Pricing silent auction items remains a challenge for many organizers. They cannot rush this process, as the right pricing plays a significant role in the event’s success. Fortunately, individuals find certain tips are of help as they move through this portion of the process. However, these tips rely on the person knowing the fair market value of each item.
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Why is the Fair Market Value Important?
The fair market value is the monetary value of an item being auctioned and provides information on what participants might pay to own the item. Donors often value the items they provide for the event. However, this isn’t always the case, and the event organizer must then assign a value. How is the fair market value determined, and how can maxanet.com be of help as the process moves forward?
Tangible items typically come with a retail price that corresponds to the fair market value of the item. However, certain items present more of a challenge, such as sports memorabilia and autographed items. When calculating the fair market value of these pieces, ask the donor for help. Keep in mind they may overvalue the item, so only use the information they provide as a guide.
Turn to eBay to see how much people will pay or have paid for similar items. Other silent auctions become a valuable resource when pricing items for the auction. Don’t overlook experts in an industry if you feel you have a unique item that should command a higher price. The expert can tell you if the higher price is justified and why.
Intangible items often come as experiences. For example, a person might bid on exclusive VIP access to an event or a unique service. How can you assign a fair market value to these distinct offerings?
Auction organizers must make an educated guess as to what a person would pay for the experience, and audience perception plays a role in this. Consider the audience demographics and previous event interest when pricing the item. Fellow fundraisers become of great help in this process as well. Use software to track these and all items along with details about each item included in the event.
Starting bids can draw in individuals or run them off. For this reason, event organizers must take care when setting a starting price for each item in the auction. Consider setting the minimum bid at 30 to 50 percent of the item’s fair market value. Take into account the item’s popularity, the audience demographics, the emotion behind the item, and more. They influence the price someone will pay for an item.
Video game systems serve as a good example of how a price can skyrocket in a silent auction. For example, kids often ask for the latest Xbox system at Christmas, making these systems difficult to find. The event organizer can put a higher starting bid on the video game system if they have one available for the event. People will pay more for the opportunity to take the system home and make their child’s holiday.
Choose one or two big-ticket items to serve as the highlight of the event. Highlight these items in all promotional materials to generate more interest. Do this with text messaging, reminder emails, landing pages, social media posts, and more.
Most auction items come with a 10 percent bidding increment. Event organizers find the bidding impacts play a key role in the number of bids received for an item. However, consider increasing the bidding increment to 15 percent for popular items that have sold well in the past. The one exception to this is high-value items. Keep the bidding increment to 10 percent to encourage participation. Round bid increments to the next whole dollar and 70 percent of the fair market value should be reached within five to eight bids. If it takes longer to reach this mark, set the bidding increment higher.
Consider offering a buy-it-now option for auction participants. They may want an item but aren’t inclined to bid. This option allows them to make a purchase, support a cause they are interested in and know they will go home with something they love. Set the buy-it-now price at 150 to 200 percent of the item’s fair market value. Not only does this option please the winner, but it also encourages other participants to take action. When they find they missed out on an item because someone purchased it outright using the buy-it-now feature, they will act quickly so they don’t miss out on other things they are interested in buying.
Silent auctions require effort on the part of the organizer. However, they tend to be successful events when the event host prices the items appropriately. Use all resources available to you to make the event a success. Organizers who do so find the auction runs smoothly and the organization it benefits comes out a winner thanks to the funds collected from the event.