Enhance your silent auction with advanced auction software
Silent auction pricing is usually viewed as tedious backstage work, and it’s true that it does require a good bit of research and calculations. All of this number crunching might leave you wondering if you’re using the right pricing strategy for your hard-fought procured items.
If item pricing strategies are haunting your auction dreams, don’t fret! Refer to this ultimate how-to guide to answer your toughest silent auction pricing questions.
We’ll take you through the pricing basics to get you up to speed on auction item pricing 101. Here’s an overview of where we’re headed:
- How to set FMV for tangible auction items
- How to set FMV for intangible auction items
- How to set a minimum starting bid
- How to set unique auction item bids
- How to set bid increments
- How to set a “Buy-it-Now” option
- How to increase bidder interest
Before we jump in, let’s review a relevant term we’ll refer to in the upcoming sections: Fair Market Value (FMV). To determine FMV, it’s best to research an item’s retail price/list value and compare it with the item donor’s valuation. That way, a donor can safely and accurately claim their tax deduction.
For our auction fundraising purposes, FMV will be a helpful figure to determine starting bids and bid increments. In many ways, it can be seen as a “source of truth” for an item’s value.
With this in mind, let’s begin!
How to set FMV for tangible auction items
FMV for tangible auction items should be set with the known retail price in mind. Tangible items refer to physical goods like a dinner certificate or a new set of golf clubs. The beginning price of these tangible items would be the amount on the dinner certificate and the retail price for the golf club set.
Generally, tangible items have a FMV that’s easier to establish as they have a retail metric to reference. However, there are some tangible items that can pose a bit more of a challenge such as signed sports memorabilia or signed musical instruments.
For these items, we recommend researching the standard retail price and then comparing that metric with other resources such as:
- eBay or Amazon. Almost any item can be found on either of these sites, especially eBay since it’s the world’s largest auction platform.
- Item donors. Consult with those who donated the item to see if they could give an estimate for the item’s FMV.
- Previous silent auctions. When in doubt, data from previous auctions can inform your item’s FMV. Or, you can reference other silent auctions and take note of how they priced similar items.
Accurately establishing an item’s FMV is the first step to creating a successful silent auction fundraiser, so make sure you consult with as many outside resources as needed to capture the right metric.
How to determine FMV for intangible auction items
Most silent auctions have a mix of intangible and tangible items. While tangible items usually have a referenceable retail price, intangible items often do not. They can take the form of exclusive backstage passes, unique services such as “assistant for a day,” or once-in-a-lifetime experiences like “lunch with a celebrity.”
The FMV for such items should be determined in conversation with the donor. You can simply enter it into your auction software, but for intangible items like this, you should not show your bidders what the value is (this is controlled separately in your silent auction software).
Next, you’ll need to review and adjust the suggested starting bid amount. And when doing so for intangible items, audience research is a must. Because even if you think about what your ideal price for this one-of-a-kind item is, it may not encourage bids if your audience does not value the item or experience in the same way. So, consult the following resources:
- Audience demographics. What sort of careers, preferences, and incomes does your audience represent? Look at your audience holistically to determine their giving capacity and willingness as well as broader interests.
- Previous item interest. Refer to your previous auction data to inform your intangible item FMV. If certain items performed well in recent years, base your FMV with this research in mind.
- Supporter Opinions. Talk with fellow supporters and donors and gather their input on pricing intangible items. Pricing silent auction items matters, so all feedback is essential.
In the world of silent auction pricing, determining the correct FMV is foundational to success. And, after every item’s FMV is established, you’re ready to begin setting minimum bids!
How to set a minimum starting bid
The right starting bid fosters instant bidder interest and boosts auction event excitement. On the flip side, the wrong starting bid can deter bidder interest and slow all momentum attached to that item.
Let’s get your auction started on the right foot by making sure your starting bids inspire supporters to get in on the action.
Strategy: Set a minimum bid at 30-50% FMV
With your items’ FMV at hand, it’s time to set a starting bid for all of your silent auction items at that value. Some item value calculations will be a simple equation input, others might rely on some additional bidder research.
Here are some additional factors that can influence starting bids:
- Audience demographics
- Audience preferences
- Item popularity
- Item model
- Donor loyalty
- Item’s perceived specialness
Set Minimum Bids to 30-50% of their FMV to keep bidders invested without devaluing your auction items. That way, you can maintain a balance of not starting the bidding too low while still capturing bidder interest.
