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All you need to know about the numbers behind the auction lots.
Selling in an online auction (also known as a Silent Auction or Timed Auction) is quite different from selling on a fixed-price e-commerce site or through a private sale.
In a private sale, the seller typically starts with the highest price and negotiates down until a deal is made. In contrast, an auction works in reverse—the bidding begins at the minimum acceptable price, and potential buyers compete by driving the price upwards.
What is an auction estimate?
An auction estimate is the expected price range within which an item is likely to sell.
This range includes a low estimate and a high estimate, based on the industry standard auction bidding increments. Typically, the high estimate is about 50% higher than the low estimate (e.g., £1,000 to £1,500 or £20,000 to £30,000).
On Indy, adding estimates is optional.
What is a starting price?
The starting price is also known as the 'opening bid' or 'starting bid'. This is the minimum price at which an auction begins.
With our online auctions, the starting price is also the minimum the seller is willing to accept, also known as 'the reserve'.
For example, a lot with an estimate of £10,000 - 15,000 might have a starting price of £8,000. This means the lot will sell for £8,000 if there is only one bidder.
In general, starting bids are usually set 15-30% below the low estimate.
How are estimates determined?
Auction estimates are set by the seller, based on several key factors.
- Auction history: Prices of similar or identical items sold at previous auctions provide a benchmark.
- Known fixed values: If an item has a known retail or fixed value, the auction estimate typically falls 20% above and 20% below that price. For instance, a chair retailing at £10,000 might have an auction estimate of £8,000 to £12,000.
- Unique characteristics: Size, condition, subject matter, medium, and the object's history (provenance) all play a role. For example, why did a relatively ordinary 1960s dress sell for $4.8 million? Because it belonged to Marilyn Monroe.
Is there a formula to setting starting price?
The starting price is entirely up to the seller, as it represents the minimum amount you're willing to accept for the item. While there is no strict formula, starting bids are typically set 15-30% below the low estimate. However, several factors should be considered:
- Competitive bidding: Lower starting bids tend to generate more interest and competition, often leading to higher final sale prices compared to auctions with higher initial bids.
- No-sale strategy: Consider what you'll do if the item doesn't sell. For example, if you are happy to keep it if it doesn't sell, you might want a higher starting price. If you want to ensure a sale, set an attractive low starting bid or consider running a "no reserve" auction.
- Lower offers: If the item doesn't sell at the original starting price, would you be willing to accept a lower offer? If so, consider starting at that lower price from the beginning in order to attract more bidders and avoid the hassle of a post-auction negotiation.
For more tips on setting starting prices see What Sells Well at Auction
Are the final prices published?
As the seller, it is up to you whether you would like the final price publicly available after the auction. If you would prefer not to have it visible make sure your 'Publish auction results' setting is turned off.
Why are private sale prices higher than auctions?
In a private sale, such as purchasing artwork from a gallery, buyers often pay a premium for the exclusivity of the transaction. There's no competition, and the buyer has the luxury of time, as gallery sales typically have no fixed deadline. The gallery sets the highest possible price, and if no buyers commit, they gradually negotiate the price down to close the sale.
In contrast, auctions work in reverse—bidding starts at the minimum price the seller is willing to accept, encouraging competitive bidding from multiple buyers, which can lead to higher final prices.
Is the reserve public knowledge?
Yes - this is because the reserve price is the same as the starting price in an online auction. Once a bid is placed, the 'Starting price' updates to reflect the 'Current bid'.
The reserve is kept confidential in a Live Auction.
Does every lot have a reserve?
Yes, in an online auction, every lot has a reserve which is the same as the starting price. In the case of a 'no reserve auction', the starting bid is typically set at £1.
What are the bidding increments?
Top Tip:
- Avoid High Estimates: Setting estimates too high can deter bidders, leading them to bid or buy elsewhere.
- Bidding increments: For a professional looking auction, make sure your auction estimates are rounded to their nearest increment. See examples here.
- Low Starting prices: The starting price should be either at or below the low estimate - never above. To incentivise bidding, this figure is usually 15-30% lower than the fair market price for the lot.
- Engage Bidders with Attractive Prices: Starting prices below the typical valuation can attract more bidders. Once engaged in bidding, the thrill, passion and competition to own the lot often sends the final result higher than the original price.
- Auction results - If you want to sell everything but prefer not to make your auction results public, ensure that the "Publish Auction Results" setting is turned off.