Many eBay sellers find pricing their items is one of their biggest challenges. Pricing them too low costs you money, while pricing them too high means they don’t sell, which costs you precious time and effort — not to mention eBay fees. In this article we discuss how to arrive at a sensible price for your item, and then how to select the best pricing strategy for it.
There are three steps to arriving at a selling price for your item.
1. Do your homework. Find out how much similar items cost in stores and elsewhere on the Web. Search other eBay stores and listings to get a feel for the fair market value of what you are selling. Remember that you will be competing with other eBay sellers with similar products; if you price the exact same item higher than another seller, theirs may sell and yours may not. Some sellers will search completed listings and set their starting bids right below an item that just sold.
2. Be realistic. Obviously, collectible items and art fetch higher prices than common items. But scarcity doesn’t always translate into demand. Just because an item is rare doesn’t necessarily mean it will command more money — maybe it’s rare just because no one has a need for it. Again, research your potential market and price accordingly.
3. Cover your costs. Remember, the cost of your item isn’t just the price you paid for it. Take into account all your expenses related to procuring, fabricating, storing, and transporting your product. If you can’t recoup your costs, it’s time to find a new product to sell.
After you determine the fair market value of your item, you will set a starting price for bidders. Your goal should be to create excitement around your item. Getting that first bid is critical, as other buyers are generally more likely to jump in if they see there are already bids on an item. To do this, many sellers prefer to set an opening bid below what the item is actually worth. This can jump-start bidding activity, and ultimately produce a higher selling price.
If there is a minimum amount you will accept for your item, you can set a reserve price that is hidden from buyers. If the reserve price isn’t met or exceeded, your item doesn’t sell. Reserve prices can help you by preventing items from selling too cheaply, but they can also hurt you by discouraging potential buyers. Buyers will often lose interest in an item if they place a bid and find it doesn’t meet the reserve. Because they do not know the reserve price, they may assume the seller is simply asking too much for the item. They may then move on to similar items that they feel they have a more realistic chance of winning.
To prevent this from happening, you may want to list your item without a reserve. Items listed without a reserve typically attract more buyer interest because buyers know that if they are the highest bidder they will win the auction. In addition, statistics show that items listed without a reserve usually sell for more than comparable items listed with a reserve. How you decided to start out your bidding and whether or not you will set a reserve price depends on how much risk you are comfortable accepting.
Experts believe that even buyers willing to pay premium prices like to start bidding low. If you decide against setting a reserve price and start bidding out low, you run the risk of selling your item for less than desired. You can start off your bidding price high but doing so may deter buyers, even those willing to pay premium prices. Balancing these phenomena is the key to getting the best return on your eBay auctions.