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EBAY BIDDING GUIDE
EBAY BIDDING GUIDE
Object collectors acquire objects from many sources. These include second-hand stores, antique stores, street fairs, Craigslist, and non eBay auction sites. However, it is well established that most objects have been and will continue to be acquired through eBay. For this reason, I have edited the following eBay bidding guide. This guide is based on years of research and observation of eBay buying practices.
The first and foremost thing to understand about eBay is that they charge sellers a percentage of their final selling price. Hence, eBay makes more money when bidding for items goes higher. It is in their best interest for buyers to bid early and often, because early and frequent bids drive prices up. Higher prices are, of course, also to the advantage of a seller. These factors are particularly poignant when considering that eBay advises buyers to enter their highest bid early; and sellers often urge buyers to bid early and often while simultaneously wishing them “luck” in the auction. It is never in the best interest of a buyer to bid early or often. Ideally, a buyer should put in only one bid, and that bid should be made at the last possible moment that is technically feasible.
When a bidder enters a bid, eBay uses only as much of that bid as is necessary to put the bidder slightly ahead of every other bidder. For example, if one bidder enters a bid of $12 and another bidder enters a bid of $1000, the actual bid that eBay enters for the higher bidder is $12.50. If the bidder that enters $12 does not raise his bid and if no other bidder enters a higher bid, the bidder who entered the bid of $1000 will win the item for $12.50. No one will ever know that he was willing to pay $1000 for the item. It does not matter when the bidder who enters the $1000 bid actually enters it—as long as no other bidder enters a bid. If he enters it at the beginning of the auction, he will win the item for $12.50. If he enters it in the last seconds of the auction, he will win the item for $12.50. The question then is: when is the best time to enter the higher bid?
It is a simple principle of economics that people value an item by what other people are willing to pay for it. If a bidder sees that an item has received a lot of bids or very high bids, he will perceive the item to be worth more and thus be willing to pay more for it. If he sees that the item has received few or no bids or that the bidding is low, he will perceive the item to have little value and not be willing to pay very much for it. If you enter a high bid early, other bidders will discover that you have outbid them, they will perceive the item to be worth more, and they will be willing to bid more. This drives the cost of the item up, increases the amount that any potential buyer will have to pay, and also decreases the likelihood that you will win the item. The trick, then, is to create the impression that the item has little value. The item will seem to have little value if few bids are entered and if the bidding is very low. If you enter your highest bid in the last seconds, other bidders will not have an opportunity to observe how much the item is worth to you and hence they will not assign very much value to the item.
The problem with this strategy is that most of us do not know how much something is worth to us until we see how much other people are willing to pay for it. Here is a personal strategy I have developed. In order to determine how much something is worth to me and how much I should bid, I have invented a little game.
To begin the game, I ask myself how much something is worth to me. I choose an amount, then I ask myself a question: If I bid that much and someone else wins for $0.50 more, can I live with that? I keep playing this game until I get to the point where I discover that I am actually glad that someone else is willing to pay $0.50 more so that I can get out of having to pay it myself. Once I reach that point, I have found my upper limit. Here is an example:
If I bid $25 and someone else gets it for $25.50, can I live with that?
If I bid $30 and someone else gets it for $30.50 can I live with that?
If I bid $250 and someone else gets it for $250.50 can I live with that?
If I bid $255 and someone else gets it for $255.50 can I live with that?
By this point, I am starting to wonder how I will pay for my groceries next week and whether or not there might be something better I could buy with that much money. Now I have found my true upper limit.
When the auction gets underway, I may see that someone else has entered a bid of $5.60, then someone else enters a bid of $7, then someone else enters a bid of $7.50, and so forth. I pay no attention to this. Maybe I do not even watch it. Maybe I do not even check the items status until it comes time to enter my final bid. It doesn’t matter to me what the bidding is at because I have already decided what I am willing to bid.
It gets up to the last ten seconds of the auction. The bidding has gotten up to $23. 55. I sweep in and enter my highest bid of $255. I do not enter a lower amount just because it looks like the bidding has not gone very high. This is a fatal mistake. I might think I am going to walk away with the item for $30 and enter a bid of $50, only to discover that someone who has done a better job of judging the market has entered a bid of $150. I will be left crying over my loss. Even though the bidding has not gone very high, I still enter my full bid of $255.
People are irrational. If they see that you have entered a higher bid than they have, even in the last seconds of the auction, the item will suddenly be worth twice as much to them. For this reason you have to bid so close to the end of the auction that they have no time to reevaluate. Usually, you should enter your bid with only about ten seconds left. However, if there is a lot of competition, you should enter it with only about five seconds left. If you cut it any closer, you risk internet communication problems.
The key element of this process is that you enter your highest bid at the last possible moment. Unfortunately, this means you must be at a computer and able to place a bid at the exact moment the auction ends. If you cannot always do this, here is a solution. I have used the following service for quite some time and have found it to be 100% reliable:
We Collectors have agreed to mark the auctions that we plan to bid on so that other cabal members will know not to bid against us:
Register Your eBay Code Name
This does not affect the process. Simply enter the smallest possible bid and do not raise it until the auction has nearly ended. We will understand that just because you have been outbid, this does not mean that you have given up on the auction.
Here is another guide:
Strategy for buyers on eBay
Last edited by Spikosauropod, 7/28/2010, 8:33 pm
8/31/2007, 4:12 am
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