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Advice for buyers and sellers on eBay

Tips for sellers
• Set low opening prices. When choosing between identical items, buyers seem to favor whichever auction has the most bids. The best way to grab early bids: Start with a cheap price. By the time a $1 DVD auction reaches $10, it will probably attract more newcomers than a DVD that started at $10.
• Don't use secret reserves. A study of online auctions with and without hidden minimum prices showed that many buyers steer clear of items with a secret opening price. It’s like that old shopping joke, "If you have to ask how much it costs, you can’t afford it."
• Stick with eBay. Research into various different auction websites revealed that eBay attracted almost 60 percent more bidders and 30 percent higher prices than identical items on Yahoo’s online auctions. Unable to keep up, Yahoo shut down its US auction site last month. But in countries where Yahoo is dominant, it enjoys similar results.

For buyers, it's about timing
Since eBay uses second-price auction rules – where the highest bidder has to pay only the second-highest bid plus an extra fee – the site's official guide suggests bidding your maximum offer right off the bat. Then you can relax. As others join in, your maximum bid remains hidden and the site automatically (and incrementally) outbids the next-highest offer. If someone outbids your maximum, that's OK. It’s clearly worth more to that person than it is to you.

But Ken Steiglitz, author of "Snipers, Shills and Sharks: eBay and Human Behavior," says that's "disconcertingly naive." An early offer attracts competition, he says. Studies show that the more bids an item gets, the more likely it is that other bids will follow. So even if no one else tops your maximum bid, the second-highest bid could rise significantly. Mr. Steiglitz's advice: "Bid late. The first few weeks of an auction mean nothing.... It's all about what happens in those last few seconds."