Selling at Auction or Fixed Price? Do Your Research.

[pierrelebel]

The growing trend on eBay over the last ten years has been to list and sell at fixed price instead of using the auction format. That is what most (not all) buyers seem to prefer.

Now, different sellers achieve different results and much depends on the category and the actual product.

Instead of "assuming" my opinion on the subject is correct, I do some research before making a decision how to list..

For example, as I am liquidating my inventory, I found some Canadian BK39 stamp booklets I wish to sell on eBay.

Should I use the auction format?  or sell at fixed price (buy-it-now)?

Let us take a look at recent completed listings on eBay.ca (lowest price and shipping first):

http://www.ebay.ca/sch/Canada-/3478/i.html?_from=R40&_sop=15&_nkw=canada+bk39&LH_Complete=1&rt=nc

It only takes a few seconds to realize that several similar items sold at auction but most generally commended a much lower price.

Several items sold at fixed price ($9.95 to $17.36 plus shipping) while those priced above $20 did not sell.

Also, pay attention to shipping: you will find relatively low priced items that did not attract a bid because shipping was not specified (those listings are usually found at the bottom of a search page where nobody looks or cares).

Conclusion (specific to this booklet):

Auction attract much lower prices

Fixed price sell at substantially higher prices

Fixed price listings with prices too high (not competitive) sit on the shelf and do not sell.

Now, take a few minutes and do similar research on items you wish to sell on eBay.

Good Luck.

[mr.elmwood]

Pretty much what I have always known. I prefer a shipping added form of pricing. I see what the selling price point is in the USA and then subtract off shipping to give my selling point. I price point at shipping plus widget.

For me, this works, for now.

[rose-dee]

Thanks for pointing this method out, Pierre.  I usually keep track of several competitors' sales by putting their items in a special list I've set up under "My Lists".  I check the list from time to time to see what has sold at what price.  This keeps me on top of the competitors I know about, but not those I haven't found yet. 

Your method (searching completed listings by category and item name) is a different, and wider approach, and I'm going to give it a try for a few weeks and see if it gives me new insight. 

Some time ago I pretty much came to the conclusion you noted: fixed price, as long as it's competitive and shipping is reasonable, is better than auction.  I use the occasional auction now for an entirely different purpose -- effectively I consider auction items "loss leaders", low-cost advertising, to bring buyers to my store who might not have found it otherwise. 

There is a theory that's been floated on the boards that a higher price equals higher quality in buyers' eyes.  I've never entirely subscribed to that theory.  I've experimented with pricing on items I know will be highly attractive to my buyer demographic, and have found (as you did with the $20+ pricing on your stamp item) that even with those there seems to be a "price ceiling", above which an item will simply sit forever.  In the end a markdown is unavoidable, so the item might as well be priced competitively to begin with.  Which is to say that I rarely, if ever, set the price I would like to get, or even the price I know the item may be worth, but the price at which I know a particular item will sell.  I'd rather sell 3 items fairly quickly at a lower price each than sell none at a higher price each. 

The only exception to this rule that I've developed over time is that there are certain highly attractive items I don't mind pricing at what I'd really feel I'd really want to get for them, as they act exactly like a beautiful store window display, bringing buyers through the doors to look at my other items. 

Still, I must say I sometimes cringe at outrageous prices set by some sellers on items that appear similar to mine, but are of far inferior quality.  I usually add those items to my "List", to see whether they sell -- they rarely do.  I can only hope my buyers recognize the unparalleled quality they are getting from me at a very reasonable price -- they do keep returning, so that makes me happy.

Pricing is an ongoing learning experience...

[ricarmic]

For the last few years, my mindset is that auctions for normal stuff (in the stamp world) generate about half of what they do if one puts them in at fixed price.

Abnormal/rare stuff will sometimes go higher. I've just completed listing stuff that has had a widely different variation in quite pleasing auction results, however I have no idea why some went for so much more than others, so I decided to auction the works. I do this with other things as well where I have a tough time knowing what the price should be and I know that it is popular at the moment.

As a side note, it seems that having at least something running under auctions helps bring people to the store and/or boost store search results.

When I have a new "product line" I do the same search/comparison thing, I check running auctions/BIN to see what the sellers are wanting to get, then I compare to what they are actually getting. I almost never pick the lowest price for my stuff, normally I am in the mid to top range (but my stuff also is free shipping where the majority of others are not)

[mr.elmwood]

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@ricarmic wrote:

For the last few years, my mindset is that auctions for normal stuff (in the stamp world) generate about half of what they do if one puts them in at fixed price.

Abnormal/rare stuff will sometimes go higher. I've just completed listing stuff that has had a widely different variation in quite pleasing auction results, however I have no idea why some went for so much more than others, so I decided to auction the works. I do this with other things as well where I have a tough time knowing what the price should be and I know that it is popular at the moment.

As a side note, it seems that having at least something running under auctions helps bring people to the store and/or boost store search results.

When I have a new "product line" I do the same search/comparison thing, I check running auctions/BIN to see what the sellers are wanting to get, then I compare to what they are actually getting. I almost never pick the lowest price for my stuff, normally I am in the mid to top range (but my stuff also is free shipping where the majority of others are not)

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I used to do that before they dumped all store listings into core and then I stopped. A few weeks ago, I did a few auction listings, with the promo, for a line that should have been doing better. Sales went very, very well. Better than I had hoped. Auctions sold, and store listings sold.

I am "guessing" there are still folks who search by auction and buy by store listing. That does not make a lot of sense, but, I will go with it.

[ricarmic]

MrE, I do think some people get fed up with always/often losing auction items at the last minute and therefore are willing to pay a bit more to be certain they get something they found that they like. Others like the bidding aspect, so they won't ever buy fixed price as there isn't the "fun" in that....different strokes for different folks.....

