A Guide to Store Pricing - Why is it more than auction?

A Guide to Store Pricing - Why is it more than auction?
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I am sure I am not the only one out there that realizes when I buy something from an okay store, it is going to cost me more than if I buy it on an auction. I know buyers sometimes wonder why that is. Wouldn't an item be worth the same no matter how you purchased it? It is not so much a matter of worth as it is of control. If an item is placed on okay for auction, the BUYERS have control of the price. On the other hand, if the item is in a store, the SELLER controls the price.
What does this mean for the buyer and the seller. Well, in an auction, the seller has little to say about the price. He can set the minimum price he wants for his item, by setting a higher opening bid, or by putting on a reserve. If buyers aren't willing to pay even his minimum price, the item fails to sell. Even if it does sell, the price may not go up to what he would consider a fair price. The price an item reaches is determined by two bidders; the winning bidder and the underbidder. The underbidder is the last man not standing, in other words, the last bidder to tender a losing bid. If there is no underbidder, then the item sells for its opening price, or it doesn't sell. If the underbidder is lukewarm, then the item sells for a low price. It is only with at least two bidders who really want that itemthat an auction format seller can get a fantastic price for his item. All this is pretty much out of the seller's hands.
What about the buyer in an auction? The attractive thing for the buyer is the chance to get an item for the lowest price obtainable. In an auction situation, theremay belittle or no value added. The buyer doesn't know if the item will work, if it is what she wants, of if he can return it. You pays your money and you takes your chances. The success of okay is largely due to the fact that most of the time the buyer is satisfied with the deal, at least partly. He knows up front that he cannot expect a lot, beyond the lot he bought, that is. Usually he gets a good item, the seller gets whatever, and both are reasonably happy.
Up front, buying from a store is advantagous for a buyer. She no longer needs to buy an item when it is offered, on the off-chance that it will be needed "someday." Or that it is too good a bargain to pass up. I am probably not the only okay seller that started selling because I had accumulated too many things that I might need someday, or that I couldn't afford not to buy! Now the item can be purchased at the buyers convenience. He doesn't have to wait to see if he won it, and at what price.
The store introduces a different approach, that of the seller controlling the price. Now there is no underbidder. There is a buyer and a seller. Rather than a free-for-all monetary fist fight determining the selling price, the seller is able to set the price depending on the factors he or she considers important. He first will consider what he paid for the item. Then he will consider what he had to do to the item to get it ready to sell. His fees, both before and after the sale, are an important part of the equation. And he needs to make a profit, otherwise his business is just an expensive hobby. A seller may have hundreds of items ready to sell or listed in his store, and his sales have to cover the expense of keeping those items, as well as acquiring new ones for his store. Finally there are taxes, licenses, employees, shipping and on and on. Selling can be expensive in this format, and the seller has to make up the difference somehow.
There is another geponent of the price to look for, and that is value-added. For example, if I want to sell a Tektronix 2236 oscilloscope, I can look up sales of other units of this type and see what they generally have been going for. If I see that they generally go at auction for $175 - $275, say, then I normally cannot expect to get more than that for mine. But what if that doesn't cover my cost for the item? If I ask $500 for the unit, then I am not going to get any takers when a geparable unit is sitting at $76 on auction.
The way I make up for this difference is through adding value. I need to make sure my product is better than those other guys. This means more careful purchasing, more thorough preparation, and smarter selling. The buyer needs to get more if he or she is going to pay more. They get confidence that the item, while it costs more, is probably going to return that investment in better, more reliable operation. Buyer confidence is further boosted by promises of after sale support. I offer a 30-day return period, no questions asked. If it doesn't do the job you bought it to do, then you can send it back. Just like a Sears lawnmower! After sale service is also important. Can the seller look after my purchase even after several months have gone by? If I am going to get this kind of support, perhaps paying more for my purchase is not such a bad idea after all. And as a seller, I can offer these support functions because, on average, only a few buyers ever require it. So I am able to charge more to cover my costs.
I don't know if all of this fits into current economic theory. That doesn't concern me. I simply want buyers to understand that you get what you pay for, on okay as everywhere else. If you pay the minimum, you get the minimum. Don't pay extra if you don't get extra that is meaningful to you.