Understanding Buyer Psychology

[fi.ra]

I think one of the most profound studies of human nature would be to understand why, when buying, buyers make offers the way they do. eBay essentially would act as the best host to study buyer behavior. 

A good example is an item I have for sale at the moment. I am selling an Italian outerwear item. It's an almost $1100 coat. NWT. I have a price of $475.00 + $9.95 for shipping. 55% less than the tagged price. Yet, buyers are making offers for $125, $150 and $175. My question is why? I am not concerned as a real buyer will come along, I sell high end items usually from my personal collection and always find the right buyer, but if 10 come along, 8 seem entirely oblivious. I'm a buyer myself occasionally. If I came across the listing, I would process it as "wow, that's an already really good deal, but I'll see if I can get it for $400, and that would be a steal, if so". That's what I expect from most people. Does the buyer that made an offer for $125 really, deep down think, that the seller would accept it? I know a lot of people are stupid. Not biologically stupid, but like absolutely washed out stupid. The filament in their lightbulb is cooked. This is what I want to understand. Why, do people make these offers? One of the offers, I countered, just to see where it could go and the buyer increased his/her bid by $6.00. Like, the 1st attempt didn't work and they actually thought, maybe if I throw another $6.00 in the pot, that could do the trick. At a total price of 90% off and another 35% less than my 55% discount. 

Anyway, there's the rant. Just wanted to hear a few thoughts, maybe get a few chuckles in the process. What I do know is there are a lot of really stupid people out there and this is not a class or rich poor thing. I don't want to discuss the merits that $475.00 is expensive for many people, etc. I'm talking about how buyers make their valuation of many items. How do they establish value, especially when lacking any relevant comps. Are they just throwing spaghetti against a wall to see what sticks? 

[fi.ra]

and I'll give you this, after thinking about your comment more, is that many people, yourself included, just don't care where the jacket is made or with what materials. To you, dollar for dollar, you can get a similar style for much less and all else doesn't matter. I guess that's fine, just not the way I personally look at the world. But I get it. 

[the*dog*ate*my*tablecloth]

I threw BIN on them all to jumpstart the summer and sold two at regular price then one priced at $41.99 free ship got a BIN of $10 I declined with no comments and no counter.  Then $15.  I declined with no comment or counter.  THen $18.

With all due respect I think it's bizarre that you abandoned a business plan because you had one bad buyer. After the second offer most sellers would have blocked him and continued life as normal. I don't understand the comment to the buyer. You're letting a stranger affect your business and your patience.

Items are worth what buyers will pay for them, no more no less. To want to buy, the item must be worth more to the buyer than the money they have to spend.

[fi.ra]

I agree, just a lot of bad negotiating too. You and I seem to get it. There is a way to negotiate and the way most other people do it. Funny enough, I move my stuff quickly. Had someone made me an offer for $325.00 I might let it go for $350.00 yet at this very moment, I am stuck to $400.00 in my mind and when people offer $125.00 I double down on that $400.00 and wouldn't sell it for a penny less to these buyers even if they eventually did come up to $325.00 or $350.00. 

[usmc*usnmom]

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@the*dog*ate*my*tablecloth wrote:

I don't think that's the attitude of buyers at all. I think buyers buy here because they're looking for something nice at an affordable price. They're used to shopping discount because most regular people shop discount now. I don't know anyone who pays full price for things.

I don't think buyers really think about the seller at all. It's the seller's job to think about the seller and the buyer's job to think about themselves.

If people had enough money to pay the prices some sellers expect they would already be shopping at Neiman Marcus and Nordstroms instead of shopping on Ebay.

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Fair enough.

But you have to admit that there are more than a few buyers out there who are beyond cheap and entitled.

CERTAINLY NOT ALL OF THEM -- I want to make that clear, because I love my buyers, even the ones that are a pain in the hiney. But there are more than enough cheapskates and lowballers to go around.

And yes, there are also plenty of sellers with their heads in the clouds (among other places) who greatly over price.

[doubledz-a2z]

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@the*dog*ate*my*tablecloth wrote:

I threw BIN on them all to jumpstart the summer and sold two at regular price then one priced at $41.99 free ship got a BIN of $10 I declined with no comments and no counter.  Then $15.  I declined with no comment or counter.  THen $18.

