The Reserve Price Dilemma
One of the most common questions sellers face when listing on auction platforms is whether to set a reserve price — a minimum amount the item must reach before it can be sold. Get this decision right and you protect your investment. Get it wrong and you either undersell or deter the very bidders you're trying to attract.
This guide walks through the mechanics of reserve prices, the psychology behind them, and a framework for deciding when to use one.
How Reserve Prices Work
A reserve price is a confidential minimum sale threshold set by the seller. Bidders can see that a reserve exists (typically shown as "Reserve not met"), but they cannot see the actual amount. Only when a bid reaches or exceeds the reserve does the item become committed to sale.
On most platforms, including eBay, setting a reserve attracts an additional fee — often a flat fee or a percentage of the reserve amount, credited back if the reserve is met.
The Case For Setting a Reserve
- Protection against low bids: In a low-traffic auction with few bidders, even a genuinely valuable item can sell for a fraction of its worth. A reserve prevents this.
- Peace of mind: If you know you need at least £150 to cover your costs and make a margin, a reserve at that level means you'll never walk away at a loss.
- Signals quality: A reserve can subtly communicate to buyers that the seller believes the item has genuine value, which can set a positive expectation.
The Case Against Setting a Reserve
- Bidder deterrence: Many buyers avoid listings with unmet reserves. The uncertainty — "will I win even if I'm the highest bidder?" — reduces participation and can result in fewer bids overall.
- Lower momentum: Auctions build excitement as bids climb. A "Reserve not met" notice can freeze that momentum, as bidders hesitate to commit below the unknown threshold.
- Added fees: The additional listing fee for a reserve reduces your net return even if the item sells successfully.
Alternatives to Reserve Prices
In many cases, a higher starting price achieves the same protective effect as a reserve, without the deterrence factor:
- Higher starting price: If you won't sell below £100, simply start the auction at £100. This is transparent to buyers and eliminates the "reserve not met" uncertainty.
- Buy It Now + Best Offer: For items with a clear market value, a fixed price with a Best Offer option gives buyers certainty while allowing negotiation.
- Scheduled relisting: If you're prepared to relist if the price isn't right, a low starting price with no reserve can generate more initial interest and organic competition — with the fallback of trying again.
When a Reserve Makes Clear Sense
Despite the drawbacks, reserves are genuinely useful in specific situations:
- High-value items (watches, jewellery, art) where a single low bid could result in a painful undersale
- Items with fluctuating market values where you're uncertain of the floor price
- Situations where you have a hard minimum (e.g. you paid a specific amount and must recoup it)
- Specialist auction houses where reserved lots are standard practice and buyers expect them
A Simple Decision Framework
| Scenario | Recommended Approach |
|---|---|
| Common item with clear market value | Start at your minimum acceptable price, no reserve |
| Rare or high-value item, uncertain market | Set a reserve at your minimum |
| Item with emotional or sentimental value | Buy It Now or reserve auction |
| Testing the market on a new item type | Low start, no reserve — use result as data |
The goal is always the same: maximise the final sale price while ensuring you never sell for less than you're willing to accept. Choose the mechanism that best achieves that balance for your specific item and circumstances.