Dr. Penny Pincher founded the popular personal finance blog Penny Pincher Journal in 2013 and has published two books about saving money.
eBay Bidding Strategies to Win Auctions
I enjoy watching the bidding closely on my eBay items for sale or when I am bidding on an item. For the last week, I have been watching bidding unfold on my collectible scientific calculator for sale on eBay. I have sold a number of items on eBay and have won auctions to purchase items on eBay as well.
Watching the bidding unfold on my items for sale, I have seen plenty of bidding mistakes and some good bidding moves as well. What is the best strategy to use when bidding on eBay?
- Some say to put your highest bid in right away and let eBay use "max bidding"—otherwise known as automatic bidding—take care of the rest.
- Others say that sniping is the way to go—wait until the last seconds of the auction and place your maximum bid then.
- Still others like to manually bid and try to stay in the lead during the auction.
What should you do to win eBay auctions with the lowest bid possible?
eBay "Max Bidding" or "Automatic Bidding"
"Max Bidding, "which is also known as Automatic Bidding, confuses some people. The idea is that you can enter your maximum bid at any time and eBay keeps your maximum amount a secret. As people bid against you, eBay automatically keeps you in the lead if your maximum bid exceeds other bids. Let's follow an example bidding sequence:
- The starting bid on the item is $99 or more. You enter your "max bid" of $150.
- The price stays at $99, with you in the lead.
- Sally bids $125. The price goes up to $125 with you in the lead.
- Sally bids $150. The price goes up to $150 with you in the lead.
- Sally bids $155. The price goes up to $155, but now Sally is in the lead and will win if the auction ends.
As you can see, the automatic bidding system on eBay is a convenient way to bid. You can enter your maximum bid once and let the automatic system do the work of raising your bid. Another advantage of automatic bidding is that if two bidders bid the same amount, the bidder who got their bid in first wins. In our example, even though you and Sally both bid $150, if the auction ended at that point, you would win since your bid for $150 was entered first using automatic bidding.
As I mentioned, automatic bidding has some advantages, but there are also some downsides. Let's say you enter your max bid of $150, and then find a better item for sale in a different auction on eBay that you would rather have. You are committed to your bid at $150 in the first auction, so you'll likely be stuck waiting to see what happens and you might get stuck buying an item that is not your first choice.
So the downside of automatic bidding is commitment. You have to commit in advance to bidding up to a certain amount. You can avoid this commitment by manually bidding, but you lose some convenience and also winning in case of a tie.
Sniping on eBay Auctions
The final hours of an eBay auction are often an exciting time. Money is on the line, and bidding activity often picks up in the final hours. Sometimes a bidding war breaks out, and two or three bidders go back and forth taking the lead with the high bid.
Sometimes the final seconds of an auction are the most exciting part. I have seen a number of my auctions decided in the final seconds by snipers. Sniping an eBay auction means that the sniper tries to stay quiet and observes the auction without bidding. The idea behind sniping is to place your maximum bid during the final seconds of an auction so that no one else has time to react. Stealth and timing are the keys to successful sniping.
Essentially, sniping is about trying to keep the final price as low as possible by not bidding it up during the auction. Also, keeping quiet may help prevent people from putting in as large of a maximum bid as they may if they sensed a lot of competition in the auction. I have seen lots of auctions where people increase their maximum bids when bidding activity heats up and people realize that they need to bid more to stay in the game. The sniper avoids tipping off bidders that another bid is coming. Snipers may even choose not to "watch" the auction since bidders can see how many people have added the auction to ones they are watching.
But sniping isn't magic—if the sniper's maximum bid is $500 and someone else bids $505 during the auction, sniping won't win the auction. If the auction is for a popular item with lots of bidders, the item is likely to go for market value whether or not a sniper is involved. The price of the item will naturally get bid up during the auction.
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Sniping has the most potential to be effective in auctions with few bidders where the sniper has a chance to pick up an item below market value before other bidders have time to react to a very late bid, which can result in a great deal for the sniper.
The Best eBay Bidding Strategy Is...
I'm going to go with sniping as the best bidding strategy for auctions that do not have a lot of bidders.
