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How To Bid Like a Pro on eBay

There are three primary rules of thumb you can follow to maximize your bidding success on eBay. They are:

1. Bid Once
2. Bid Your Max
3. Bid Late

eBay's Proxy Bidding System

The key to the philosophy behind these 3 rules is eBay's proxy bidding system, or automatic bidding. When you place a bid on eBay, it's automatically handled by the proxy bidding system; there's nothing special you have to do to take advantage of eBay's "automatic bidding."

A good analogy is to think of the proxy bidding system as a trusted friend who attends an auction to bid on an item on your behalf, with instructions from you about the maximum you're willing to pay for that item. If you tell your friend, "I'm willing to pay up to $500, and not a penny more," he'll bid up to $500 in an attempt to get the item for you.

Of course, your friend knows that you would prefer to get the item for less, if possible, and he won't just bid your $500 all at once. He won't commit you to paying $500 unless he has to. Your friend will only bid as much of your $500 as he needs to keep you in the lead. If the bidding ends with you as the high bidder at $325, you'll get the item for $325. If someone else bids $490, though, your friend will bid $500 for you, and you'll pay $500. If another bidder bids more than $500, your friend will stop bidding, and someone else will win the auction.

In case of a tie, the earliest bidder will win. So if you bid $500 early in the auction, and the showing bid is now $350, if someone else comes along and bids $500, the showing bid will be boosted to the full $500, but since your $500 bid was submitted first, it takes precedence over the later $500 bid. On ebay, the highest bid wins, not the last bid.

That is eBay's proxy bidding system in a nutshell. You bid your maximum bid, once, and eBay will use as much of your bid as needed to keep you in the lead during the course of the bidding, up to your maximum bid.

Bid Once

Experienced eBayers recognize eBay's "newbie" buyers by their tendency to "nibble." They see an item with a single bid at the item's starting bid of $0.99. (Unbeknownst to the newbie, someone has placed a bid of $50 on the item, but since there are no other bids, the minimum starting bid is the showing bid.) So the newbie bids $1.24. They're immediately outbid by the other bidder, with a new showing bid of $1.49, so then they bid $1.74. Outbid again, they bid $2.24. And so on. If and when they finally take the lead, they keep checking back for the next few days to see if someone else has come along and outbid them, and if so, they make a few more "nibble" bids until they take the lead again. This is known as "nibbling," or "nibble bidding." It's a perfectly legitimate way of bidding on eBay — but it's also a perfect waste of time.

With the proxy bidding system there's no need for you to sit at your computer hour after hour, day after day, nibbling and nibbling. Simply decide the maximum price you're willing to pay for the item, and bid that amount. Then go back to doing whatever else it is that you do with your life.

Bid Your Max

Part and parcel of the "bid once" philosophy is "bid your max." Do your research on the item: Check completed sales on eBay, check retail prices at other online sites or local retail stores, think about the scarcity of the item and how difficult it would be to buy it somewhere else if you don't win this particular auction. Take into account the shipping cost, of course. Then decide the absolute maximum amount you're willing to pay for that item — your "not a penny" more price — and bid that.

Special Tip About Your Maximum Bid: Actually, you should add a little bit to your "not a penny more" price. Since many bidders bid in round numbers ($50, $100, $250, $500), if you add a bit to your maximum price, you're more likely to avoid losing the auction due to a tie with an earlier bidder.

Let's say you're looking at an item that you think is worth $250. And some other bidder also values the item at $250. That other bidder bids $250 early in the auction. There are no nibblers, so the showing bid is the item's starting bid of $25. You top off your max bid to, say, $251.32, or some other random number slightly above $250. Your $251.32 bid will beat the $250 bid. But if you had bid a nice round $250, you would have tied with the other bidder, and the other bidder would have won, since he placed his bid earlier than you did.

Whatever you do, don't bid in retail-style amounts like $9.99, $99.95, or other amounts just below the nearest round number. You'll always lose to some other bidder who values the item at about the same price as you. They either bid in nice round numbers, such as $100, or they know better and top off their max to something like $100.22. In either case, they'll beat your bid of $99.95. If you add a "top-off" amount, you may or may not beat another bidder's top-off amount, but at least you won't lose to people who bid retail-style amounts or round numbers.

The critical point behind "bid your max" is that you are indeed bidding the highest amount you're willing to pay. As long as you truly bid your max, you'll never have reason to regret your bid. Many many "nibblers" who have lost auctions said, later on, "Well, the item sold for $95. I would have been willing to go that high, but time ran out." Many other nibblers complain that another bidder kept bidding against them, so they ended up paying too much. That's simply not possible if you follow the strategy of bidding your max.

If you truly bid your max, there are only two possible outcomes to any auction in which you place a bid: Either A) You win the auction for your maximum or less, or B) You lose the auction, which means that someone else overpaid. At least, they overpaid by your standards. The item may be worth $282 to that person, but if it was only worth $241 to you, there's no reason for you to regret losing that auction, because it wasn't worth $282 to you.

