WINSPIRE NEWS

Your destination for insight into the world of event fundraising and charity auctions.

3-Step Guide for Setting Minimum Starting Bids on Charity Auction Items

Posted by Jeff Cova

Charity Auction Items - 3 Step Guide setting minimum bids

In your charity auction, setting the minimum starting bid at a low, fair price can help your Nonprofit raise more money per item. Here are some guidelines for setting a minimum bid that will attract and encourage more donors to participate at your next charity auction while earning plenty of profit for your cause.

1. Determine Fair Market Value

In order to set a reasonable starting bid for each of your charity auction items, you first have to determine each item's Fair Market Value, or FMV.

Winspire twins only smallWhat is Fair Market Value?

In the auction industry, the fair market value (FMV) or suggested retail value (SRV) describes the estimated value of an item based on similar products in the market. It can be used as a reference point for determining starting bids, but keep in mind the actual "dollar value" of an item can be worlds apart from what a buyer is actually willing to pay.

Tangible Items

Some items are easy to price, like a $25 certificate to a restaurant in town; the FMV for this item is obviously $25. Similarly, a pair of Beats headphones will retail for $300, making that the FMV. Most tangible charity auction items will have a price that can be found by doing a little research online.

Even collectibles and sports memorabilia have a FMV that can be determined by doing a few online searches to find out what other people are paying. A quick search on eBay - one of the biggest online auction forums - can help you determine the fair market value of almost anything.

Download Free Bid Sheet Templates

Intangible Items

Setting Priceless Item ValueSetting an Item's Value as "Priceless"

The perceived value for intangible items can vary dramatically for those in your audience. Instead of announcing your estimated FMV up front, which may limit your return, present these items as "Priceless" and see where the bidding goes.

Sometimes there is no precedent for determining the FMV for an item. This is usually the case for intangible or unusual charity auction items like unique experiences or exclusive access. Examples include dinner with the Mayor or the opportunity to be grand marshals at the next community parade.

In these cases, you have to make an educated guess as to what you think your audience is going to be willing to pay—not what you are willing to pay. Try to judge your donors based on their demographics, income and relative interest in similar items at previous events.

If you are still struggling to come up with a number, give a few of your top donors a friendly call to ask for their input. They will appreciate you involving them and it's a good excuse to chat about the event and confirm their attendance.

Read Next: "Should Retail Values Be Displayed On Auction Items?"

2. Set the Starting Bid

Calculator-Icon-1.pngAccording to consignment auction item provider Charity Fundraising, live auctions typically yield 75% of the item's actual value, while silent auctions yield just 50%. When setting your starting bid, you are setting a price that will hopefully allow you to yield the maximum possible profit.

Many industry experts say the best practice is to set minimum bids at 30-40% of the FMV. Others think 20-25% percent of the FMV is ideal, as the lower price could garner more interest. The logic here is that once invested in the bidding process, donors who are attracted to the lower price become emotionally attached to the item and are then willing to spend more money as the process continues.

The minimum bid price is up to the discretion of both your organization and fundraising auctioneer. Keep in mind that a high starting price can discourage bidders from participating, so it's typically better to err on the side of caution and go with a lower starting bid.

One strategy is to separate the charity auction items by value and uniqueness. For example, you could set the minimum bid for more exciting items at 40% of FMV and just 20% for other items.

 

 

Using consignment items

If you're hosting a live auction with no-risk consignment items, like Winspire's unique travel Experiences, you'll want to adopt a different approach. Consignment items come with a base price for the Nonprofit, which is the cost for your organization to sell the package. To secure a significant profit, it's recommended that you start bidding at 20% above the Nonprofit cost.

These items are your big-ticket items, ones that provide the "wow" factor at your event. Setting a higher price raises the perceived value and increases interest among those who can afford to participate in the live auction and make high bids.

Here at Winspire, it's our privilege to offer free fundraising event consultation to any nonprofit! Schedule a call with your designated Fundraising Specialist below to brainstorm strategies to maximize revenue at your next fundraiser.

Looking for auction items?

3. Set Minimum Bid Increments

After you've set minimum bids where necessary, the minimum bid increment can also impact how well an auction item performs. In most cases, it is considered a good idea to set the minimum bid increment at 10% of the starting bid. For pricier items, it may be a good idea to lower the percentage so the price won't jump as drastically between each bid.

The minimum starting bid you set can make all the difference for an item's performance. Be reasonable and fair when pricing your items, and don't be afraid to set the starting bid on the low side of the spectrum.

For more tips to maximize the effectiveness of your silent auction, click below to download our FREE pocket-sized handbook all about Silent Auction (plus live auction and sponsorship) best practices.

Download free charity auction handbook series.

Event Production, Consignment
Jeff Cova
Jeff Cova
Jeff Cova, President of Winspire, Inc., has over 17 years of experience in the Nonprofit and fundraising industry. Prior to Winspire, Jeff worked for 5 years as the Director of Development at Cal State Fullerton before co-founding a company specializing in producing charity auctions for Nonprofits where he successfully produced the auctions for 250 of Southern California’s most successful fundraising events. In 2008 Jeff founded Winspre with the goal of helping non-profits across the country increase their event fundraising revenue and identify new fundraising sources. Jeff and his team at Winspire have helped over 12,000 non-profits to date.

Related Posts

4 Places to Find Quality Volunteers

Whether you are putting on a charity golf event, a 5k, or an annual gala, putting on a fundraising event requires all hands on deck. Finding enough dedicated, hard-working people to volunteer their time to help your cause can be challenging!

  • 3 min read
  • Oct 28, 2019, 2:28:43 PM

Our 8 Favorite (Free!) Tools for Nonprofit Fundraising

Every Nonprofit Marketer/Fundraiser has ran into the same problem while doing their job; a lack of resources and tools to use! I was the Marketing Manager for a Nonprofit for 7+ years and would experience this each day at work. How do I crop and edit an image without Photoshop? We can’t hire a full time designer, but we want pretty invitation flyers for our upcoming event!

Using Events to Identify and Build Relationships with Donors

Imagine you just had your annual gala supporting an incredible cause for your Nonprofit organization. You ensured every detail was perfect, from the live band to the gourmet meal you served. You created flyers, posted to social media, and even sold the most tickets you have ever sold for an annual gala. But, for some reason, you were unable to reach your fundraising goals. You leave confused, wondering why your efforts did not result in the outcome you were hoping for.