What's the point? Reserve price vs minimum starting bid

[artbikephysveg]

Why do people have a reserve price and a minimum starting bid? Surely if you want something to sell for more than "x" amount of money why not just have x as your minimum starting bid.

The reserve price has built in disappointment for bid winners who are below the reserve price. Also, if the reserve price is too high then it's a waste of time  imho bidding. A case in point. I am looking at a laptop. It has a reserve price. But it's also on offer for a good price brand new in shops. I would buy the laptop if the reserve price wasn't high. But if it is high then I would rather buy brand new with a good warranty/guarantee and knowing the battery will be good.

I find it a strange concept. Maybe just me.....

Anyone care to please explain why reserve prices are allowed?

[plpmr]

reserve prices make money for eBay as they charge a fee even if the item does not sell.

[red_magpie]

A reserve price can be worthwhile when selling say antiques or collectibles for which there is no "benchmark" price and buyers have to reach their own decision about the value.

it gives buyers confidence to see other bidders bidding, so it's often a good thing to start the bidding low to encourage competition. The more bidders, the higher the price rises, and the more confident bidders become in the value of the item. With luck, bidding will rise to and beyond the original reserve price.

But this doesn't always happen! On a flat day when buyers of this type of item don't seem to be around, bidding never gets going properly and without a reserve the seller can end up selling for far less than the price hoped for. That's why they are willing to pay a 4% fee of their reserve price, even if the item doesn't sell, as an insurance against making a much bigger loss by selling it too cheaply.

There is absolutelty no point in setting a reserve for ordinary items like electronic goods which have a fairly clear price range, according to condition. For these, the answer is simply to start the auction at the lowesr price the selleer would be willing to accept.

[artbikephysveg]

Surely you get the same result by having a higher starting bid if you are convinced your item is worth that much?

[john1297576]

As reserves cost 4% sold or unsold, so unwise to use. We always recommend listing at a price seller is happy to sell at, then if no sale no fee.

In my opinion sellers should use the starting price as the reserve, no point in wasting money as we see so many sellers complain about unexpected fees, when they keep relisting the same item, not expecting to pay a fee each time.

Too many sellers use ebay suggested start prices then are annoyed when item sells too cheaply, or use a BIN price thinking that acts as a reserve and nit realising it disappears at the first bid. 

Even for such things as antiques where prices are as high as buyers are prepared to pay, my solution would be a high start price with best offer, if no sale gradually reduce price, unless desperate for a sale, when price should start at a price seller would be happy with.

[red_magpie]

Surely you get the same result by having a higher starting bid if you are convinced your item is worth that much?

For typical household items, yes.

For antiques and collectibles, no. For these, it's not what the seller thinks it's worth that counts, it's what potential buyers may be willing to pay. Which not even the experts can reliably predict.

If you attend "real" auctions for these items, items can unexpectedly fail to reach what the seller or auctioneer thought was a fair reserve. Or they can soar up in price, far higher than the valuation suggested by the auctioneer.

Because of this uncertainty, buyers are reluctant to pen the bidding at what they think an item is worth, when with luck they might get it for less. If you start an antique at what you think it should be worth, you may get no bids at all. As I said, bidders like to see other bidders bidding, which makes them feel more confident about the value and will drive up the price. This is auction psychology, and always has been. And why setting a reserve can be worthwhile for certain items. 

The pity on eBay is that many sellers don't realise that there's no point in paying a reserve price for ordinary, everyday items like second hand bikes and used PCs. Everyone knows roughly what they're worth.