Never Bid More Than Your Max — And No "Nuclear Bidding"!

An important corollary to the "bid your max" rule is to never bid more than your max. (With the exception of the "top-off" amount in case of ties.) What if you get into a bidding war with a nibbler? Pretty soon you're both so intent on winning that you lose sight of the item's actual value. You bid it up way beyond its true worth. In such a case, the only winner will be the losing bidder — and the seller.

Or suppose you think the item is worth $80, but you bid $500 to ensure that no one else will win. That's called nuclear bidding — placing a bid so high that you're sure to win the auction. But think about this: What if some other bidder also places a nuclear bid, but their nuclear bid is $480? Guess what? You're going to win that auction for that $80 item with a winning bid of $485 — one increment above the second-highest bidder's highest bid.

Bid Late

Bidding your maximum extremely late in the auction — in the last few seconds — is known as "sniping." There are services you can hire that will place snipe bids for you (known as sniping services), but many eBayers enjoy placing very late bids manually: In the last couple of minutes. In the last minute. In the last 10 seconds, if possible. Some eBayers find it thrilling to win an auction with a 1- or 2-second manual snipe.

Many eBay buyers never snipe. They are perfectly happy to place their maximum bid at any point during an auction, from the first hour to the last minute. They understand and make effective use of eBay's proxy bidding system, but they don't want to bother logging back into eBay for the last couple of minutes of the auction to place a late bid. There's nothing wrong with that approach, so feel free to place your bid anytime if that works for you.

But there can be advantages to sniping. Primarily, you minimize the possibility of your final price being driven up by a nibbler. Let's look at an example to see how that would work.

In scenario one, we have Brad, an experienced eBayer who bids once and bids his max, but doesn't bother sniping. He generally bids early in the auction. His competition for a particular item is Mary, a newbie who nibbles. Brad and Mary are both interested in a particular widget, which is worth about $80 and is listed with a minimum opening bid of $25. Mary sees the item first and bids $25, hoping to get a great deal on this item. She watches the item carefully for the duration of the auction. As soon as Brad comes along and bids $81.11, the showing bid jumps to $26 (bid increments are $1 when the item's current price is between $25 and $99.99). Mary gets an email that she's been outbid. She logs back in to eBay and bids $27. She's outbid immediately, as Brad's proxy bid raises the showing bid to $28. She bids $29. Outbid again. She bids $31. Outbid again. Mary is trying to catch up to Brad's proxy (which is kept confidential; no one knows Brad's maximum bid except Brad).

What Mary is doing is called "chasing a proxy." She's placing many small "nibble" bids in an attempt to catch up to Brad's proxy bid. Mary is starting to feel frustrated at being outbid immediately every time she increases her bid. So she starts bidding in larger increments; She bids $35. Outbid immediately. She bids $45. Outbid immediately. Feeling even more frustrated, Mary bids $70. Outbid again! She finally gives up in disgust, convinced that the bidding system is rigged somehow, or that the seller is shilling his own auctions to drive up the final price.

Brad wins the auction. Since Mary's final bid was $70, Brad's winning bid will be $71.

Now suppose that Brad snipes. Everything else is same-same: Item worth about $80. Opening bid of $25. Mary bids $25 early in the auction. But Brad doesn't place his bid right away. Instead, Brad puts the item on his watch list and bides his time. At the end of the week, he comes back to eBay a few minutes before the auction is scheduled to end. He logs in, enters his max bid of $80, clicks the initial "Place Bid" button, and waits until there's only a few seconds left in the auction, then clicks "Confirm Bid." With 5 seconds to spare, his $80 proxy bid puts him in the lead with a showing bid of $26. Mary, sitting at her computer and refreshing her browser page every few seconds, sees that she's been outbid. Her heart racing, she quickly enters $27, clicks "Place Bid," clicks "Confirm Bid," and ..... oh, too bad, so sad for Mary. Her $27 bid wasn't accepted, because the auction ended and she ran out of time. Sniper Brad wins the auction for $26! (Note that even if Mary had managed to get her $27 bid in before the auction ran out, she would only have pushed Brad's cost up by a couple of dollars.)

Even if Brad isn't very good at split-second timing and doesn't like waiting until the very last few seconds, he can place his max bid in the last 20 or 30 seconds. Mary might have time to punch in a couple of more bids — perhaps raising the showing bid to $29 or $31. But she simply doesn't have time to enter nibble bid after nibble bid after nibble bid, and it's highly unlikely that she could push the showing bid up to $45 or $50 before time runs out. Brad might pay a little more if he places his bid with 30 seconds to spare instead of 5 seconds, but in either case he pays a lot less by bidding late than if he bid early.

