Buying or Selling Your Guitar on eBay: The Demand Factor
You've either read the Selling Your Guitar? article or you had previously decided that eBay this was the best choice to maximize the selling price on your guitar. Congratulations...You're on the right track because eBay is easy to use and has a huge shopping population! I will outline the steps to ensure a successful selling experience in another article, but now I'd like to talk a little bit about supply and demand.
This site is primarily intended to help buyers find value in preowned guitars, but sellers can also benefit from some of these same tips from the other perspective. Value is finding good quality at a good price. Some guitars (at the music store and on eBay) that are available may not fall into this category simply because they are not of a sufficiently high quality to begin with, but at the same time anything at the right price can be considered a value. eBay is flooded with cheaper, low end guitars that are fine (given ample consideration) for beginning musicians or kids to learn on. However, price is partially determined by the ‘Demand Factor' (DF) defined here as the number of potential buyers divided by the number of guitars meeting the buyer's criteria.
For example, if a beginner were looking for a cheaper Fender to learn to play electric guitar, a suitable choice in a ‘decent' guitar would be the purchase of a Squier Stratocaster. If we assume that there are 20 Squier Strats on eBay and that there are 40 people looking to buy one, then our DF would be 2.0 (40/20). Now let's consider the example case of a more experienced player looking to upgrade their guitar from a Squier Stratocaster to an American Deluxe Stratocaster. Again, if we assume that there are 20 American Deluxe Strats on eBay but now we've determined that there are 80 people looking for this guitar, the DF for this model has increased to 4.0 (80/20).
Simply put, the increased demand indicated by the ‘Demand Factor' of 4.0 will increase the selling price relative to the guitar's actual value due to the fact that there is more competition to buy this guitar. This is supply and demand. The more potential buyers that you have competing against each other for your guitar will result in more money in your pocket. Conversely, buyers looking for a better buy in a guitar could limit their search criteria to try to find a guitar with a lower DF.
As seen here, timing is a prime factor in raising the DF and the price of the guitar that you are selling or lowering the price when the DF is lowered. You have absolutely no control over the number of potential buyers looking to buy a given guitar at any time unless there is some sort of seasonal buying pattern of which I am unaware, but for sake of argument let us assume that it is a constant. However, you do have some control to increase the ‘Demand Factor' by listing your guitar for auction when there are fewer competing products.
Seasonal variations in supply and demand may also influence the DF, particularly for certain categories. Golfers looking to buy clubs on eBay know that there are fewer buyers in late fall through the winter months and that is when they are most likely to find the lowest price on the driver that they want to try out next year. It's true that they won't be swinging the newest model from Taylor Made in the hype driven driver market, but they also realize that last year's technology is almost the same and they much prefer a value club over a newer club with the flashier buzz words. In an area with ‘new and improved' product releases each year (like drivers) the savings can be quite substantial. However, guitars do not typically fall into this type of rapid turnover category and the golf club example is presented solely to demonstrate my point.
Now, back to our subject market and estimating the ‘Demand Factor' for the guitar that we are looking to buy or sell by optimizing the sale or purchase of a guitar by considering its' DF. Here's a relatively simple way to estimate the relative DF for a guitar over a given time period. Search for the specific guitar that you want to buy or sell and place those terms in eBay's search box. When the listing returns, click on the ‘Completed listing' link on the left and review the sales over a given period of time (week, two weeks, etc.). Since I highly recommend that the market price be determined by the buyers, click on a couple of the completed auctions (ignore the ‘Buy It Now' items) and look for the page counter for that particular auction. Get the average page hits for the number of guitars that you've just included and you've got a pseudo-Demand Factor. Why pseudo? Because there are page hits from the tire kickers and from others looking to see what the guitar is going to sell for their reference purposes, including their own future sale.
Admittedly this is a rough approximation and is not the true DF in that it will most likely result in a way high number, but over several auctions for a given time period the garbage should wash out and a DF that is relative to different guitar models should emerge. And in fact, there is really no way to segregate the serious buyers from the browsers without a set of possibly faulty assumptions, but the ‘Demand Factor' is very real. It's just a very difficult value to accurately quantify, particularly on an absolute basis.