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Before the Auction: Understanding Reserve Auctions continued ...

High Starting Bid vs. Reserve
The argument goes like this: Why bother with a reserve if you can just set a high starting bid? From the seller's perspective, it's quite simple: high starting bids can scare off bidders. Some folks might be less inclined to consider an item if the amount seems out of their price range right off the bat. High starting bids can potentially halt an auction before it even begins.

Sure-Fire Hit
If you feel there is genuine interest in your item, then it's best if you don't set a reserve. In general, you will generate more excitement and interest for your merchandise if you go with a straight auction. Reserve auctions can reduce competitive bidding. In addition, straight auctions are great PR for you as a seller, indicating to bidders that you believe your merchandise is so strong that it will eventually command a legitimate, if not high, price. If you feel a reserve is absolutely necessary, one strategy is to set the reserve price a little below the amount you actually want. Perhaps set the reserve at a price you think will be reached on the second- or third-to-last day of the auction. That way the reserve is hit in stride. This will generate interest in your auction and still protect your investment.

Reasonable Reserve
Sellers who use the reserve auction format must decide what constitutes a reasonable reserve. The reserve amount a seller chooses is extremely important because a high reserve and a low starting bid can alienate bidders. For example, if the bidding begins at $1 and closes out at $500 without the reserve being met, bidders are likely to feel as if they're wasting their time. (A general rule of thumb: the reserve amount should be about double the starting bid amount.) The common assumption is that the reasonableness of a reserve is based on the ratio between the opening bid amount and the reserve amount. Nevertheless, as a seller you should also consider the ratio between the reserve and retail prices.

Revealing the Reserve
Finally, if you opt for a reserve, don't be surprised when bidders send emails asking you the reserve amount. Some sellers will provide this information with no qualms, while others will not, claiming that a bid is necessary even if it does not reach the reserve and that bidders can decide the maximum amount they're willing to pay anyway (proxy bidding will take care of the rest). Whether or not you're willing to reveal the reserve is completely up to you.

Understanding Dutch/Yankee Auctions
Selling Internationally
Cancelling Auctions