How much is this worth? IDK, check ebaY.
A few summers ago, a friend and I were scouring a local yard sale for sweet deals. Well not really, it was more of a way to pass our boredom. On what seemed like our 1000th searched box, we finally came across something interesting. It was an Atari 2600 game system with about 40 games. For 5 bucks we couldn’t go wrong. We brought it back to my house, hooked it up, and played nonstop until we got sick of the glitchy controls and bad graphics… about 9 minutes later.
Not wanting this contraption to confine my already limited desk space, we decided to put up a quick ebaY listing. 7 days and 128 dollars later, I was packing my Atari into a box headed for Wichita. Who would ever think that that dusty chunk of plastic would be worth so much? This got me thinking back to my first ebaY experience…
I was in the market for a new motorcycle. My tireless searching for the perfect Yamaha R6 lead me to 4 bikes in the area. All were priced dead on with the Kelley blue book price (the leading authority on used vehicle values). Before picking the eventual winner, I thought I should do a quick search on ebaY. A few hours later, my graph of online R6 sales suggested to me that the bikes sold online were going for 500-600 dollars less than the blue book value. Was the blue book wrong? Does ebaY offer a better representation of the true value of an object? After printing out recent sale prices, I eventually talked a seller down 400 dollars because of the ebaY pricing.
Classic Car values are determined by their median selling prices at recent car auctions, same with rare coins. The model of ebaY, the ability to extend a medium for exchange to all points of the globe, has broken down the geographical limitations of pricing. No longer is a snow mobile worthless in Florida, or a Jetski worthless in Alaska.
The ability to extend the market of even the most random objects to the few people in the world that hold that object at a higher value, gives the most accurate system of pricing in the world. The day the XBOX 360 was introduced, they were being sold on ebaY for 4 times their retail value. Which is the more accurate value, the retail price from walmart or the bid price on ebaY? Only when a product is easily available to all, can the invisible hand of the law of supply and demand truly reach its potential.
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Tags: ebaY, Kelley Blue Book, market value
February 3rd, 2008 at 5:18 am
Manufacturers are forced to guess a sale price for their products. They of course must cover costs, but then they need to make a profit. On top of this, they don’t want to enrage retailers by allowing anyone to set prices lower and lower, thus manufacturers set a MSRP. Usually a company will not allow a store to sell for below this price.
In a capitalistic society, the consumer sets the buying price according to what they are willing to pay for a product. Unfortunately, we live in a democratic society where government interferes with the sale of goods by guaranteeing the sale price of certain types of goods, taxing the sale of goods, specifying tariffs, and providing minimum price points for which retail stores must sell products.
Auctions, like eBay, begin to remove government intervention with regard to the sale of goods. Consumers compete to purchase product at the price they wish to spend. Many people, including myself, feel that eBay is the place to find items at cheaper than market prices, but it is also a place where consumers can find harder to obtain items. Those willing to pay a premium to purchase an in-demand good may pay more, but this simply shows that for some individuals paying a little more is better than waiting for stock piles to increase to a point they can make a purchase normally.
I would agree that eBay probably begins to get at the real value of a product, but then again the reason products sell for what they do, many times, is due to the fact that consumers have a retail reference point. Without this, most consumers would not know what to bid on an auction and I believe auctions would end higher then they are currently.
February 4th, 2008 at 1:05 am
ebay doesnt always represent the real value of a product for example tickets to a sportin event, They are never sold at face value always to the highest bidder, hence not what exactly the tickets worth deemed by the promoters of the event Ebay has tried to avoid this by putting in some anti-scalping policies on tickets but what people do is for example put a terrible towel online to be sold and say with purchase of towel comes 2 free tickets so the rule can be by passed
February 4th, 2008 at 4:42 pm
I disagree with the argument that ebay does not alwayas represent the real value of a product because value is in the eyes of the beholder. The basic concept of exchange is that both parties feel they are recieving more than they are giving.
In the case of ebay, the sale goes from retail prices to an individual sale…and it allows the price to be subjective based on the value placed on the product by both the seller and the buyer. There is no “real” price or value except the different one that each individual person holds. If they don’t think that the product is “worth” the price, they won’t buy it. If they do, they will find a way to do it.
I do want to clarify that I am not saying these subjective views of value cannot be influenced by different factors. They are every day by the press, marketing, word of mouth, etc. But recognize that there is NO SUCH THING as the “real value of a product”. It cannot be narrowly defined like that. There are things that the market does to help lead buyers to find the cost of a product to be its actual “value”, but unless consumers/individual customers share that same definition at that same point in time, the sale will not be made.
It is constantly changing, and there are as many definitions of “real value” as there are in the world. So, instead of debating whether or not ebay demonstrates the real value of a product, the focus instead should be on the channels used to convince buyers AND sellers of the value of the product.