In many cases, silent auctions are lucrative fundraisers for nonprofits. Their broad appeal attracts a wide range of participants, they can be paired with a variety of other events to increase the total revenue your organization brings in, and they tend to have a high return on investment (ROI).
That is, however, if your nonprofit puts in the work up front to set your silent auction up for success. To maximize your fundraising potential, you not only need to procure auction items that your supporters are excited to bid on but also price those items strategically.
In this guide, you’ll learn everything you need to know about how to price silent auction items for your nonprofit’s fundraising events, including:
- Why is Silent Auction Pricing Important?
- 4 Steps to Price Silent Auction Items
- Silent Auction Pricing vs. Live Auction Pricing
At Winspire, our goal is to help nonprofits make the most of their auction fundraising events. Our Event Fundraising Specialists are equipped to work with you on the most challenging aspects of your silent auction planning process, from helping you set the best prices for your items to securing unique vacation packages to feature at the event. Let’s get started with an overview of why it’s so critical to properly price your silent auction items.
Why is silent auction pricing important?
Just as your silent auction items have to appeal to your organization’s supporters in order for them to want to place bids, so does your pricing model. While some auction participants are happy to bid on items simply to support a good cause, others will attend in part because they hope to secure unique goods or experiences at a discounted price that they couldn’t find elsewhere.
When you price silent auction items, try to find a balance between appealing to your supporters’ interests and setting your nonprofit up for the highest possible fundraising total. To accomplish this, you’ll need to do three things:
- Procure high-value items.
- Set their starting bid at a lower amount than they’re worth.
- Encourage competitive bidding to drive the prices back up as much as possible.
Even if you take these steps, you’ll probably sell several items for a lower amount than their true value. That’s why it’s important to be strategic in your procurement process. Ask for in-kind donations of physical goods from individuals and corporate sponsors, look for nonprofit discounts when purchasing tickets from event venues, and seek out dedicated auction item providers to secure big-ticket items like vacation packages.
4 Steps to Price Silent Auction Items
Once you’ve procured some silent auction items and are ready to start pricing them, be advised that you’ll have to do a little research and some simple math. For each item, there are four numbers you need to figure out to create your pricing model:
- Fair market value (FMV)
- Starting bid amount
- Minimum bid increase
- “Buy Now” option
Let’s walk through how to determine each of these values and how they fit together.
1. Find out the Item’s Fair Market Value
Fair market value (FMV) is defined as the price an individual would pay for an auction item if they purchased it on the open market rather than at your event. While this value may sound straightforward, figuring it out is easier for some types of auction items than for others.
For instance, a $50 gift certificate to a local restaurant would clearly have an FMV of $50, and you can figure out a gift basket’s FMV by adding up the values of all of the items in the basket. But what about concert tickets that sell for different amounts on different ticketing websites, custom art pieces, or one-of-a-kind experiences like having dinner with a celebrity?
Here are some strategies for figuring out the FMV of more difficult silent auction items:
- Research comparable items online. For example, you might find that independent artists are selling similar paintings to one that you’ve acquired for your auction on websites like eBay or Etsy. You could then base your estimation of your painting’s FMV on the prices they’re charging for those pieces.
- Leverage your network. If you have connections to other nonprofits in your vertical or geographic region that also host silent auctions, reach out to them to see if they’ve ever sold a similar item to one you’re having trouble pricing. If they have, ask what they estimated its FMV to be.
- Ask the item’s provider. Consider contacting the donor who contributed the item or the venue where a ticketed event is being held to see what they think your prize is worth. For unique physical goods like antique furniture or signed sports memorabilia, you should take the donor’s estimation with a grain of salt—some owners of these types of items tend to overvalue them.
- Contact potential auction participants. Because your event attendees are the ones who will purchase your auction items, it often doesn’t hurt to call a few loyal supporters and ask what they would be willing to pay for a behind-the-scenes tour of a movie studio or backstage passes at a Broadway musical. Plus, your conversation with them can serve as a personalized invitation to your event, making them more likely to attend and bid on those items!
No matter which of these resources you use to determine an item’s FMV, do your best to make an accurate estimate. Undervaluing your auction items will cause your organization to miss out on potential funding, while grossly overestimating a prize’s FMV can create problems if the supporter who wins it tries to claim their contribution as tax deductible.
2. Set the Starting Bid Amount
Once you know an auction item’s FMV, it’s time to calculate the rest of its pricing model using percentages. First, you’ll set a starting bid amount, which is the lowest amount guests can bid to win the item at your silent auction.
For most items, your starting bid amount should be 30-50% of the FMV. Consider placing rare or unique items on the higher end of that spectrum and more commonplace items on the lower end. To make it easier for auction participants to do quick calculations as they place bids, round the starting bid amount to the nearest $10, $100, or $1,000.
