Can You Increase Sales With a Low Opening Bid Pricing Strategy?
By Lisa Suttora

The low opening bid strategy is often touted as the way to make the sale and increase the final bid price of your auction. But does it work? And will it deliver as promised?

While the fundamental strategy of starting an auction format listing at a below market value price to build excitement and create a bidding frenzy (which can ultimately drive up the final price) is a viable one, you need to do your market research FIRST before using this strategy.

Because by not implementing a low starting bid strategy correctly, you can easily lose a lot of money on the sale!

Two Key Variables

There are two important things to consider in making this all important pricing decision:

1. Hard market data.

2. Seller variables.

In this article, we'll look at what you DO need to consider before starting a listing with a low opening bid price and how to do it!

Hard Market Data

While I am big proponent of looking at eBay Completed Listings to get a feel for what is going on in the eBay marketplace, when making strategic pricing and listing decisions you must ALWAYS start with hard business data first.

Hard business data means the specific numbers and statistics that make up historical data AND empower you to make an informed business decision with your valuable inventory rather than going simply on a guestimate or gut feel.

In order to get this information, you need to use a research tool that will give you the data in a clear, concise, objective manner. Because if you are researching eBay pricing and sell-through rate data by "eye-balling it" on eBay, you're very likely going to miss something.

And to miss a key indicator (a listing, a pricing strategy etc.) will give you a vastly different picture of the current market conditions.

With a research tool, you know that all pertinent data is being gathered and compiled based on a set of research criteria that applies across the board and takes the human error or bias factor out of the research.

When using these tools to look at pricing and starting bid history, you also must look at the day it sold, and the seller itself.

You see, if the demand is not strong enough for a product and the opening bid is started too low, the final sales price of that product will not rise to a profitable level. And without depth or breadth of other inventory to offset a loss, skipping the critical step of pricing research and making an informed pricing decision that is right for the individual business can be a very costly mistake.

Does this mean that YOU can't use a low opening bid strategy? Not at all! But you must do it right.

The bottom line? Research is KEY when using a low opening bid pricing strategy.

3 Steps to Researching Hard Market Data

When determining the starting price point of your auction style listings, you must take these factors into consideration:

1. Look at the historical sales data. Is this product in demand? Are there more bidders than sellers? How long has it been in demand? Is demand increasing or subsiding? If demand is holding steady or increasing, your item might be a good candidate for a low opening bid pricing strategy. If demand is decreasing and supply is increasing, there will not be enough bidder interest to drive up that price. (Unless you ADD value to the product, which we'll talk about a bit later.)

2. What price ranges are other listings starting at? If everyone is starting the same item at .99 cents, and you do the same, you'll get lost in the crowd. Start your item at $2.31 and all of a sudden, your item looks different to the buyers. People will automatically wonder why your item is starting at a slightly higher price. Once they click on your listing, you have the opportunity to keep them there by creating a listing that sells!

3. Who is using what pricing strategy? Are only the established sellers who start with a low opening bid getting the high rush on final sales price? Or are buyers responding to all sellers who offer a low opening bid? Starting with a low opening bid because you are hoping to get the sales price that other sellers are getting is not solid business sense. Looking at who is doing what in the marketplace and pricing your products accordingly is a smart move.

The "X" Factors

One of the overriding principles that I believe is that selling on eBay is a blend of both art and science. If selling successfully on eBay were only about the numbers (and hard and fast rules) everyone could run their business from the same playbook and achieve equal amounts of success.

Of course we all know that eBay (and life) are not like that. And it's what YOU bring to the table that makes the difference between a stellar business success and a business that struggles.

The same applies to your pricing strategies. What you bring to the table in your listing will in large part determine if a low starting bid will end in outrageous profits.

Therefore it's important to research the Listing X Factors in other successful listings and see how you stack up before setting your listing out to "fly" and hopefully skyrocket.

Researching Listing X Factors

When researching the X Factors to determine how to price your product, you must look at the following variables:

1. What are the "X" factors that other sellers offer? Are your competitors offering free shipping? A money back guarantee? A rebate? Gift with purchase? Do they ship worldwide? Do they have a polished listing template? Do they showcase testimonials in their listings?

All of these factors do make a difference in the final selling price of your product.

What Do You Bring to the Table?

After you've done your research, ask yourself - what can/do I bring to the table? Are you offering the same value advantage as every other seller or do you offer something extra? Something different?

If Seller A (your competitor) starts their opening bid at .99 cents and has a poorly written listing with an in-effective listing title and Seller B (you) starts an opening bid at .99 cents with a well written listing description, a keyword rich listing title and free gift-wrapping, hands down, the highest bid will go to Seller B (you!)!

The high final sales prices will go to the seller who has done the work. The one who has paid attention to the Listing X Factors.

Testing and Tracking

As you can see, the low opening bid strategy can be effective but there's more to it then determining a start bid price and "set it and forget it".

And of course the final step in this process is to test and track. Ultimately the final word in which pricing strategy works best for YOUR products are results. The results will speak for themselves.

Test your pricing strategy and track the results.

See what works and what doesn't.

It's then that you'll know what path to follow for your business.

Founder and CEO of What Do Sell®, Lisa Suttora is a noted eBay authority. An internationally known product sourcing and trending expert, Lisa has coached thousands of eBay entrepreneurs in building a successful eBay business. Lisa is the co-author of the best-selling product sourcing book "What to Sell on eBay and Where to Get It" from McGraw-Hill publishers and the Product Trending Editor for the Product Sourcing Radio Show. WhatDoISell.com, the oldest online private membership community for eBay Sellers has been serving eBay sellers since 2004. An eBay Certified Provider and a member of the Better Business Bureau, whatdoisell.com is your all-in-one solution for starting or expanding your eBay business. http://www.whatdoisell.com To receive your free Product Trends 2008 report, please go to http://www.producttrends2008.com

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