It seems like such a simple question, but honestly, are you making as much as you could with each listing? During the past few weeks I have been convinced that no matter how much you are making on eBay, you can always make more.
Take our three Grow My Profits study participants, for example. Bryan increased his sales and profits to become a PowerSeller, while Leslie, already a PowerSeller, increased his sales to become a Gold PowerSeller. Finally, Tim, a Gold PowerSeller (meaning he makes at least $10,000 in sales every month), was still able to increase his sales by 40 percent!
What´s their secret? You´ve got it. Auction Research! It´s time to start using HammerTap to its full potential and to stop losing out on lost profits. Today I will show you just one way to use HammerTap to increase your profits.
Your Starting Price Directly Affects Your Profits
A little while back we did some research for Chris Murc, President of WSRadio, home of eBay Radio and Entrepreneur Magazine Radio. In our research, we found one thing Chris could do to increase his selling price for each auction—increase his starting price.
A couple weeks after Chris put our research into action, this is what he had to say:
"HammerTap research increased my eBay profits more than 20 percent. The starting price analysis was nothing short of amazing and revealed an unexpected way to draw more buyers to my auctions."
How do you know what starting price to use unless you use research to find out? The hot thing on eBay has been to list your item at $0.99 to create a bidding frenzy. However, this is not the ideal price for every item, especially because each product is different, and if you are still listing every auction for $0.99, I can guarantee you are missing out on additional profits.
The reason is that buyers often associate starting price with the value of the product. A $300 iPod with a $0.99 start price indicates that it may have problems or not even work at all.
The key is that each product is different, and if you want to maximize your profits for the product you are selling, you need to do some quick research to find out which starting price will bring you the highest end price.
Using Research to See the Effect of Start Price
To get started, open HammerTap and research a product you´re currently selling or planning to sell. Once you have your results, go to the Listings window. I´ve been doing some research on Nintendo Wii and PlayStation 3 recently, so I will use one of those as an example. (By the way, I found that Wii is out-selling PS3!)
Here´s a snapshot of the Start Price findings for a Nintendo Wii.
So, if I was selling a Wii, what would be an effective start price? $0.99? Well, not if I want to make the most money. The chart on the left indicates the effect starting price has on LSR, Listing Success Rate. For the highest success rate, we want to start our auction anywhere from $222 to $259. Going from left to right on this chart we see that as our start price increases, our success rate decreases.
But look at the chart on the right. This chart displays the affect our start price has upon our end price, ASP. (And, of course, if we have a higher end price, we are making more money!) Look at the trend on that! We can clearly see that as our start price increases, our end price (and our profits!) increase as well.
So, we need to create a healthy balance of LSR and ASP when determining the optimal starting price. It´s that optimal start price that hooks the high-paying bidders.
Setting Just the Right Starting Price to Hook the High Bidders
To set that hook with the highest bidder, you need an effective start price. If the start price is too small, you are going to lose out on profits. If it is too big, you are going to scare away bidders. It´s the perfect start price that attracts bidders and makes the big sale.
To find out what that price is, we will use the Listings window.
To do this:
- Go to the Listings window.
- Sort the auctions by High Bid by clicking the High Bid column heading. (You want the arrow pointing down to sort them in descending order.)
- Now the High Bid column and the Start Price column should be side by side for comparison.
The image below is an example of our Wii research.
I´ve highlighted four auctions that all had a high bid of $850. Now, look at the start prices. The one listed with a start price of $850 did not sell, so you may want to stay away from listing the Wii this high. But notice that two of the auctions that sold were both listed in the $450-$485 range and still sold for $850. This tells me that I can increase my start price and have a higher end price.
Notice how very few of these auctions started at $1.00 or below. In order to see the most auctions listed at that price, I had to scroll down to see that most of them sold for about $350 to $400. If I want to make more money, I´m going to start my auction at a higher price.
Removing the Guesswork
The techniques explained above show you how to set that optimal price to hook the high bidders. Knowing what size of fish you want to catch helps you determine the size of your hook. I know many of you feel like setting a good start price is often a gamble, just like fishing, so here are a few tips to remember when setting that perfect start price.
- The start price should not be the same as your reserve price (the lowest price at which you will sell your product)—it would most likely be too high for buyers.
- Although a low start price creates a bidding frenzy, it often does not reach the desired sales amount—make sure you do not set your start price too low.
- Price mark your starting price. For example, instead of $10, use $9.95 or $9.99. Shoppers are most familiar with this type of pricing in brick-and-mortar retail locations. This can also help you save on eBay fees.
The key, however, is to utilize the research results. HammerTap shows you both the starting prices that were effective and those that were not. Look and see how much money you want to make (how big a fish you want to catch) and then determine the starting price (size of hook) you need to draw in the high bidders. And remember, every product is different. What works for one may not work for another.
Now, go on and research your other products and determine that perfect starting price!
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Hope you have a wonderful holiday!