eBay Hacks

Reserve Judgment

Use a reserve-price auction for items with unknown value or limited appeal.

One of eBay’s greatest strengths is the lengths to which its policies go to protect its millions of users, both buyers and sellers. One of the best known of these policies is the reserve price, which subsequently gets overused.

A reserve price is a dollar amount the seller specifies, below which he or she is under no obligation to sell. For example, you might want to sell a car for at least $15,000. But if you set the starting price at $15,000, you might not get as many bids as with a starting price of $100 (see [Hack #33]). A reserve effectively allows you to start the bidding at $100 while protecting yourself from the auction closing with too low of a bid. If a reserve is set at $15,000, and no bids exceeding that amount have been placed by the end of the auction, then neither the seller nor the high bidder is under any obligation to complete the transaction.

Bidding on a reserve-price auction proceeds just like a normal auction, with two exceptions. First, a notice stating whether or not the reserve price has been met is shown next to the current price at the top of the auction page. Second, if the reserve has not been met and a bidder enters a bid that exceeds the reserve, the current price is automatically raised to the reserve price.

The reserve is never made public, which is essential for it to work as intended. Keeping the reserve price secret allows the seller to decide whether to ...