It is very difficult to say what exactly contributes the correct price of an item. What truly is important is what someone is willing to pay. The word ‘someone’ is key here too as it only takes one interested person to buy an item. Here are some key factors to keep in mind when determining the value, and therefore the price, of an item.
Research the competition
The first point of call for price research is to check what the competition are selling the same or similar item for.
- Search eBay completed auctions to see what recently listed items are selling for. Click ‘Advanced’ next to the eBay search box and then ‘Completed listings’ and other relevant criteria on the next screen. This will show all items sold with the criteria in the last 15 days. Read our dedicated post on this for more details.
- Free Advertising websites Craigslist (USA and Canada), Kijiji (Canada) and Gumtree (UK) are all to price check items. Be aware though that items do not necessarily sell at the listed price – it is common to barter before purchase and the final price may be significantly lower.
- Price comparison websites such as Google Shopping and NexTag make it easy to compare prices at the major online retailers (including Amazon and eBay) in one go.
- Don’t forget to check offline stores too. Traditional retailers generally have more overheads than online stores, so prices will likely be higher than elsewhere but can give a good indication of market value.
eBay sellers concentrating on rare antiques or unusual items may struggle to find similar items being sold both online or offline. For the most valuable items, there purposely may not be any prices listed on some websites. Consider using one of the various antique valuation guides available plus the services of offline experts.
Be realistic about an item’s condition. The price isn’t right if a buyer is expecting ‘as new,’ doesn’t consider it as such and requests a refund. It can easy to overlook small damage and overvalue objects, especially if they are second hand personal items rather than brand new retail products. Products in less than perfect condition are not necessarily harder to sell – buyers with a smaller budget looking for second hand items are still plentiful. Always be as honest as possible about the condition of the item you are selling to avoid issues.
Auction vs. Fixed priced listings
As a general rule, the starting price or reserve price in auction style listings should at least cover a minimum of the product cost and additional fees. In the unfortunate event that the item only receives a few low bids, a seller should not lose money to sell an item.
Fixed price listings have less risk but have a potential profit limit. For this reason, sellers should consider all expenses plus a fair profit margin when pricing items. Read about more differences between auctions and fixed price listings elsewhere on the Auction Nudge blog.
The original cost of the item to the seller, especially if they specialise in brand new items, must be factored in when considering a price. This should be researched ideally before purchasing items. The standard wholesale to retail markup is 100% and is known as the Keystone Markup. An item originally purchased for $10 (from a wholesaler or second hand store) would typically be sold for $20. The retail markup (or margin) varies between types of products and also depends on whether the seller intends to be deal with high volumes. In the latter case, there would be more potential sales but less profit for each one.
Including shipping costs
Offering free shipping can be appealing to buyers, especially as so many of the big online retailers offer it as standard. eBay’s Best Match search shows favour to listings with reasonable shipping fees, with free being the ideal. If profit margins are low and/or shipping costs high for an item, add what the approximate shipping rate would be to the asking price.
Once a price has been set, have a go and see how the item sells. Pricing high and then working lower is the preferred technique as the other way around provides no proof that the item did not sell just because it was priced cheaply.
Try not to be downhearted if items do not sell quickly. If there are no takers, consider lowering the price slightly or holding off and relisting at a later date to see whether it was just a timing issue. Think about the presentation of the item; how it was photographed, described, where it appeared on the search results, what shipping options were available etc. The price is not always the most important factor when selling on eBay, but it should not be underestimated.