A reserve price is the minimum price a seller is willing to accept for an item. If the bidding doesn't reach this price, they aren't obligated to sell the item.
Sellers might use a reserve price because it allows them to set a low starting price to generate interest and bidding, but protects them from having to sell their item at a price that they feel is too low. For example, a seller might list an item with a starting bid of $1,000 while setting a reserve price of $5,000. This attracts initial bidders with the low starting price while ensuring the seller doesn't have to sell below their minimum acceptable amount.
To strategically use reserve prices, sellers should evaluate their item's market demand and set a reserve that reflects the minimum acceptable value without discouraging competitive bidding. This ensures broader appeal while protecting the seller's interests.
When combining a minimum bid and a reserve price, the minimum bid attracts initial interest, while the reserve price protects the seller's desired outcome. Sellers should balance attracting competitive bids with ensuring the reserve price is realistic and aligned with market conditions.
Reserve prices are hidden to bidders. This confidentiality is maintained throughout the auction process and even after the auction concludes, ensuring fairness and protecting the seller's interests.
Maintaining this confidentiality ensures bidders are motivated to offer their best price instead of limiting their bids to a known reserve amount. It creates a sense of competition and fairness, ultimately benefiting both sellers and genuine bidders.
If a reserve has been met, bidders will see “Reserve Met” next to the item price. If the auction ends without any bids meeting the reserve price, the seller isn't obligated to sell the item. However, they may choose to offer the item to the highest bidder at their last bid price, creating an opportunity for post-auction negotiation.
Alternatively, sellers can choose to relist the item, potentially reaching new bidders for a better outcome. It is also advisable to contact the highest bidder for a possible post-auction sale, providing flexibility and increased chances of selling the item.
Timing restrictions are also important: reserve prices cannot be added after bidding starts. This rule ensures clarity and fairness in the auction process.