[treasure.hunter.d]

Agree totally.

This also points out what a total crock of stinky dog doo Ebay's claims about auction format being the better way and that's why they are taking away our free BIN listings. Just goes to show that when someone claims that "they are doing it for your own good" they are generally full of you know what!

[mr.elmwood]

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@treasure.hunter.d wrote:

Agree totally.

This also points out what a total crock of stinky dog doo Ebay's claims about auction format being the better way and that's why they are taking away our free BIN listings. Just goes to show that when someone claims that "they are doing it for your own good" they are generally full of you know what!

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No, they are taking away the BIN listings because they want you to buy a store. I said this 14 months ago when they changed the store pricing and features.

Store owners are different than non-stop owners. I am sure the metrics have borne that out. I will continue to say that the gulf between store owners and non store sellers will widen.

[treasure.hunter.d]

Yes ok, that is the end result you are right. The premise they are using is still a load of **bleep**!

I should have probably already set up a store but I really don't like being bullied into it. First of next month I'll probably set it up but I'm still not going to be happy about it, and how I was forced into it.

[pierrelebel]

"First of next month I'll probably set it up"

Why wait?

Taking a quick look at your recent sales/listings, I noticed slightly less than 14% "sell thru" rate (61 sales out of 445 listings).  With an average of about 20 sales a month, it certainly makes sense to have a store.  The savings in FVF will cover most of the monthly fees while you benefit from additional "free listings" and many better tools with a store.

Since most of your sales have been at fixed price, you may want to review your shipping charge policy.  Being a TRS, you would pay lower eBay fees by moving some of the shipping charge (not eligible to the discount) to the selling price (eligible to the 20% rebate).

For example, regardless of actual shipping cost, you pay less fees (more money in your pocket) selling at $120 + $10 shipping (total $130) than selling at $110 + $ 20 shipping (total $130).  Same overall cost to the buyer, same fees payable to PayPal but smaller fees payable to eBay.

Also, I am not sure you benefit from having your listings "private".  http://pages.ebay.ca/help/sell/private.html

Good Luck.

[recped]

Ebay's claims about auction format being the better way

I have no idea where you read that. Did you actually listen to or read the PowerPoint presentation?

[cumos55]

When auctions were the only way to sell on eBay, people came to eBay every week to see what was selling... They bid, and they bought.... Lots of traffic

There was lots of bidding on each item.

Then came the Buy It Now (BIN),  Fixed Price format  and people came to eBay less frequently... because they knew it would be here to be bought... within their time frame.  Lower traffic to eBay  and less bidders... and the auction format lost its lustre....

One has to use the auction format ... very carefully,  and not with all items and not with all categories on eBay.

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There are people who know how to use the auction format effectively.....I do know a few such people

and ... Their first rule is nothing starts at $0.99,  99 cents.... Starting bids are at a price they would be willing to sell with one bid..... Not the best sale, but effective

Auctions with a starting bid of 99 cents are suicide on valuable items that would sell at a much, and sometimes very much  higher price at Fixed Price.

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Just because eBay has an auction format, does not mean it has to be used.

Just because eBay says an auction format works, does not mean it should be used for all categories on eBay.

[pierrelebel]

A few words earlier last year (January 2013) from the CEO of eBay:

http://allthingsd.com/20130116/a-quick-chat-with-ebay-ceo-john-donahoe/

How is the old-school classic eBay auction business doing?

We give buyers and sellers lots of choice. Five years ago our marketplace business was 70 percent auctions and 30 percent fixed-price sales. Now its 30 percent auctions and 70 percent fixed-price sales.

If you’re selling something like an iPhone, you probably want to do it at a fixed price. But if it’s a 1967 Ernie Banks baseball card, the value is in the eye of the beholder and you might prefer to sell it at an auction.

It’s still 30 percent of what eBay does, but it’s a smaller and smaller percentage of our business. In the last quarter, fixed-price sales grew 22 percent and auctions grew 7 percent.

Fast forward to earlier this month.  In its quarterly statement with the SEC, following the release of its first quarter financial results:

We believe that the mix of sales under our traditional auction-style listing format and fixed-price listing format will continue to shift towards our fixed-price format. Accordingly, we have eliminated some of the features related to our traditional auction-style format and expect others will continue to become less meaningful to, and used less frequently by, our sellers, resulting in a corresponding decrease in revenues from those features. We also expect that the costs associated with our seller discount programs will continue to increase as more sellers become eligible for such discounts.

http://investor.ebayinc.com/secfiling.cfm?filingID=1065088-14-60

[pierrelebel]

Why?  Why?  Why?

You do not like my posts... move on to the next one.  There is no point in you constantly arguing or questioning every post I make.  Life is too short for that.

If you do not understand numbers, graphs, charts, words from the CEO of eBay, filings with the SEC, move on.

[rose-dee]

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@pierrelebel wrote:

Since most of your sales have been at fixed price, you may want to review your shipping charge policy.  Being a TRS, you would pay lower eBay fees by moving some of the shipping charge (not eligible to the discount) to the selling price (eligible to the 20% rebate).

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Great point Pierre, the obvious logic of which for some reason had totally escaped me until I read this!  I was looking at my 9% store FVFs on both the selling prices and the shipping prices as being equivalent and overlooked the fact that the discount was only on the selling price portion (although I probably knew this was true but didn't connect the dots as you have). The light bulb just went on. 

Since a good 90% of my buyers are in the U.S., I long ago reduced my Cdn shipping prices drastically (and I run free domestic shipping promos) to benefit from lower FVFs on shipping anyway, but your comment may just prompt me to make all my Cdn shipping free -- very little nothing  to lose, and probably a substantial amount to gain.