Bidding on eBay is easy to do, and hard to do well.
Here are the basics. Every auction item states a minimum bid. Bidding does not cost you anything.
You can bid whatever amount you want, but as the price of any item rises, the minimum bid increment rises also. Here are the current (7/05) eBay bid increments. Note that these are minimum increments, and you do not need to bid in round numbers – in fact we advise against doing that when we discussing bidding strategies below.
Item Price ($) |
Bid Increment ($) |
Item Price ($) |
Bid increment ($) |
0.1 – 0.99 |
0.05 |
1.00 – 4.99 |
0.25 |
5.00 – 24.99 |
0.50 |
25.00 – 99.99 |
1.00 |
100- 249.99 |
2.50 |
250.00 – 499.99 |
5.00 |
500- 999.99 |
10.00 |
1000.00- 2499.99 |
25.00 |
2500 – 4999.99 |
50.00 |
5000 and up |
100.00 |
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Most online auctions including eBay use a “proxy” bidding system for non-fixed price auctions. You can approach auction bidding with two philosophies. First you can bid the maximum you are willing to bid right now then check the auction, or your email, to see if you are outbid and may want to bid again. Alternatively, you can bid the maximum you think you will ever be willing to bid on the auction. Here’s the difference.
Say you are bidding on a Movado watch with a retail value of $695. The auction starts at $50 and has no reserve price.
Currently, with three days to go, the bidding is up to $135. You are willing to pay $400 but you only want to bid $150 today, so you do.
There are two possibilities. If someone had previously placed a higher “proxy” bid, their bid will increase automatically to beat yours even though you bid more than the current displayed price. If nobody did this, the bid will go to your price, or, the lowest price needed to beat any remaining proxy amount.
On the other hand, you can bid your maximum right now of $400. As the bids go up, your bid will automatically go up to your maximum, at which point you will be the high bidder and win, or you will not, and lose.
Many auctions have a “reserve” price. A reserve is a price below which the seller does not agree to sell. As a matter of practice and tradition reserve prices are not known to the bidders, but some sellers will reveal the price, or a range, if you ask. Reserves are usually used on items that have a strong intrinsic value but an unknown likely price on eBay, or where the seller may have paid too much in buying the item and wants to be sure to get his money back if and when it sells.
eBay has recently expanded its “non auction” elements to include a wide variety of fixed-price auction types, which generally are known as “Buy It Now” or BIN. A BIN is similar to how you shop in a store – things cost what they cost, and you buy it or you don’t! Increasingly eBay is distinguishing between true “auctions” and store-type listings, though BIN remains an optional feature in regular auctions as well.
Dutch Auctions
A “Dutch” auction is one in which multiples of the same item are available. You can bid on as many multiples as you wish, all at the same price, and all winners of the auction will pay the lowest of the winning bid prices.
This sounds mildly confusing, and it is, which is why new eBayers are actually not allowed to participate in them. On eBay, you must be a member for 60 days and have at least 50 feedback points in order to participate in them.
The way it works is that if a seller has items in high quantity say 25 in numbers ( similar to wholesale) he will take the top 25 bids and award it all of them at the lowest bidder price to all. If the starting bid was $290 for a digital camera (25 in number) and the lowest was $120 at position number 25 out of total 80 bidders than, all the top 25 bidders get a camera each at $120. Its simple but can get confusing initially. Dutch auctions work the best for people who have merchandise in bulk and are not aware of the price it will go at. Since selling them individually incurs high insertion fee, they are auctioned with one Dutch auction.
Reverse Dutch Auctions
Reverse Dutch auctions are unusual but be can very profitable for a skilled buyer. Basically rather than a price incrementally going up, it incrementally drops. When you’ve been trading on eBay a while, look into the format!
Restricted Auctions
Restricted auctions are for adult items, in general. Check the eBay regulations at any given time, as the auctions requiring age verification have been increasing, and certain adult materials are no longer allowed on eBay at all.
Private Auctions
Private auctions are used when a seller wishes to let (or indeed force) the bidders to remain anonymous. This format was developed earlier in eBay history when there was more unrestricted communication between members – someone would see twenty people bid on something and contact them directly to offer the same item for less than the auction price. Today such communication is not possible, and can get you suspended in any case, yet the private auction remains popular for either controversial or adult items where buyers might prefer privacy or certain very expensive items where buyers might prefer to be unknown.
Next: Bidding strategies (2)
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