When bidding on an item, you will sometimes see “Reserve” by the bid. Whenever a seller lists an item, she must list a minimum bid. This is not the same as a reserve. A reserve is a price below which the seller will not sell and the amount is kept secret during the auction.
You will often see some strange items sold this way. When I was a novice, I was startled to see a diamond bracelet with a minimum price of $1. However, there was a large reserve price on this bracelet.
Why do sellers do this?One reason is to have a lower insertion fee to pay. Another reason is to create interest on the part of the buyers. Here is an example of a sale item that deliberately was started low just to create interest ...
If you look at the line entitled, “First bid,” you will see that the seller began the bidding at 99 cents. For a “new/barely used” palm pilot? The seller absolutely did not expect to receive this tiny amount. Instead, he set the reserve high enough to achieve whatever profit he thinks is reasonable. As you can see, the current price is $360 and the reserve isn’t met yet.
Here are other examples of reserve items...
This is a typical reserve auction. After the description is the notation “Res.” This lets prospective buyers know that it has a reserve price.On this car, the reserve price isn’t met at $10,100...
If it is not met, the car will not sell at the end of the auction, even though it has received 29 bids.
Are reserve auctions a good selling strategy for you? A reserve seems like a really cool idea. You can sit a tiny minimum price and yet be covered so that you don’t have to sell your Rolls Royce for $10. The downside, however, is that there are many buyers who will not bid on reserve items. They “don’t want to waste time playing games,” as one buyer put it.
I once bid on an item seven times in a couple of minutes, and each time received the “reserve not yet met” response. I gave up in disgust and I haven’t bid on an item with a reserve price since then.
This is an individual decision, without question. But as a seller, be aware that many potential buyers will pass you by. Reserve auctions are definitely in the minority.
