Importance Of Starting Price During An Auction
Be it selling surplus equipment, liquidation of a company, or selling other forms of heavy machinery, industrial auctions play a key role in all the aforementioned cases. The process for the auction itself is quite elaborate, requiring a thorough examination and appraisal of the equipment being sold, acquiring proper documentation, promoting it through the right marketing channels, and more. However, there is another aspect of the auction that is understated, the starting price or opening bid. In this blog, Infinity Asset Solutions explores this term and lays out its importance during industrial auctions.
What Is A Starting Price?
The starting price, also known as an opening bid or starting bid, is the initial price of each lot set by the auctioneer before the beginning of the auction. In most cases, this starting price has to be met or exceeded to be accepted as a qualifying bid.
Importance Of Setting A Starting Price
Creating Engagement
The primary purpose of disclosing the opening bid is to generate interest and momentum for an auction. Since auctions are a public market channel requiring some proper engagement for success, tactfully selecting an opening bid is one of the key responsibilities of an auctioneer. Choosing an appropriate opening bid can remind bidders that there is a real possibility of getting a deal at an auction which translates to bidder engagement.
Establishing Value
Apart from generating interest, the starting price also establishes a perceived value for the lot. This psychological factor is crucial in molding bidders’ perceptions and influencing their willingness to participate. A starting price that aligns closely with the perceived value of the lot creates a sense of fairness and transparency, creating trust among bidders. The starting price sets a benchmark against which bidders evaluate subsequent bids and encourages continued bidding.
Striking A Balance
Ultimately, an optimal opening bid requires a fine balance between risk and reward. Setting the price too high can detract potential buyers whereas setting it too low can give the impression that there’s something wrong with the lot which may cause it to be sold below its actual value. However, with expertise and examining case studies, it is possible to craft the right opening bid for any auction.
Infinity Asset Solutions is known for this expertise, being a key player in organizing auctions for surplus equipment,overseeing liquidation of a company, offering equipment appraisal services and audits. Contact us today to learn more about our organization and services.