With all due respect I think it's bizarre that you abandoned a business plan because you had one bad buyer. After the second offer most sellers would have blocked him and continued life as normal. I don't understand the comment to the buyer. You're letting a stranger affect your business and your patience.

Items are worth what buyers will pay for them, no more no less. To want to buy, the item must be worth more to the buyer than the money they have to spend.

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I never used a BIN in the past and thought I would try it.  I never put my items on sale either.  These are covers for years 1980s and 1990s that guys are not going to find pre-made.  Funny that I sold two on BIN at regular price.  I guess I really don't need it and once I revised my listings, I sold more.  

[mrv71]

Sorry, I forgot to mention the coat I found in TJ Maxx was German, some very high-end brand. And it did sell on the manufacturer's website for 500 Euro, I checked. I do not remember the brand now, I bought this coat for my father and I don't have it now with me.

In general, TJ Maxx sells decent quality clothes, it's not Chinese junk. I found some stuff made in Italy specifically for them, some made by major quality brands for them, some department stores' last season. They are usually 50% or more off manufacturer's price.

[mrv71]

As for the lowball offers, there are a lot of bottom-feeders on eBay who want everything for free or nearly free. Seller can set the minumum for the offers, and everything lower would be automatically declined, and you will not waste your time getting upset.

[18704d]

"A good example is an item I have for sale at the moment. I am selling an Italian outerwear item. It's an almost $1100 coat. NWT. I have a price of $475.00 + $9.95 for shipping. 55% less than the tagged price. Yet, buyers are making offers for $125, $150 and $175. My question is why?"

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Why?

Because it's not Buyer's Psychology... it's Seller's Psychology.

You .. are  ... being .... tested..... to see ...

well, the reason(s) don't matter.. but to see if

you will eagerly drop your price.

Myself?

If I'm at a garage sale.. and they're actually selling real $20.00 bills for $10.00

My first instinctive comment will be:

"Will you take $8.00?"

It's just Business

and it's worked like this, since before the Pyramids were built.

All my best,

Lynn

[savanna.dance]

@fi.ra some people want hand crafted, bespoke, premium materials. A classic item that will last for many years.

Others want the trendy, now look and won't invest $$$ because they'll be on to the next trend and no longer want or care for the original.

Neither person is right or wrong, just different. It could be the trendy, look of the moment people, are hitting you with offers in the range of what they would pay for a similar to, lesser quality item, on an off chance you'll say yes.

The other thing, and this could speak to you're preference for dealing with buyers who have middling numbers, is because they haven't been around long enough to see thousands upon thousands of listings where a seller used a MSRP as an enticement to sell, then has the item priced at 10% to 25% of that price.

So, it's possible the people making offers are used to that type of pricing scheme ...

[swenson8781]

My philosphy on buyer psychology?.........There is none.

Or rather, no true way to understand it.  Every buyer, every seller, every circumstance, every item listed is different.  So there is no good baseline of consistency to determine why people make offers the way they do.  

I have listed many NWT items at 75-80% or more off the tagged price, and due to the amount I had invested in the item been very pleased with the sale.  Some sellers aren't willing to go as low, and that's okay, but I don't feel a buyer is stupid for trying.  If I had the the same item listed as you, and I only paid $10 to aquire it, I would easily let it go for $175 or $150.  But if I paid closer to full price retail, I'd have a harder time letting it go, so I'd try to wait for a buyer more willing to pay more also. So I guess I fell the sellers viewpoint comes into the equation also.

And no, they aren't throwing spaghetti at a wall, they are throwing dollars at you 🙂  A bird in the hand......   Some sellers might not let it go, but some will.  IMO, they've got a 50/50 chance, why not try?  If they don't come back higher, they obviously didn't want it that bad, or don't feel its worth that.  Other buyers will come along that want to buy it, as will other sellers that list the same item.

[whatmodernwas]

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@18704d wrote:

"A good example is an item I have for sale at the moment. I am selling an Italian outerwear item. It's an almost $1100 coat. NWT. I have a price of $475.00 + $9.95 for shipping. 55% less than the tagged price. Yet, buyers are making offers for $125, $150 and $175. My question is why?"

---------

Why?

Because it's not Buyer's Psychology... it's Seller's Psychology.

