Fixed-Price vs. Auction: How to Choose a Listing Format
If you're relatively new to selling on eBay or sell primarily as a hobby or sideline, the choice of listing formats may be confusing to you:
- What are the advantages and disadvantages of different formats?
- What format guarantees that I'll get the best price for my item?
- Are different formats better for different kinds of items?
These are all sensible questions whose answers have changed over time as eBay's policies have changed, meaning that there's a lot of information and advice out there, much of which may be conflicting. If you're just looking to keep it simple, here are some tips to help you to choose.
Strengths and Weaknesses
Each of eBay's listing formats has particular strengths and weaknesses that affect how they appeal to individual sellers.
Auction format listings have the following strengths and weaknesses:
- Auctions create the possibility of selling for much more than you would otherwise have asked for your item(s)
- When started with very low starting bids (i.e. $1.00 as a classic example), most of the time auctions guarantee that the item will sell, whatever the price
- Auctions let the market (i.e. the community of bidders) set the price when you're unsure of an item's value
- But when using auctions it is also possible that you will end up selling well below an item's market value unless you set a reserve price, which is likely to reduce the number of bids you receive
- The variability of auctions makes it much more complicated and time- and research-intensive to plan or develop well-conceived business strategies when using them
- Auctions are also much more time-sensitive; to maximize your sale prices with auctions, they must increasingly end when buyers are likely to be at their computers-often a complex calculation to make that depends on culture, geography, holidays, and seasonal habits
- Auctions are more easily subject to complex supply-and-demand interactions as the result of your own listings that can drive down profits
- Auction-format listings provide no way to preemptively protect yourself against non-paying bidders
- Perhaps most importantly, there is a proportionally shrinking market of auction bidders on eBay and a growing market of fixed-price buyers
- And eBay's own strategy is shifting toward supporting and more heavily marketing and serving fixed-price listings and sellers
Fixed-price format listings have the following strengths and weaknesses:
- With a fixed price listing, you always know your revenue and profit margins on any item that sells
- When using a fixed price listing, you will never be forced to sell at a price that damages your business or creates unexpected losses
- At the same time, fixed price listings are much more likely to go unsold than auctions with low starting bids
- And they leave pricing up to you-which can mean more research work for you to stay on top of things and can present problems if you are unsure of an unusual or one-of-a-kind item's worth
Choosing Between the Two?Clearly each of the two formats offers a unique constellation of benefits and drawbacks. Read on for some simple rules to help you to choose between the two in practical terms, for particular kinds of items.