P3D eBay; reserve pricing; starting bid; making a profit

["Hershel Saylor" <saylor@xxxxxxx>]

I too have been dabbling in eBay auction selling.  I am
a great fan of the true auction.  I have been attending auctions
since the early '70s.  At one point in my life, I would be bidding
at an auction, somewhere in Indianapolis, seven days a week.

There is a weakness in the eBay system that causes a person
to list an item with a hidden reserve price.  As with a live auction,
when the auctioneer ask a starting bid that is equal to what the item
should finally sell for, the participants refuse to bid.  However,
when the starting bid is much, much lower then bidding can
become quite hectic.  Auctions work best when the audience feels
that the item they are bidding on is one that is also desirable to
others.

Now the problem with the eBay system:

What if I post an item on eBay with an estimated selling price of
$5,000 and a starting bid of $100?  Assume the first bidder
is just curious when he bids $100.  The auction will reflect a bid of
$100.  Now along comes bidder number two.  He really wants or
needs the item.  He bids the maximum that he wants to pay for
the item, $4,200.  The bid price on the auction board now shows
a bid price of only a little over $100.  Bidder number three arrives
and he just wants to play.  He bids $8,000.  The bid price
now jumps (bidding war) to a little over $4,200.  But, since bidder
number three is just playing, he waits until the  very end of the
auction
(maybe even the last minute as was done to me) to retract his bid.
Since there were only three bidders total the price will drop back
to the status it held before bidder number three arrived.  The auction
will close with a final bid price of just over $100.  Note: you are
legally
obligated to sell to the final bidder at the final bid price.

The advice to me from eBay was to list my items with a hidden reserve
to protect myself from this type of action.  So be kind and give us a
break over the matter of reserve pricing.  It is what the system
forces
upon us.  Mixed in with the untrustworthy are also the sellers who
are simply trying to provide good quality items to the buyers at a
price
that includes a profit margin.   Should you bid on my items, simply
place your fair bid as if the reserve did not exist and you may be
surprised at how low the reserve actually is!

                                        Hershel