That is a great question and I have the answer - What bidders are willing to pay for it.
Lets look at the definition of an auction:
An auction is a process of buying and selling goods or services by offering them up for bid, taking bids, and then selling the item to the highest bidder. The open ascending price auction is arguably the most common form of auction in use today.
So you know that people will compete on price with your items. You don't have to negotiate directly with often time low balling buyers.
When I was selling on Craigslist or Ebay, many times I would agree with the other party on price just to have them wait or never hear from them again. So we really didn't have a deal even though the price (I thought) was agreed on.
In an Auction, the buyer sets the final price. This pricing method has been around for hundreds of years, unlike eBay and business-to-business marketplaces. Marketers selling through auctions do not have control over final price. Only Bidders do. And you cannot control the minimum price by establishing a price floor or reserve price. If buyers aren't will to pay your reserve price, you item will go unsold, resulting in a waste of time and floor space for bidders and sellers.
We start out all our auction lots at .01 to encourage bidders to register for the auction and compete with each other on price. With our auctions grossing $10,000- $30000, most lots do not sell for .01.
Items that sell for .01 are often scrap where the value was nominal or items that should have been in a yard sale - dishes, blankets, monitors, etc.
Another factor is number and type of bidders in your locality.
How aggressive are the bidders? I've had many who came up to me after an auction and said they waited to bid on an items only to lose to someone else willing to pay much more for it. These tend to be resellers, flippers or investors, not end users.
What do bidders look at when bidding in the auction?
- What other sellers are asking for their items - probably the most inaccurate. I've seen wild asking prices on ebay, Craigslist and elsewhere that just turned off buyers.
- Personal experiance - what they've sold items for in the past. Mentally the most concrete price in the buyers mind.
- Historic sales data - The most accurate indicator. Because there is no emotion or luck involved.
- If a local seller has similar items - is there a glut of that product? A shortage? Those will influence price.
We found the Auction format to be the purest form of capitalism, and reflects an items true worth. At the end of the day, your items will be worth what bidders are willing to pay for them.
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