Every year I’ll be asked by a few auction chairs, “Sherry, let’s review the opening bids on these live auction items. Where shall we start them?”
In this video and the post that follows it, I’ve addressed why you shouldn’t care about opening bids.
Here’s a conversation I’ll have with some clients each year:
“Sherry, this item is worth $2500. Where are you going to start the bidding?”
“Start?” I’ll counter, “It doesn’t matter where I start the bidding. It matters where I finish the bidding.”
I want to explain why this question never needs to be asked of your professional, full-time auctioneer because of (1) selective memory, (2) science, (2) and (2) skill.
1. Selective Memory
At a gala auction, bidders and donors always recall the final sale price, but no one remembers the opening bid.
“That vacation sold for $4500,” one will say.
Another adds, “I couldn’t believe it when she sold that dinner for $2000!”
No one says, “I can’t believe she started that item at $500.”
To a degree, I understand the planner’s sentiment. I used to be an event planner myself. To facilitate your creation, you hire professionals.
- You hire an excellent caterer … and you wouldn’t dream of wandering into the kitchen to tell the chef to slice the carrots thicker.
- You hire a popular band … and you wouldn’t dream of going onstage and telling the pianist to play with more staccato.
- You hire an auctioneer … but some planners feel comfortable suggesting opening bids for items. What’s up with that?!
Opening bids is your professional auctioneer’s job. Trust her to use her judgment on running the auction.
And remember, your guests only remember the sale price anyway.
In 2006, Adam D. Galinsky and J. Keith Murnighan of Northwestern University and Gillian Ku of London Business School published their research paper “Starting low but ending high: A reversal of the anchoring effect in auctions” in the Journal of Personality and Social Psychology.
After studying thousands of auctions, they found that the lower the opening bid in an auction, the higher the sale price.
Three processes contributed to this effect.
- Lower starting prices reduced the barrier to entry. In other words, bidders who ordinarily wouldn’t be interested or able to bid on that $5000 trip suddenly became interested because the opening price was so low. This increased the amount of bids and escalated the sale price.
- Lower starting prices tempted bidders to invest more time and energy into the sale process (which became sunk costs). This, in turn, escalated their commitments. In other words, once a bidder became invested in bidding, he was more likely to stick around, bid, and watch it sell.
- The frenzy of bidding generated from these lower starting bids led other bidders to believe there was great value in the item. In other words, the more bidding activity there was, the more bidding activity it generated.
Knowing this, doesn’t it make you want to ask the auctioneer to open the bidding for every item at $1.00?
And this leads to the final point …
A professional auctioneer’s ability to read a crowd and “talk fast” (chant) raises you more money.
Auctioneers learn to read bidders. As your live auction progresses, he’s reading body language, observing bidding history, and noting other factors. He’ll speed up or slow down his chant, depending on what he observes.
A non-professional auctioneer (think your local mayor or newscaster) may call out numbers, but lacks this skill. They are little more than “order takers.”
Now imagine that you decide to begin the bidding with a low opening bid, based on the research you read in the “Starting low but ending high” study.
If your chosen auctioneer doesn’t have expertise in reading a crowd and can’t chant, he’s dramatically slowing down your auction. You’ll be there all night selling items.
But a professional auctioneer could start every item at a dollar (if it was so decided) and — through the magic of the chant – be selling them for $2000 and $5000 in short order.
A low opening bid catches a bidder’s attention, and the skill of the auctioneer keeps bidders in the sale.
In conclusion, save yourself time and raise more money in the long run.
Hire a professional auctioneer and let her manage the auction.
Now that you know where to start opening bids (ahem …don’t), here’s a tool to get the rest of your live auction just as spiffy.
Lucrative Live Auctions is a comprehensive training for auction planners wanting ideas for more interactive live auctions, procurement, ordering the items into best-selling order, tracking sales, and more.
Here’s where you can learn complete details about the program and order it.