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Via azcentral.com

How to Set Starting Bids at a Silent Auction

Hosting a silent auction can be an excellent way for organizations to raise money, but many hosts struggle with the finer details. Setting starting bids for items is a common source of confusion—many first-time silent auction hosts (and even a few experienced event planners) need help to do it properly. But setting the right starting bids can be vital for your silent auction’s success.

Maybe you aren’t sure how to set fair starting bids for your items, or perhaps you’re curious about bid increments. Fortunately, we’re here to tell you everything you need to know about setting starting bids to make your silent auction succeed.

What is a Starting Bid (& What Role Does it Play?)

Many people mistakenly assume that a starting bid is the same as a minimum bid — but that isn’t true. 

Minimum bids (also known as reserve prices) are the prices the items must reach in order to be sold.

Starting bids (also called opening bids) are the amounts you set to start the bidding. The purpose of a starting bid is to inspire excitement—and competition—amongst other bidders.

How to Determine a Fair Starting Bid Price

Starting bids can be lower than minimum bids, but an item can’t sell until it reaches the minimum bid. In fact, one popular strategy is to keep starting bids low to encourage competition and result in higher closing bids later.

Still, you don’t want to make your starting bids so low that people undervalue your items. To start in the right ballpark, you’ll need to learn something about the Fair Market Value (FMV) and Suggested Retail Price (SRP) of each item.

Finding an Item’s Fair Market Value (FMV)

The price at which an item is sold is considered fair if the parties involved make the deal willingly, with all the relevant facts, and without outside pressure or special incentives. FMV is therefore one strong indicator of how to price an item for your silent auction.

Unfortunately, there’s no ironclad formula for determining an item’s FMV. As the old saying goes, the value of anything is whatever people will pay for it.

Confused? Not to worry. One easy way to estimate the FMV for your items is to look at online retail platforms to see how much similar items are selling for. Doing so will help you determine what other people are willing to pay for your items under fair and clear circumstances.

Finding an Item’s Suggested Retail Price (SRP)

Suggested retail price is the amount that a product’s manufacturer recommends it be sold for to consumers. Since almost every manufacturer lists an SRP for their products, this metric is far easier to find for an item than its FMV—and much less ambiguous.

How Do FMVs & SRPs Affect Starting Bids?

Unfortunately, setting the perfect starting bids for your items isn’t as simple as just using the FMV or SRP. However, these numbers are important reference points you’ll need to find the ideal starting bid for each item.

Obviously, you want to raise as much money as possible for your charity fundraiser or organization—but you still need to stay realistic about how much guests will be willing to pay for your items. Most silent auctions yield around 50% of an item’s suggested retail price, so the SRP for an item is more useful for helping you calculate what you can expect to make than for helping you set starting bids.

FMVs, on the other hand, are vital for calculating starting bids on most items. We recommend setting your starting bids at 25–40% of the FMV for each item, depending on your fundraising goals and type of guests at your event.

For example, guests with more disposable income may be inclined to bid on items with higher starting bids—but if you have more guests in lower income brackets, you’ll get more competition by making your starting bids lower.

Starting Bids for Notable or Unique Items

Some items you receive for your silent auction may be more difficult to determine the FMV for. This includes unique items like experience-orientated gifts, special access to VIPs, home-made crafts, and other less tangible donation items. In these situations, a bit of research and some educated guessing is required.

Take a look at your guest list, and try to find the following information about the people attending your event. Consider their:

  • Average income
  • Past silent auction bids
  • General preferences (if you know them)

Use this information to influence the starting bid you choose for each item—and if you need help, ask your donors for their opinion.

 

Man placing bid at silent auction using app with minimum bid increments

Via Pexels.

Setting Bid Increments

Once you’ve set the starting bids for your items, you’ll need to pay some attention to setting bid increments as well. You don’t want your guests nickeling-and-diming each other all night, which keeps bids low and revenue down.

When you pre-determining the bid increments for each item, all guests have to do is confirm their next bid amount on each item. You control the rate at which the bid of each item moves up. One of BidBeacon’s features is the ability to set automatic bids for users, placing bids for them until they’ve reached their maximum limit and keeping the competition hot.

If you set the starting bid of an item high, we recommend keeping your bid increments slightly lower so the price won’t jump dramatically after a few bids. For smaller items, set the minimum bid increment at around 10%.

Grouping Items Together

Some silent auctioneers and event planners recommend grouping similar auction items together. If you know some items will generate more excitement than others, grouping them together can make the less-attractive items part of a package that still inspires competitive bidding. Adding some less-exciting items to a big-ticket item can also justify setting a higher starting bid for the entire package.

Setting Up Your Silent Auction for Success

At the end of the day, here’s what you need to remember about setting starting bids for any item at your silent auction:

  • Find the item’s SRP first, so you can figure out what you’re likely to get for it at auction (usually about 50%).
  • Next, calculate the item’s FMV by looking online to see what other people are already paying for similar products.
  • Set your starting bid at 25-40% of the item’s FMV. The harder it is to find the item’s FMV, the more you’ll need to rely on information about your guests and the money they’re willing to spend.
  • Set appropriate bid increments to keep the competition going throughout your event. Use a tool like BidBeacon to help you, and to manage other important parts of the auction like closing times and payments.
  • Group similar items together or place exciting items with less-exciting ones so that you can set higher starting bids without negatively affecting competition.

Finally, feel free to contact us if you have any other questions about setting up your silent auction. We’ll be happy to chat with you and point you towards tools that can help.