OK, all you coin auction aficionados and experts...what is the bottom-line difference between a reserve and a starting price...? I say they're the same when all is said/done...in short order they both protect the seller and his/her interests in items of certain value, et al. Understand they can be/are applied a bit differently...a starting price is known and openly advertised, where a reserve can be and most often is "hidden" until bids reach it. But why mess with a bunch of bids plus the time that takes, but that never reach the (hidden) reserve...when you can set the starting price (same as reserve) and eliminate all those feeler and/or fantasy bids, often by trolls bidding $1, $2, etc, etc...? Does one work better over the other for live or online auctions...advantages, disadvantages, etc...? Thanks for any input/feedback to learn from.
There's a person on eBay who's auctioning a PGCS PR65 1882 3CN in an old green holder with a gold bean. I've seen it go several rounds with no bids hitting the hidden reserve. In the last round the highest bid was a solid PR66. My guess is the seller is hoping that someone will have to have "the gold bean on an OGH" and pay way above market. To me there are many better 1882 proofs that routinely come up for auction. I'd rather have a nice cameo example.
A reserve can lead to lots of people watching/bidding, creating a type of hype on the item. That's a good thing. If the coin doesn't hit the reserve, it'll give the seller some idea of what the general bidding population is willing to pay for that item, which is knowledge the seller now has that he didn't beforehand. The seller can then decide if he/she wants to lower the reserve closer to what the going rate is. Some sellers will even put the reserve price in the description. A high starting price can cause people not to even look at an item, and the seller really won't have any idea as to how high the price is over what folks are willing to spend on it. That seller my sit on that item for a very long time without any activity. A high starting price is like a Buy It Now price, but the buyer doesn't get it 'now', and may lose it to someone willing to go just 1 bid more. IMO, if you're going to do a high starting price, you'd be better off with a realistic BIN price.
I'll keep it simple. In the 2008 New York Times Year in Ideas, there was an article simply (and succinctly) entitled 'Low Auction Prices Lead to High Auction Sales' - a principal that I find to be true (the 'Low Auction Prices,' the author was referring to were auction starts). It builds aggression when the potential buyers all think they have the item in their pocket.
As someone who has both worked for an auctioneer and now someone who basically builds my own online auctions, here's what I think about starting bids and reserve prices: From the seller's perspective (and in my auctions I'm technically also the consignor, as I'm selling my own stuff off) I want to get the most money I can for my stuff. I want as many things to sell as possible, but not for pennies on the dollar. So I have to protect myself somehow - either by setting a reserve price, or by setting the starting bid at my reserve price. I don't really mind too much if a particular item doesn't sell (say, a silver dollar that only gets bids to $2 for one of a myriad of reasons) because at the end of the day I still have the item and I've already done all the "work" (typing out the listing and photographing it.) I can just put it in the next auction where hopefully it will meet the minimum I need to feel comfortable with the sale. From the auctioneer's perspective they want everything to sell, because an unsold item does not earn them buyer's premium. Yes, they want things to go for as much as possible, but at the end of the day it's the sold items that matter, because they don't earn anything if an item gets to $1 million but the reserve is $1 million and 1 cent. Bidders want every item for as cheaply as possible. Bidders are also going to complain about something in your auction, no matter what you try to do. Start your items at $1 each with no reserve, they'll complain that $1 is too high or they'll expect free shipping. And sometimes they'll just disappear off the face of the earth after winning bids (but not paying for their items) meaning both seller and auctioneer lose out and have to then do a lot of extra work putting those items back into the mix. (It's not always difficult, but I've had people buy 150 items and not pay for them, which is a pain in the butt because I've already replaced their lot numbers in the next auction, plus the reserve price of their items might have changed due to change in spot prices.) Sometimes if you start all your auctions at reserve prices, bidders will not bid because they want deals (like silver under melt value) - so you can start your items with a low initial bid, but set a reserve price so you're covered in case your auction doesn't get the visibility it needs to get stuff sold. At the end of the day, you as a consignor/seller/auctioneer have to find a balance between those three sets of desires - both consignor and auctioneer want as many things to sell, for as much as possible, but the auctioneer has lower standards regarding final value prices. The bidders want everything as cheaply as possible, even if it means the seller takes a significant loss. As the seller, you have to find the spot between where you need (or want) to sell something and where a particular set of buyers is willing to pay. But you have to protect yourself first, because many things can cause your auction to slide completely under the radar.
A starting price is a price to get the item to be auctioned off moving in an upward direction. This is done by drawing attention to the item and has lower bids. The reserve price is a price point set by the seller that is the lowest price they will sell it for.
Once in a while I will bid on a few items from a Silver City auction. Several times I was outbid by a floor bidder. A few weeks later that same coin was up for auction. Again I place my max bid and get outbid by a floor bidder. Sure enough, a few weeks later that same coin was up for auction. Obviously there is no reserve but this seems one way around it. I think it's wrong.
Depends on the price point. Having a reserve on say a 100 dollar coin is stupid, just start it at 100. Now if youre taking about a 20 thousand dollar coin you want the bidding frenzy built up to to get it to the reserve and having a bidding war. Starting price is generally better for cheaper coins or things on eBay.