Other Advantages of Sniping

Sniping has several other advantages in addition to protecting your bid against nibblers. Here are a few:

• Sniping protects you against shilling.
  Shilling is when a seller (or someone in collusion with the seller) bids up the price of the item in order to increase the final selling price. The shiller has no intention of winning; he just wants to push your showing bid up as high as he can. Shilling is strictly against eBay's rules, and is illegal in all 50 states. And sellers can be booted off eBay permanently if caught shilling. So it's rare, but it can and does happen. In the same way that sniping protects you against nibblers driving up your final winning bid, sniping protects you against shillers doing the same thing. By placing your bid extremely late in the auction, the shiller simply doesn't have time to make additional bids to push up your final winning bid amount.
• Sniping allows you to decide to snap up a better deal if one comes along.
  If you bid early in the auction, you are obligating yourself to pay for the item if you win the auction. So you shouldn't bid on other similar items while the auction is ongoing, unless you really want multiple items. Remember, even if you are outbid, you can still win the auction, if another bid is retracted or cancelled. You must consider your bid active until the auction has ended without you as the winner.
  
  But by waiting until very late in the auction to place your bid, you are not committed early in the auction. If you spot another item listed as a Buy It Now at a fraction of its value, or you stumble across a mis-categorized item in its closing minutes without any bidders, you're free to swoop in and grab that deal. Since you haven't placed your snipe bid yet on the other item, you're free and clear to buy something else if it suits you.
• Sniping protects you against yourself
  If you place your bid early, then you see the bidding go up higher than your max bid, you just might get caught up in the "I Gotta"... as in, "I gotta have that item. I gotta win this auction." So you go back and enter a higher bid, and then another higher bid, and before you know it you're hoping that you don't win the auction, because you've bid way more than the item is worth. By sniping in the last few seconds, there's no time for that. You have to decide ahead of time what your true max bid is, because you know that the one chance is all you get. You'll either win the auction at or below your max bid amount, or you'll lose the auction because someone else was willing to pay more. But you'll never pay too much for an item.
• Sniping protects you against changes to the auction itself
  A seller can make certain changes to an auction right up until the auction is nearly over. If you bid early in the auction, and if you don't notice the changes, you might end up with an item you don't want. If you wait until the last few seconds of the auction, all the revisions will be in. When you snipe, read over all the details carefully shortly before placing your snipe bid. You'll base your bid on the description and photos of the item as they exist at the very end of the auction, so you know exactly what you're bidding on.

Disadvantages of Sniping

Is sniping always and only the best way to bid on eBay? Certainly not. As we noted above, many successful eBayers never snipe. And there are some disadvantages you should be aware of, as well.

In case of a tie, the earliest bid wins.
With a very late snipe, you won't have time to react to an earlier bid that ties with yours. Suppose Mary finally gave up nibbling and learned to bid her max. She actually placed a bid of $80 early in the auction, but the item's showing bid is still the opening bid of $25. At 3 seconds to go, Brad snipes with an $80 bid. Mary's earlier $80 bid will win, and Brad won't have time to place another snipe. Brad's bid of $80 loses to Mary's earlier $80 bid. Hopefully, Brad is smart enough to top off his bid with a random small amount, so that he wins with a bid of $80.33. In that case, Brad's final price would be the full amount of his maximum bid, but since Brad bid the maximum he's willing to pay, then by definition he's willing to pay that much.

Computers and computer systems can malfunction, and will always do so at the worst possible time
Picture this: You're sitting there in the final seconds of the auction with your mouse cursor hovering over the "Confirm Bid" button and your finger hovering over the mouse button. Just as you're about to click "Confirm," your computer crashes, or your internet connection goes down, or your power goes off. By the time you get back to the auction, it will all be over, and you lost the auction without placing a single bid.

Typos can wreak havoc
You do have to live with the amount you type into the "bid amount" box. If you bid $1,000 instead of $100, and someone else bids $800, your winning bid will be $810. Oops! eBay does offer you the option to do a bid retraction in case of such an error, but bid retractions must be done before the auction ends. If you bid that $1,000 with 5 seconds to go in the auction, you won't have time to do a bid retraction, and you're stuck with that bid. Or, conversely, if you bid $10 instead of $100, you won't have time to place another bid. So if you decide to snipe, check your numbers very carefully. You only get one shot, so don't mess it up.

Conclusion and Summary

By bidding once, and bidding your max, you'll avoid most of the pitfalls of a frenzied bidding war, malicious "sport" bidders, shill bidders, nibblers, and other shenanigans. You'll save time. You'll have to decide early on how much the item is actually worth to you, so you know you're bidding an appropriate amount. You know that if you end up paying your maximum bid, you'll be happy to win the auction at that price. If you also snipe, you're likely to do even better, and will gain additional protection against nibblers and shillers. You won't always win, but you'll never lose an auction because you failed to bid high enough. And you'll never pay too much.

Remember

1. Bid Once
2. Bid Your Max
3. Bid Late