Auction Fundraising Items: Procurement, Pricing & Profit
There are two crucial components to make an auction fundraiser soar: auction items and bidders. Gear the auction item procurement to match the audience, and the audience will show up and bid on the auction items. Auction fundraisers can only yield bids with desirable, quality auction items. In general, mainstream goods and services from both national and local retailers, restaurants and service providers do well at auction. Those are easy to value because there is hard retail value that can be calculated. But don’t forget about items more customized to your audience. The perceived value of unique experiences, keepsakes and intangibles can really make an auction profit soar.
Procurement can start at anytime before an auction. The sweet spot is six months in advance. Many corporate donation policies ask for lead time to process donations. In addition, many have a limited availability by year, or quarter or month, so giving more lead time increases the chances for a “Yes, we will donate to your cause!” You can ask for donations in two basic ways:
Online Donation Requests
Many larger chain businesses and professional sports teams have online donation forms on their website. A simple Google search for “[Company Name]+donation request” should quickly offer a result. To make this even easier, here are Pinterest boards to Mega-Donation request board and Mega-Sports Donation request board.
Procurement LetterA short and sweet procurement letter is the best way to formally ask for donations. Be friendly, ask nicely and include what the donor gets out of making the generous contribution as well as how their donation will advance the cause. Include a mission and vision and how the funds will enrich the students, fight the disease, feed the hungry, save the animals, etc. Using action terminology in the letter makes the donor feel like part of the solution by simply donating goods or services. In addition to the goodwill, include any recognition that comes along with the donation. This may be a listing in an online catalog, print catalog or sponsorship publicity. To facilitate the donation process, clearly state the following in your letter:
- Your website URL
- Email address
- Name of fundraising group
- Contact name(s)
- Tax status and ID
- Call to action. Ask for donations now! Be specific in the date or timeframe the goods and services are requested for.
Sign the letter with a real name, not just on behalf of the organization, which promotes a more personal touch to the request. Once you know how you’re going to ask for your auction items, what exactly are you going to ask for?
Priceless Items & Keepsakes
Priceless auction items are those that truly do not have a retail value but do have an utility or emotional value; for instance, upfront reserved parking, front row seating at an event or an opportunity that is out of the ordinary, like principal-helper-for-the-day. Keepsakes can be a dynamic way to increase auction awareness and success. These auction items emotionally and lovingly tie your bidders to your charity. Keepsakes are highly sought-after for school based events. Get inspired by this Keepsakes & Priceless auction donation board.
Third Party Auction Items
Consignment items can make the auction offerings very appealing and, used wisely, can increase the bidder pool with marketing. Many companies offer unique goods for consignments such as sports memorabilia, experiences and events. Consignments can be fun and flashy, but do your due diligence and read the fine print. Taking consigned goods means the charity agrees to offer at auction an item usually with a minimum sale price. Collections above the required minimum gets donated back to your function. If merchandise does not sell it goes back to the consignment house. DSC Consulting is our favorite because they have been in the business for two generations and always offer a free item of value along with consigned no-risk items. Matchmaking sites help nonprofits request donations through a service rather than lots of one-off requests. They streamline the in-kind donation and sponsorship process for nonprofit event leaders. Begin by creating your organization's profile, and once your account is verified and approved, you'll be able to post your event into the system, get access to a donation catalog of items you qualify for and then request the ones you want in a shopping-like atmosphere. Companies will respond to the fundraising group directly. Donation Match is our favorite because it can be used for free.
Pricing Auction Items
Pricing auction items is hardly an exact science, but there are some best practices for starting bids and bidding increments. Justify pricing by including numerous photos and lively descriptions. The key is finding the sweet spot that will initiate interest to bring about the maximum potential, visibility and success for your auction. Remember, almost all auction items are donated, so any income is brought in is considered profit; fundamentally, the higher the final bid, the greater the philanthropy. Pricing works differently for each category of auction item:
Auction Pricing for Ordinary Goods & ServicesThe general rule of thumb for pricing ordinary goods and services is to start the bidding at about 40-50% of the retail value, then divide the remaining value by 5 to calculate the increments that will facilitate typical back-and-forth bidding exchange. For example:
- Yummy Restaurant donates a $100 gift certificate
- Starting bid should be $100/2 = $40-$50
- Increments should be $50/5 = $10
Auction Pricing for Unique & High Value ItemsUnique goods and services or those that have a high value can be speculative. Start too high and there is the risk of getting no bids, start too low and by auction close time, it might be purchased at an undervalued price. Start the bidding at about 40%-60% of a realistic retail value, then divide the remaining value in bite-sized chunks to quickly elevate the donation. Here is an example:
- A vacation package with a retail value of $3,000 is donated
- Starting bid should be in the $1,200-$1,800 range
- Increments should be between the $75-$200 range
High value items do well at live auction too. Live auction permits impromptu modifications. If the starting bid gets no activity, then the auctioneer can immediately lower the starting bid and adjust increments accordingly.
Auction Pricing for Keepsake Items
Pricing keepsake items is also flexible but can produce very high yields. With a keepsake, consider if it is valuable to only a subset of the audience (for example, Mrs. Smith’s classroom parents). If this is the case, start the bidding on the higher end, but with smaller increments to draw bidders into the action and remain captivated. To capitalize on the rarity of the item, the description should be detailed and play up the sentimentality. If there are multiple types of keepsakes, try to be consistent with the starting bid and let the market forces dictate the natural flow of bidding.
Auction Pricing for Consigned Items
If you do choose to accept consigned goods, be sure to budget the starting value and potential profit margin to see if consigning is a true value-added effort. Bidders are most likely not aware that an item is consigned, and when they win or purchase that coveted paraphernalia with a large donation, most believe that the charity gets the funds. Be sure to budget time for receiving and potentially shipping back unsold goods.
ProfitProfit is simply gross income minus expenses. To make more profit, either increase gross income or reduce expenses. Making more money can be accomplished in a few ways:
- Get more bidders to register and bid. Strong promotion of the auction event should include an online catalog, pre-registration and ongoing communication and updates for the auction event.
- Get the bidders that are supporting the event to spend more. Sell raffle tickets, drink tickets and include a raise-the-paddle into the event.