A good way to increase the money your non-profit makes on live and silent auction items is to not advertise the item’s value. The disadvantages of listing an auction item’s value are:
Your non-profit can create an internal value of the item so you can estimate how much you think an auction item may bring in or for your IRS records, but don’t give that value out. Donors have phones on them, so they can look up an item’s value if it is important to them.
We like to say people who bid at auctions fall into one of two categories: they’re either shoppers or givers. The shoppers are looking for a bargain. They’ll bid on items when they are below the item’s value. This is great because it drives up the bidding price. Givers, on the other hand, are bidding because they believe in your mission. If they win the auction item, it’s an added bonus, but they are happy to bid above the item’s value because it is about the donation for them.
Remove values from your auction guides, and you’ll remove any psychological caps for your donors.
On average, each auction item receives between 6 and 8 bids. Some items may only receive a handful, and some may receive 30, but across all your auction items, it will average out to 6-8 bids on each item. This is important to remember when you are setting starting bids.
Let’s say you are auctioning a Yeti cooler worth $500. You don’t want to set your starting price at $100 with $10 increments. It will take too many bids to make the money you want on that cooler.
Ideally, you want to set your starting price so that you’re already making money. That way, if you only get one bid, you make money for your non-profit. We recommend setting the starting bid for consignment items at a minimum of 25% over the price the item costs you. Your goal should be to make 150% on each auction item.
For live auction items, you need to make sure your auctioneer is aware of how much the item costs you and what your goal bid is for the auction item. That way, they can set the starting price and drive bidding in a way that works for the room and the item. Don’t give your auctioneer a made-up number and hope that the bids will go higher. Your auctioneer will use the numbers you give them to create the appropriate hype around the item.
For donated items, set a price that you want the item to bring in and tell your auctioneer (if it is a live auction item). Tell your auctioneer it is donated, and you need it to bring $4,000 or whatever number you set. Tell your auctioneer the reserve price as well as the minimum amount you will accept.
Another thing to remember is to keep your numbers marketable. Round up or down rather than setting odd numbers like $86 or $778.
Be mindful of setting increments that make sense for the value of the item. If your donors are bidding on a $250 item, $50 may seem like a lot, but $25 is a lot easier. You also don’t want to set your increments too low where donors lose interest too early.
Auction software is great for silent auctions because you can set different increments for price categories. That way, when your auction bidding gets above a certain threshold, the increments will increase to a more appropriate price.
The data we have collected from our past roles and from our clients’ fundraising events suggests that you will make approximately 30% more on auction items by switching from paper auction sheets to auction software. We believe there are two reasons for this:
Remember, Donors are Consumers
Donor psychology has changed so much in the last 5-10 years, so don’t return to what you were doing in 2019. The last few years have given us creative thinking and technology that increases donor engagement and removes friction in the fundraising process. Continuing with the changes you made will help you to grow in a competitive non-profit space.
Our co-founders, Jason and Trevor give more tips on how to improve the success of your silent and live auctions in Episode 92 of our webinar for non-profits. Check out the full episode to learn more.
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At HGA, we're dedicated to helping nonprofit organizations Raise More Money through coaching, auction items, and auction software.