When you set up a listing on eBay, your goal is to sell your item at the highest price possible. Your secondary goal is to not loose money or, not leave untapped value on the table. To accomplish this there are many different pricing strategies you can use. One of the tools that eBay provides for your use is a reserve price.

The reserve price is a set price that your item cannot be sold less than. For example, if you are selling a camera and you want to start it very low but you know it should be worth at least $200, you can set the reserve at $200. As the auction proceeds, your auction is marked "reserve not met" right under the current bid price as long as the current bid is lower than your $200 reserve. The reserve price is invisible to your bidders. They can see it is a reserve price auction, but they do not know what the reserve price is.

Once the bid price reaches $200, the reserve warning is no longer displayed and the auction goes on to a normal ending. If the auction ends, and the price is under $200 then the auction ends without a winner. Since the bid never went over the reserve price, the auction item could not be sold therefore the auction ends with out a winning bidder and your item is not sold.

Setting a reserve price is a double edged sword. From the stand point of protecting the value in your item, it works because you cannot sell it for less than the reserve. On the other hand, most experienced sellers would agree that using a reserve price significantly lowers the number of bidders you get on your auction. With less bidders, your final bid price will be lower than if you had not used a reserve.

But how does a reserve price work with ebooks? Should it be used at all? The answer is no most of the time but maybe under certain circumstances.

If you are selling items that are low cost items like ebooks, you certainly don't want or need to be concerned about reserve prices.

There is one exception to using the reserve price. If you have an auction on say, a large collection of ebooks bundled together. You set it up in an auction format. You also want to have a buy it now price for anyone who is impatient, can't wait for the end of the auction and has to get it right now.

The problem with buy it now is, it goes away once there is a bid. Then there is no opportunity to have the buy it now option available. Once the first bid comes in, even if it is just for a penny, the buy it now goes away, unless....... there is a reserve price listed.

The buy it now will stay there and remain active until the reserve price is met. So you can use the reserve price as a tool to keep the buy it now option available longer. It is still a trade off, you will get less bidders but it depends on your ultimate goal.

The advice most often given is not to use a reserve price if can avoid it. You would be better off starting your auction off higher instead of using the reserve option. That way you would still get more bidding than if you used a reserve. The exception is using the reserve price to keep the buy it now active longer. The right answer can only be determined by you and your goals for that auction.

To find out how you can successfully sell information products using eBay and the internet talk with Ray Johnson - Google.com No.1 Ranked eSeller:

Source: www.articlesbase.com