As the auctioneer, one of the most important discoveries you can make is that people can be involved for very different reasons. You can speak to those reasons and encourage their involvement. Economist refer to two types of valuations that inform bidders on how much to bid…
Interdependent Value, (Or as I call it public value). If it’s common knowledge that a pair of True Religion Jeans costs around $200, and you can buy them lots of places, and you’re trying to auction them… Then the value of your goods (in peoples minds) are going to be governed and influenced by these ‘interdependent’ bits of information. If you are selling custom made knives, and it’s common knowledge that your knives always sell for $500 or more, and you’re the only source because you’re an artist knife carver, then that’s going to shape the bidders perception of the items worth.
The other type of valuation is Private Value, (Or as I call it personal value). If you’re a dad, and you feel guilty that you’re never home, and your daughter asks for something special she saw on Ebay, then the valuation is a private matter. It’s not about the cost of the materials, or how long it took to make. It’s not about how much the dad has in his toy budget. It’s about the dad’s relationship to his daughter and his emotional state of mind. Or, if you grew up on 555 Broadway Street, and you see that exact street sign for sale on Ebay, your valuation is completely personal. Not rational to anyone else.
Why would anyone pay $100 for a pair of 18 inch doll Jeans that were made from chopped up True Religion Jeans? (That question has crossed my mind a lot over the last few years). That was the first $100 sale we made at Liberty Jane. Crazy right?
As an auctioneer, what’s important is to suspend judgment, not make assumptions, and realize you won’t ever know what people are thinking, unless you have the good fortune of sitting down and chatting with the bidder over a nice dinner and hearing their story. Imagine for example, the winning bidder of the $100 dollar pair of doll jeans is:
- A dad, sitting next to his seven year old daughter at the Children’s hospital as she undergoes chemotherapy. Her doll is the most important thing to her as she battles this horrible disease, and she has asked for a pair of amazing and special jeans for her doll.
- A billionaire mom, who has her daughter’s birthday wish list in front of her, and all it says is, “Liberty Jane Jeans for Chrissa”.
- A collector has watched every auction you‘ve ever done, and knows the prices your items go for, and is bidding because she knows the item is currently valued below what it should be.
- An avid toy collector, who has made a nice living betting on the future value of rare collectibles, and has a complicated pricing model that drives his decisions.
Can you spot the Interdependent Value bidders versus the Private Value bidders in the list above? What’s important as the auctioneer is to consider how you can encourage each type of bidder. How?
- This would make a great gift
- You deserve one special outfit
- You’ll be able to pass this on to your grand-children.
- Your daughter will love this.
- A treasured keepsake
Speak to Public Value bidders in your listing:
- Numbered tags
- Limited Edition
- This item regularly sells for $100
- The Blue Book value is X
It’s important to realize this isn’t simply addressing ‘emotional’ versus ‘factual’ concerns. It’s about understanding what motivates your bidders, and encouraging those motives. Since you have no way of knowing their motives, it’s best to add information in your listing that speaks to both these scenarios.