What is an auction?
One way to look at it is as a “Price Discovery Game”. Nobody knows what the final price will be, and together you’re all committing to participate in the process to find out. The more information that is revealed to bidders, the stronger their bids will be, and the higher your auction will go.
Information is power. In an auction everyone has more information than they are sharing, and people release their information over time as the auction unfolds. The battle is over who will share their information and who will not. What’s the winner of the auction get at the end of the auction? They get to keep their estimation of the items worth a secret to everyone else. Have you ever wondered after your item sold,
The winning bidder is the only one that gets to keep his estimation of the items value a secret, and everyone is always curious.
Information is revealed by you, by Ebay, and by bidders, and each additional piece of information that is shared results in the most passionate bidder having a better chance of winning.
Of course, you can share information that is damaging to the final results too. This happens all the time. Remember, your words have power, you’ve got to be careful to make sure you don’t damage your current, or future auctions.
Suppose you’re auctioning a limited edition set of hand crafted knives, one at a time. Consider the impact of this phrase in your auction listing:
“I never extend second chance offers“
What is this saying to the bidders? It’s telling the 2nd place bidder that if s/he wants the item, the only way it’s going to happen is if they increase their bid to the top spot.
Now consider the impact of this statement:
“Second chance offers will be considered if the auction exceeds my expected price”
What are you saying to the bidders? You’re telling them that 2nd place is the most financially prudent spot to take, if your secret pricing conditions are met. What’s the problem with this? Obviously if you have financially motivated buyers, and everyone wants to be in second place, your not going to see your bid prices rise aggressively as everyone waits for someone else to take the top spot. It’s confusing the situation. Bad move.
What if you don’t say anything about second chance offers, but then after the auction is over, you offer the second place bidder the item for their final bid price, ($1.00 less than the winning bidder paid). You’ve just sold 2 items for almost an identical price, and only paid the listing fees for one of the items. Good for you, right?
But what message are you sending to the second place bidder? On face value you’re saying, ‘hurray for you, you get one of the items too‘ But you’re also telling them by your actions that you don’t have to be the winner to be a winner. Who cares? Well if you are a regular seller, and this buyer is a regular customer of your auctions, you’ve just planted a very bad thought in their mind – that I can be in the game, but not push for the top spot, and I’ll probably still get what I want. In an auction environment, this is a very bad message to give a bidder.
Manage information wisely if you want to maximize final bid prices!