguity. You gotta love it, or not.
There is another approach, and that is to set a higher starting bid level if you’re really convinced your item is worth a certain amount or you don’t want to see it fly out the door too cheaply. Of course, with higher starting bids, eBay charges higher listing fees. So again, it’s a trade off.
However, if you do sell your item with a low starting price and a reserve, your final fee will be less than setting a higher starting bid without a reserve.
There is another drawback with higher starting prices. They chase off a lot of buyers. So there you go.
By the way, if you do start an auction with a reserve price, it’s okay to tell bidders what the reserve price is. There’s no rule against it and buyers tend to appreciate your willingness to be honest and open about the situation.