How to bid on auctions with a reserve

We show you how to calculate the maximum possible reserve opening bid and give you a tip or two about bidding on auctions with a reserve.

gavelThere is no doubt about it. Buyers do not like it when sellers place a secret reserve on their listings. After all, no one wants to waste time bidding, only to find that “the reserve has not been met”!

Really, why don’t sellers simply put the minimum opening bid at a higher amount, instead of setting a reserve? We suspect that they hope the lower opening bid will excite interest and attract more bids. Alas, in real life, the opposite seem to be the norm: reserve prices tend to drive bidders away.

However, if an item you really want happens to be on auction with a reserve, you as a buyer should not dismiss it outright. On bidorbuy, it is easy to work out the maximum possible reserve on the basis of the publicly declared starting bid, because our first rule of reserves states that:
“The starting bid amount cannot be less than 80% of the reserve price.”

Let’s see how that works out on a real-life example. Here is your assignment:

An item has the publicly declared starting bid of R1400, with reserve. If the starting bid cannot be less than 80% of the reserve price, calculate the maximum possible secret reserve.

If you have not slept through your maths lessons, you will know how to set up the equation…

a x 80% = 1400

…and how to solve it:

a = 1400 ÷ 80%
1400 ÷ 80%=1750

So, the maximum possible secret reserve (a form our formula) = R1750

This wrestling with numbers goes a long way towards empowering you to make a decision about whether it’s worth your while to start bidding or not; however, it only gives you the maximum, and not the actual reserve price.

You can try to overcome this obstacle too. Here’s how: go to the listing, click on the Ask the Seller a Question link, and ask the seller what the reserve amount is. The chances are that he or she will respond, especially if the auction has been open for a while with few or no bids. Do note that, if the seller replies, both your question and the reply become public property, visible to all who land on the listing.

In any case, if the reserve price seems too high to you, don’t hesitate to make the seller an offer via the Ask the Seller a Question facility at a price that is acceptable to you. Providing no one offers more, the seller can list the item as a Buy Now for you, at your price.

And did you know… The auctions starting from R1 are by definition without reserve, for it would not make sense to set a reserve which cannot go over R1.25.

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No-reserve auction (note the blue NR button)

no-reserve-price-R1

R1, no-reserve auction

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Auction with a reserve (note the blue R button)

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Auction with a reserve, with one bid placed. Note the “Reserve has not been met” message generated on mouse-over. 

And here’s your homework for today: using the formula above, calculate the highest possible reserve on the Galaxy Note auction!