Lesson 6

Choosing Effective Categories and Starting Prices

Hey there, eBay Executive!

So I have to ask, are you wearing a suit now, or did you take my advice and stick with the "executive shorts?" You know, they make some pretty expensive shorts for executives now...but enough of that! Back to our iPod quest.

A couple questions still remain: What category should I list my item in and what is a optimal starting price for my item? This is when your fishing skills will come into play.

For example, if I am going fishing, I obviously want to catch that champion fish. But in order to catch the big fish (high bidder), I need to 1) be fishing in the right lake (category) and 2) have the right hook (starting price) for the fish I want to catch. The wrong lake means that the fish I want to catch won´t be looking for bait in that lake. The wrong size of hook means that it will be either too small, and the fish will steal my bait without taking the hook, or it will be too big, and the fish won´t pay attention to it.

In other words, you need to list your item in the category that will give it the most attention. You also need to set the most appropriate starting price so the high-paying buyers will get hooked.

Today I will teach you how to find the best category and start price for your auction.

Introducing the Listings Window!

In Lesson 3, we spent a little time in the Listings window, but now we are going to see what it can really do for us. Go ahead and open up our saved file, iPod 30GB. Click on

As I mentioned before, this window displays every auction included in our research results. The auctions are actually links that access the original closed auction on eBay.

When you are in the Listings window and find an item that sold particularly high, it´s a good idea to go to the original auction and find out what made the difference. Was it the pictures? Was it the product description? Did they use Auction Trust Network? Answering these questions can often increase your profits.

This window also has many columns that can be viewed by scrolling to the right of the screen. To me, this window, along with the Keywords window, truly manifest the power of your Research Tool. In this window you can manipulate the data to tell you what you want it to. Huh? Okay, basically, you ask the questions and this window will give you the answers.

Sorting the Data

First let´s learn how to sort the data. I mentioned this briefly in an earlier lesson, but want to show you again here.

Look at the Total Sales column. By clicking on the column heading, the data is sorted in ascending or descending order. (Notice which way the little arrow is pointing. That tells you which way the data is sorted.)

You can sort this data by any column heading and compare that column to other columns.

Listing in the Right Category

Listing in the right category is all about supply and demand. You want to get your product where the most people who want it will see it. Let´s go back to the example of my friend making $15 more per shirt if he closes it in the early morning hours. If there are only fifty polo shirt available at that time in that category, and there are 500 buyers bidding for the same shirts, your profits will go through the ceiling.

Let´s figure out the best category for these iPods. Now that you have the data sorted by Total Sales, let´s compare that to another column. For this example, let´s compare it to the Category 1 column.

To do this:

1. Make sure the data is sorted in descending order for Total Sales.
2. Scroll to the right of the screen until you find the Category 1 column.
3. Left-click and hold on the Category 1 column and drag it to the left of the window. As you do this, the window will scroll back to the right as you keep holding the column heading.
4. Drop the Category 1 column next to the Total Sales column. Green arrows will appear to show you where to drop it. Let go of the mouse button to drop the column.

Now you can see which categories worked best, according to total sales. In our example, category 73837 is specifically for iPod 30GBs, and every listing in our research listed their iPod in the same category. However, other products sold on eBay may not have obvious categories; similar products may be sold under many different categories. This is why it´s important to research the best category for your product. You have to think of it this way—the auctions that make the most money receive the most attention from buyers. More buyers see the same item, which drives the bids higher than those on a product listed in a different category.

There is one more way you can move the data to look at this from another angle. Remember, as an executive decision maker, you want to look at this from as many angles as you can.

To do this:

1. Left-click and drag the Total Sales column heading up into the grey area labeled "Drag a column header here to group by that column" and drop it.
2. Your screen will change, having only the Total Sales listed on the right.
3. Left click and drag the Category 1 column and drop it next to the Total Sales above. Now the data is grouped by Total Sales and Category 1.
4. Click on the plus box next to the Total Sales and it will open to display the Category 1 fields.
5. Look at a few of the high priced items to find the best category to list your product in.

To go back to the Listings window:

1. Click and drag the Category 1 column heading up until an X appears, then release. This automatically puts that column back with all the other columns.
2. Repeat step #1 for the Total Sales column heading.

Setting Just the Right Starting Price

To set that hook with the highest bidder, you need an effective start price. To find out what that price is, we will use some of the techniques we used to find the right category. But you may be asking yourself, "Why don´t you just give me the average starting price in the executive summary and save me the time?" Setting an effective starting price using data is an art form that cannot be taken lightly. Okay, it´s not that serious, but it is important.

The point is, if you took the average start price for a specific product, you would have a range of start prices from $0.99 to $50 or even higher. That average will not give you the start prices that will give you the highest profit. You´re setting the size of your hook based upon the average of hook sizes and not upon the size of fish you want to catch. In order to get that start price, you need to compare the items with the highest ASP with the Start Price of each item.

To do this:

1. Make sure the auctions are sorted by Total Sales in descending order.
2. Click and drag the Start Price column and drop it next to the Total Sales column (remember to let the green arrows guide you).
3. Look and see what the Start Price was for items highest in the Total Sales column.

For these iPods, the optimal start price is around $0.01, to get the highest profit, around $230.00 (in other words, the total sales minus the starting price). Though several of the iPods offered sold for up to thousands of dollars, I found that these listings either came with special offers or allowed customers to buy up to four iPods at a time. Be sure to click on the link to each auction to investigate exactly why it closed with the profit it did, particularly if it closed with a much higher ASP than the average listing.

Now you can see why I said that setting an effective start price is an art form, just like selecting the right size hook to catch a fish. I´m sure you see items listed all the time that have a start price so high, that no one is willing to bid on it. On the other hand, some are set so low that they cannot create enough bids to get the price up where it needs to be.

Assignment #6: Get ready to go fishing!