For example, let’s say your nonprofit secures two front-row tickets to the concert of a world-famous artist, which includes a photo opportunity after the show. You determine that the total FMV of this package is $9,100. The photo op makes this prize unique, so you’d want to set the starting bid as close to 50% of the FMV as possible. A good starting bid for this item would likely be $4,500—50% of $9,100 is $4,550, and you’d round down to make the math easier for supporters.
The one exception to this pricing rule is consignment items such as Winspire’s travel Experiences. When you use these items in your nonprofit’s auctions, the money you make above the list price goes toward your mission. Therefore, your starting bid amount should be 100-120% of the list price to set yourself up to exceed it. For example, if you used Winspire’s Tuscany Culinary Escape vacation package in your auction, you could set the starting bid at $4,000, a round number that is just under 110% of the Nonprofit Cost (list price) of $3,660.
3. Determine the Minimum Bid Increase
Deciding on the third key number in the silent auction pricing equation, the minimum bid increase, is also a balancing act. You have to set it high enough to ensure substantial bid increases (so participants aren’t outbid for a high-value item by $1) but still keep it low enough that the bidding process is competitive.
Consider setting each item’s minimum bid increase at approximately 10% of its starting bid amount. In contrast to the strategy for setting starting bid amounts, it often makes sense for higher-value items to have a minimum bid increase of less than 10% and lower-value items’ minimum increase to be set at or above 10%.
For instance, if you set a gift basket’s starting bid amount at $50, a 10% increase would be $5, which would likely make sense for that item. However, returning to the concert ticket example above, 10% of that prize’s starting bid amount of $4,500 would be $450. If you set a minimum bid increase that high, you run the risk of quickly hitting the point where supporters no longer want to bid on the item because the higher amount is too much to ask. A lower bid increase like $300 or even $200 can be more effective to keep the competition going.
4. Add a “Buy Now” Option
Adding a “Buy Now” option to a few bid sheets at your silent auction gives passionate participants the opportunity to purchase items they really want outright. It isn’t wise to do this for every item because the bidding process stops when a supporter takes the option, which can disengage other guests. However, it can help you maximize your earnings on your highest-value prizes.
To make sure you profit from any items with the option and set the barrier to entry high enough that it won’t negatively impact bidding, set your “Buy Now” price at 150-200% of an auction item’s FMV.
Returning to the examples above, the gift basket with the starting bid amount of $50 (making its FMV about $120-$140) wouldn’t be a good candidate for a “Buy Now” option. However, the concert tickets with the photo op and the Tuscany Experience likely would be as both prizes are high enough in value that your organization could profit significantly from them. Plus, a supporter who desperately wanted to meet the artist performing or was dreaming of a honeymoon in Italy might jump at the chance to secure those items no matter the cost.
Using the above pricing formula, you could set the “Buy Now” options for those two items at $14,000 for the concert tickets and $7,000 for the Tuscany Experience. On your bid sheets, separate this section from the rest of the bidding rows and place it at the bottom to encourage auction participants to place regular bids first and only take the option if they’re certain about it.
Silent Auction Pricing vs. Live Auction Pricing
Now that you know how to price your nonprofit’s silent auction items, you might be wondering how to price live auction items, especially if you’re hosting both a silent and live auction during the same event. While the process of finding the item’s FMV and setting a starting bid amount and minimum bid increase is similar, there are a few differences in the pricing strategy between silent and live auctions:
- Live auction participants tend to bid more impulsively than silent auction attendees because the bidding moves much faster. Therefore, bid increases may fluctuate depending on supporters’ enthusiasm about an item.
- The auctioneer can also increase or decrease starting bid amounts in the moment at a live auction based on attendees’ reactions, rather than relying on a fixed amount printed on a bid sheet.
- It’s best to set a lower starting bid of 25-30% of a live auction item’s fair market value and minimum bid increases of up to 10%, with the understanding that a dynamic bidding process may lead the auctioneer to adjust these amounts slightly.
There should also be no “Buy Now” option for live auction items because bidding wars are even more necessary to keep live auction participants engaged. Plus, your catalog will likely only include 12-15 high-value items, as opposed to the 100 or more prizes of varying prices featured in a silent auction, making it much more difficult to even choose items that would qualify for a “Buy Now” option.
How to Price Silent Auction Items: The Bottom Line
Pricing your nonprofit’s silent auction items is both a science and an art. By leveraging the formulas in this guide and adding a bit of creativity, you’ll be well on your way to maximizing your auction’s fundraising totals. And if you need help along the way, don’t hesitate to reach out to experts like the Event Fundraising Specialists at Winspire.
For more information on silent auction items, check out these resources:
- The Ultimate List of 100+ Silent Auction Item Ideas. Discover a wide range of items you could include in your nonprofit’s silent auction, from easy-to-price goods to unique experiences.
- Silent Auction Bid Sheets: How to Get Started [+ Template]. Learn more about the process of creating standout silent auction bid sheets and download our template to get started.
- How to Procure Auction Items: The Complete Nonprofit Guide. Dive deeper into the process of procuring items for your nonprofit’s auction fundraising events.