Popular items should land closer to 30% FMV while lower ticket items should land closer to 50% FMV. For instance, if you anticipate that you’ll have only one or two guests excited about an item, you should set the minimum bid higher than you would otherwise since the chance of sustained, competitive bidding is lower.
Software tip
Skip the number crunching and save time by using silent auction software to determine starting bids and bid increment values.
How to set unique auction item bids
Unique auction items are usually the ones that carry the largest bidder interest, and, therefore, the most revenue potential. These items are frequently used to promote your silent auction ahead of time.
Strategy: set a minimum bid at 40-50% FMV
For unique items, consider setting a higher starting bid. If you’re unsure how to identify your auction’s unique items, refer again to audience demographics. For instance, parents participating in school auctions would likely be interested in high-value items like all-inclusive daycare services or Airbnb lake weekend getaway packages.
Software tip: Use mobile bidding for auction guests to receive outbid notifications so they’ll feel motivated to increase their bids for higher-ticket, unique items. Or, conduct your entire silent auction online with silent auction software!
Make mobile bidding work for your next silent auction
How to set bid increments
Bid increments, or minimum bid raises, set the bidding pace. These values can directly influence the number of bids each item receives. Your auction chair can easily use an auction software platform for bid increment suggestions to help them get started.
Strategy: Start by increasing bids by 10% of the item’s FMV
We recommend setting bid increments at 10% FMV. Although, you could even go upwards to 15% FMV depending on the popularity of the item or past performance data.
For an informed pricing strategy, consider these factors:
- Previous auction event data. Consult year-after-year statistics. If a similar item has performed well at a previous auction, and will be available at this year’s auction, set your bidding increment at 15% FMV.
- Re-evaluate pricey items. Double-check items that have a higher FMV attached to them. Keep these item bid increments closer to 10% FMV to continually attract bidder interest.
- Round to the nearest whole number. Finish off your calculations by rounding to the nearest whole number to make it easier for your guests.
Software tip: Get bidding momentum going before your event even starts with silent auction software pre-bidding capabilities. Or, use a fusion option to facilitate simultaneous in-person and virtual bidding.
How to set a “Buy-it-Now” option
Buy-it-Now options ensure items exceed FMV when bidding closes. They incite interest in bidders who aren’t interested in back-and-forth bidding wars, and would rather secure their favorite auction items outright.
Strategy: Set “buy-it-now” options at 150-200% FMV
Quickly selling an item at top dollar not only helps generate revenue but also increases a feeling of scarcity. However, not all auction items are worthy of a “Buy-it-Now” option, so we recommend using it sparingly.
Avoid offering “Buy-it-Now” options for emotionally appealing items, unique items, and other items that are known to stir up bidding wars.
Now that you’ve got a handle on all things silent auction pricing, let’s review some non-pricing-related ways to increase bidder interest.
How to increase bidder interest
It can be easy to get caught up in the nuts and bolts of auction item pricing, but a perfectly-planned pricing strategy can only go so far without additional auction considerations.
Keep in mind that auction guests are most interested in** the silent auction experience rather than revenue generation. It should come as no surprise then that **the most effective way to drive bids is to enhance the auction guest’s bidding experience.
Here is a quick checklist of auction aspects to consider for increased bidding:
- Physical venue arrangement
- Schedule arrangement
- Auction item marketing
- Auction item bundling
Make your pricing strategy and event day work together to create an unforgettable, positive bidder experience!
Wrapping Up
Silent auction pricing is both a science and an art. It’s achievable with a little research and planning. And, now that you know the strategies to succeed, there’s nothing stopping you from throwing a stellar silent auction!
Ready for more auction resources? Check out our articles below to gain more fundraising insights!
- Mastering The Silent Auction Rules: The Essential Guide. Learn the ropes and become a silent auction expert with this ultimate guide.
- Silent Auction Software Top Providers. Looking for the right silent auction software to fuel your mission? Check out our recommended top providers!
- How Does a Silent Auction Work? What Fundraisers Should Know. If you’re new to silent auctions or need a refresher, refer to this article for a comprehensive silent auction review.