Some people don't like sniping and feel that is is somewhat unfair or dishonest, but sniping is not against the rules and it can be an effective way to win auctions with the lowest possible bid. With sniping, you are not committed to bid at all. You can decide right up until the last minute whether to bid on the item or move on to a different auction.
Sniping may even allow you to influence the final price to some extent by keeping information of your intention to bid a secret, which avoids bidding up the price and does not encourage other bidders to push up their maximum automatic bids.
Manual bidding is a lot of work and can encourage bidding up the price since it is so easy to keep on bidding.
Automatic ("max") bidding commits you to bid up to your max bid. Also, it seems like many people do not enter a high enough max bid to be effective. This seems to happen to me quite often.
If you are bidding on a popular item or an item with lots of bidders, you may need to go with a "max bid" strategy and keep trying auctions until you win at your maximum bid- sniping won't really help win these auctions since the bidding activity will push the price up no matter what you do.
You may be able to find your item in a "best offer" or "buy it now" item and get the item for your desired price. If you are having trouble winning the item at your maximum price, consider checking on craigslist or at consignment stores and see if you can find your item selling for less in a market with less competition.
eBay Bidding Mistakes- Round Numbers
One bidding mistake I saw in one of my recent auctions was using a round dollar amount for a maximum bid. The bidding on my item started at $99. The first bidder ("John") put in his maximum bid of $150. The way eBay's automatic bidding works, the price stayed at $99. Let's say the second bidder ("Richard") bids $110 maximum. The automatic bidding will move the price to $110 and John is still in the lead.
The mistake that John made was using a round dollar amount—$150. Later in the auction, Richard tried bidding $150. The automatic bidding system set the price at $150 and John was still winning. A couple days later, Richard tried $152.50 and was in the lead. John would have had a better chance of winning if his maximum bid was not such a round number. Biding $161.98 would have had a better chance of winning, even though it is only a few dollars more.
People seem to have psychological limits that they set for themselves at round numbers. John set his maximum price at $150. People with experience on eBay expect that people may have a maximum bid at such a price point and are skilled at pushing a little beyond these round numbers to get a winning bid.
eBay Bidding Mistakes- Biding War
Another bidding mistake I have seen is getting into a bidding war early in the auction and bidding up the price, going back and forth with manual bidding. This is a little surprising to see, but I think this is part of the competitive psychology of an auction at work. Both bidders want to win. Both bidders want to convince the other bidder that they are serious and can outbid them. So the price goes up and up.
In an auction with this dynamic, you may do well to find a similar item for sale without so much bidding. If you feel yourself getting drawn into a bidding war, consider holding off until the end of the auction to make your best bid.
eBay Bid Retraction
We have talked a lot about placing bids on eBay, but another common question is: "How can I cancel an eBay bid?" Bids on eBay are considered a binding contract between the bidder and the seller and it is not common to retract a bid. However, there are circumstances that allow you to legitimately retract a bid.
- You accidentally entered the wrong amount when placing your bid. For example you meant to type "2.00" and entered "200" instead. Oops!
- The description of the item changed substantially after you bid. For example, the seller added more details on the condition of the item that decrease its value.
- You are also allowed to retract a bid if you are not able to contact the seller via phone or e-mail.
In addition to these restrictions on valid reasons to retract a bid, there are also time limitations. During the last 12 hours of an auction, you only have 1 hour during which you are able to retract your bid.
If you do not meet any of these criteria, you can still contact the seller, explain your situation, and see if the seller will delete your bid. Some sellers would rather delete a bid than deal with a buyer who does not want to buy the item.
More eBay Tips
Learn how to make money selling stuff on eBay. Tips on finding good items to sell on eBay and how to go about making money selling on eBay.
Tips on how to ship your sold eBay items. As a seller, efficiently shipping your items is one of the best ways you can build your feedback score.
Here are some things around the house you can sell to make extra money. Find out which items you already have that you can sell quickly on eBay or craigslist to pick up some cash.
This article is accurate and true to the best of the author’s knowledge. Content is for informational or entertainment purposes only and does not substitute for personal counsel or professional advice in business, financial, legal, or technical matters.
© 2015 Dr Penny Pincher