A few years ago I was called to be the auctioneer for a near-by auction house when their regular auctioneer had to be away for the week. When I drove to the auction I found they had a very nice facility. The owners were very warm and friendly. As we talked about how they operated one of them told me that their primary problem was that people didn’t want to give anything for what they bought. I was told, “We have a lot of one-dollar bidders here.” When I began looking at what was being offered I understood why. I personally wouldn’t have given a dollar for much of what was being sold that night. As the auction began I noticed something that I’ve seen at other auctions. Better quality items were bringing some decent prices, but the people were not going to pay much for the inferior items. I thought to myself that this is not rocket science: if you want higher prices you have to sell better quality items.
Unfortunately, the problem is that the regulars who come to this auction have been conditioned to buy things cheap. The risk to the sellers is that even if they began to bring in higher quality items, for which they’ve probably paid more to get, the buyers have been taught they can buy things cheap and may not bid much to get it. This has happened to me several times when I’ve sold items at an auction and they brought much less than I paid for them. I’ve learned that there are some auction houses I can take only lower quality items to sell because these are what I call “$2.00 auction houses.”
What needs to happen in these facilities is that they need to quit accepting low quality items and begin to raise the bar for what they are willing to sell. In recent weeks I have turned down several people who wanted me to sell their items in my auctions. I explained to them that everything they had would be put in box lots and would probably bring no more than $2-3. I could tell a couple of people were hurt that I said that, but I explained to them that I would rather have them upset at me now that later after their items sold.
When auction houses sell better merchandise they can afford to do more advertising to attract the buyers who are more likely to pay what the better items are worth. In time, these auction houses will be known as the place to sell top quality goods for a fair price. The sellers make more on what they sell, the buyers are buying top quality items at a fair price, and the auction house sees its commissions increase. It’s a win for everyone, but it’s not going to happen until the auction house raises the bar and insists on only selling quality items.
This is true for any small business. In another business I owned I had a sign where our walk-in customers could see it. The sign read, “We sell the highest quality merchandise, offer the best service in town, and have the cheapest rates. You may now pick two out of three.” I knew we had competitors who offered less expensive equipment than we did, but we weren’t competing for that business. We had competitors that charged less for their service work than we did. That was OK too because we felt we offered better service than they did. We wanted to set the bar high enough to attract what we felt would be quality customers who knew the difference between cost and value. I still believe that is a business philosophy that works for small business owners.
Raising the bar allows you to make more money with less work. It will eliminate some people from doing business with you, but it will bring in the ones who can afford to pay your higher prices. Like one business owner told me one time: Do business with people who can afford to do business with you. He had some of the highest prices in his line of work, but he was busy all the time because he provided top quality products and service. That seems like a good way to do business.