Understanding the Low-Start Pricing Strategy
WHY A LOW-START PRICE WORKS
Break through the barriers of new bidders with our Low-Price Strategy
Every company has unique needs when partnering with a proven solution provider depending on the type of inventory, the velocity of sale, level of effort, and recovery expectations from the retailer. One of our proven strategies we offer retail companies is the Low-Start Price Auction Strategy. This strategy aims at increasing bidder participation for the best final selling price.
A low-start price is an easy barrier for buyers to cross. When buyers see low-start prices, they are more likely to bid. Having a buyer place an opening bid is one of the biggest barriers in an auction style market place. Buyers look at participation within auctions to determine the value of the lot.
If a buyer sees a low-start price, they have less risk if no one else has bid on the auction. This will increase the chances of others placing the opening bid and continue to bid as the price increases. When a buyer places their first bid on an auction, they tend to continue bidding until the auction is over. This is due to the emotional connection they feel towards the auction after the initial bid.
A high opening bid rate can also cause resentment from the buyers. This is because it reflects the amount retailers wish to receive from the auction rather than letting the market determine the price. Lower starting prices allow for a sense of additional control of bidding from the buyer base.
Creating an environment in the auction style eCommerce where buyers feel welcome, at ease and in control is a proven way to increase bidder participation. Increasing the participation will increase the recovery on each auction. A low-start price and smaller increments within the auction build that sense of safety for buyers and will help encourage them to bid.