You .. are  ... being .... tested..... to see ...

well, the reason(s) don't matter.. but to see if

you will eagerly drop your price.

Myself?

If I'm at a garage sale.. and they're actually selling real $20.00 bills for $10.00

My first instinctive comment will be:

"Will you take $8.00?"

It's just Business

and it's worked like this, since before the Pyramids were built.

All my best,

Lynn

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Boy, do we differ. My instinct would be to say "I'll take them all." A wise dealer happily pays $10 for a $20 bill.

[luckythewinner]

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@fi.ra wrote:

It's an almost $1100 coat. NWT. I have a price of $475.00 + $9.95 for shipping. 55% less than the tagged price. Yet, buyers are making offers for $125, $150 and $175. My question is why?

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OP, 

Because it costs nothing to make the offer, and and only takes a few seconds to do it. 

Two of my best purchases on eBay were a $90 offer on an item priced at $500, and an $500 offer on an item priced at $5,000.

Both were accepted. 

Unlucky

[smkcbk]

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@the*dog*ate*my*tablecloth wrote:
 

If people had enough money to pay the prices some sellers expect they would already be shopping at Neiman Marcus and Nordstroms instead of shopping on Ebay.

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Not necessarily.  There are buyers who have enough money to shop at Nordstroms, but they enjoy shopping at Ebay because they are thrifty, or like getting a good deal.  This mentality is part of the reason they are wealthy.

Also there are sellers who are willing to sell a high end item at a BO of 50% or more off, because they got the item for free, or cheaply (like an estate sale), or just want or need to move the stuff out quickly.

[fortys-tech-n-stuff]

People know that coat is not worth 500$, if you add up materials plus labor costs at most you probably get 150$, probably much less, so what makes that coat worth 500$, let alone 1100?

[fi.ra]

Responses like this make me realize how different people think is in this world. How vastly different people process and rationalize things. It's fascinating that someone like you would rationalize that this jacket is only worth $150.00 tops. I guess that's fine, but what's really worrisome is if you feel this jacket is worth only $150, then how do you establish value for an inferior jacket, made in China, machine made, of cheap materials and most likely a poor fit? To me, that means you would pay at most, $65-$75 for that jacket in comparison. That's just not possible or maybe it is, but you would have to shop every thrift store to achieve that. I think your comment is perfect example of the downfall of society and the teetering death of globalization. I understand for many, my comment is much more to wrap your heads around, but the point I am pretty much making is that you and other buyers have a far different logical process when establishing value in this world. One that I strongly disagree with. And you could be very wealthy and have this mentality or not so wealthy. I know many people who have such flawed logic when processing value. For example, I know a guy who owns a $1.2mm house, and a very nice Audi (and SUV) that had an MSRP of $65k. The house was purchased in my opinion in a peak market and the car as we know, loses 30% of its value the moment it drives off the lot. Yet this guy will pay these prices and not pay more than $50.00 for a pair of shoes. A few reasons why. Borrowing. People may or may not buy shoes on their credit card. To many people, those shoes are bought in real dollars, whereas, the house and car are bought on margin, therefore people indemnify themselves of most of the responsibility should they be unable to pay. Also people process shoes or a jacket as being disposable or in your case, have the view that the materials mean little in your life and are not a reflection of who you are. I on the other hand, choose to rent and stay liquid financially and own 4 pairs of $500-$1000 shoes. Shoes that will last 20 years with resoling and good care. More importantly, I represent myself in my best form. I can spot a guy in bad shoes two miles away. I would never want to be that guy that pulls up in a Porsche and owns 3 pairs of shoes total: dirty white New Balances, flip flops, and a $40.00 pair of "dress" shoes from Walmart. A ton of people like this exist and much of that translates to eBay when we are contacted by other parties. Many people can afford to spend $450 for a $1k jacket, but would rather own $2k 65 inch TV, when the 42 inch version I have, that I bought for $350, is just as good. To me, it's just a fascinating difference in psychology when exchanging money for goods, and I'm including myself, and how people rationalize value in their lives. It's pretty cool stuff, but also scary when you realize why we have massive housing bubbles (like the one we have now again) and why everyone looks like they are poor, when they are not. This is an American phenomenon too. People buying cheap inferior products at high values, and then valuing/grouping top end luxury products as being the same.