So you think you know how to win auctions?
So you think you are a clever bidder?
Well, bidding endlessly until you win at a ridiculous price makes you an auction LOSER.
Obviously there is no "right way" to bid in any given auction but it is certainly worthwhile to evaluate the results that your previous bidding achieved and learn from any trends.
Ask yourself this question: Who is the winner of an auction? Here are several answers.
- The bidder who made the highest bid.
- The bidder who made the highest bid at or below the value he placed on the item.
- The bidder who made a losing underbid because the bidding exceeded the value placed on the item.
Any fool can win auction 1. Just keep bidding until you win at any price. This is the bidding style of a born overbidder and one you don't want to cross bids with at auction. Such bidders have an ego that insists that they must come first, come what may, and invariably pay too much. The bidders in auctions 2 & 3 got a better result.
Every so often you should analyse your bidding......
Overbidding Analysis for collectors
You can analyse your bidding to see if you are exhibiting this tendency by using the auction results supplied by your eBay Summary. Use the lists of Purchases and Didn't Win in the top left corner of your Summary Screen. Take a period of 2-3 months and compare th\e wins/losses ratio. Are you winning a lot more than you lose? If you are then the data is shouting at you - "YOU ARE BIDDING TOO HIGH, TOO OFTEN. Personally, I try to keep the number at 9.0-10.0, winning between 1 in 9 to 1 in 10 auctions. The closer you get to 1.0 the more you are overbidding. If you want real value for money, achieve a winning ratio of 7.0 or greater. Remove Buy It Now auctions before calculation.
The Concept of Optimum Value
The secret of truly winning is in the concept of VALUE and each bidder in an auction will have assigned their own VALUE to the item listed - what the item is worth to THEM. If you accurately assessed the item's maximum value to YOU before you bid, it does not increase the moment you are overbid. Strangely, the high bidder in auction 1 has assigned the LOWEST VALUE. He is bidding regardless of VALUE.
One should never place an auction bid without first assigning your own VALUE which, in turn, determines your highest bid.
To give you a BASE VALUE to work with, do an eBay search of your item’s description. When the list appears look down the left-hand side for Completed Listings, tick the box and then Show Items. A list of selling prices for the preceding month appears in green. The starting prices of no bid items appear in red.
So now you have a rough guide what to bid which you can adjust either up or down if you take account of the following:
+ve VALUE indicators
- You really need it to complete your collection.
- The item rarely appears for auction.
- It is in excellent condition.
- No others are for auction now.
- The seller has a good reputation.
- An auction item you want from the same seller closely follows allowing postage discount.
- Etc, etc.
-ve VALUE indicators
- You already have a near equivalent
- Several sellers are selling stock at one a week.
- Your careful scrutiny of item description reveals problems with condition.
- You don’t really want it but will happily accept it at the right price.
- Seller has little or no feedback.
- Etc, etc.
Once you have established your Optimum Value, deduct the carriage cost to establish your Maximum Bid. This move eliminates the imbalance caused by excessive p&p charges. If you win the auction the carriage charge will be added back, reinstating your Optimum Value at its original level.
Analysing your Estimate of Value
Go to your My Summary Page and click Customize Display for your lists of Items I’ve Won and Items I Didn’t Win to show Sale Price and My Max Bid adjacent in the list. Look at the Items I’ve Won list for the auctions where you left a Proxy Bid. Is there a big gap between what you were prepared to bid and the actual Sale Price? If there is consistently a large gap then you can assume that your estimate of the item’s value is greater than the other bidders and you are OVERBIDDING. You should be aiming to get the Sale Price and My Max Bid to within a couple of bid increments.
Look at the Items I Didn’t Win list. Is there consistently a wide discrepancy between the actual Sale Price and your My Max Bid? If yes, then you are UNDERBIDDING. Of course you may have been chancing your arm with flippant bids on the off chance that no one else would bid and you picked up a real bargain. If you weren’t trying to pull a fast one the analysis is telling you that your Estimate of Value is significantly lower than that of the market as a whole.
Analysing your Auction
Open the auction listing and click bids. A list of bidders, the amount and timing of their bids appears. eBay will give you the Ratio of Bids to Bidders.
Auction Type 1: BIDS 24 BIDDERS 4
Characterized by a string of consecutive bids, by the same bidder, increasing by minimal increments. As soon as the auction lead is established, the bidding stops. At least two of the bidders will demonstrate this trait. Clearly they have little concept of bidding to a pre established value and are intent on outbidding each other, at any cost. Not a good auction to be involved in as the bidding is likely to be driven to heights beyond reasonable value. There is also the possibility that one of these bidders is making Shill bids. (See my guide to shill bidding)
The only sensible way to win this type of auction is to snipe. Wait until the last few seconds of the auction closing and then place a bid at the level of your Estimated Optimum Value. Bid too soon and it is inevitable that you will be outbid.
Auction Type 2: BIDS 24 BIDDERS 18
Here the bids are escalating in large increments based on the bidder’s valuation. If that valuation proves insufficient, only a few bidders re-enter the auction. I have found this bidding pattern more common in USA based auctions. Winning the auction at a reasonable valuation is possible.
In this type of auction it is a reasonable option to leave a proxy bid at your Estimated Optimum Value
Of course there is no right way to bid, and this guide certainly provides no answers on how to bid. The intention is to provide a means of tracking changes in your bidding trends over a period of time. If changes are required they should be made at the valuation level rather than making more or fewer bids.
The maxim: "Like London buses, another one will be along in a minute" should be engraved on the heart of all eBayers. Then there would be a lot less overbidding.
The only good thing to be said for eBay's policy of disguising your identity in the list of bidders is that you are less easily identified as an individual so that your tactics are recognisable.
As Kenny Rogers sang in the Gambler, "Know when to throw them..........." Good Luck! Thank you for your interest.