Silent Auction Bid Steps - One Size Does NOT Fit All
I often get asked about what a minimum bid amount should be, or what a normal "raise" is for a silent auction item. Recently, I got asked the following on my "Ask the Maestro" page on my web site (www.auctionhelp.com):
We are going to hold a silent auction that will have a mix of consignment items and donated items. What are your suggestions as to setting minimum bids for the items (particularly donated)? Should we start the pricing at a discount to retail value, premium, or right at the retail value? Any insight you can provide would be helpful. Thank you.
Minimum bids are set generally at a level based on the "buying power" in the audience. If you plan to have more items than people, you are in a "buyers market" and will need to set the opening bid LOWER to generate interest in the item, because the bidders have so many choices. If you have fewer items than buyers, you can set the opening bid HIGHER because you now have a "sellers market" and supply in demand will work for you - more competition for the fewer items.
Typically, the range is from 20 or 30% of value (buyers market) to 40 to 50% of value (sellers market.) You do not want to be too aggressive on the opening bids. Generally, 50% of the value would be the very top end, otherwise the bidders will pick and choose what to bid on, and you will be left with many items unsold.
As for consigned items, I generally pick the cost, plus 10% as a starting point. That way, from the first bid you are making money. So, a consigned item with a value of $1000 and cost to you of, say, $500 would have a minimum bid of $600. Also, bid steps (minimum raises) should be relative to the value, typically 5 to 10% of the value of the item. It makes little sense to have a "$10 raise" on a $1,000 item, and also on a $100 item. The raise should be relative for each value range.
let me know how this works for you at your event.