The “One to Three” of Spending Money to Make Money in a Live Auction

The “One to Three” of Spending Money to Make Money in a Live Auction

This shift in the economy really began impacting events as far back as March of this year. That’s when we started seeing bidders start to become increasingly hesitant. It’s also when we discovered that many events were having a harder time obtaining donations.

When it suddenly becomes harder to obtain lots for your live auction you have two choices: put on an auction with fewer or less valuable lots, or start buying auction lots. We always recommend relying upon donations, not only because they cost you nothing, but the acquisition of donations is an important exercise. We also understand that there are times when you simply need to bolster your auction and have no other options.

In this situation, we recommend a simple formula: for every $1 you spend, you should be able to earn $3 at auction. Otherwise, you are simply taking money away from your cause and giving it to a retailer or -worse yet- the new breed of charity auction lot middlemen who’ve popped up everywhere.

Your attendees and supporters are happy to give you money because they believe it is going directly to your cause. They understand the need to cover costs to put on an auction, and will forgive you for some strategic spending that helps you make far more than you would have otherwise. Don’t betray that trust by spending $3,000 on an auction lot that only nets you $600, as happened to a client recently.

There are lots of potential auction lots that seem attractive on first blush. Your first question should be, “Can I triple my money with this investment?” If the answer is yes, do it to fill gaps in your auction, but don’t let bought lots become your foundation.

If a lot is expensive, ask yourself if you could put a variation of the package together for less. No-one owns the copyright on a package, and you have every right to put a similar package together for less. The brokers who offer “no-risk” packages for charity auctions often overcharge, which becomes readily apparent once you start pricing out the components on your own.

Whatever you do, don’t waste money on airfare. The people you are targeting as major supporters have their own miles, travel agents, and favorite airlines. Round trip coach seats won’t bolster the value significantly in their minds.

Before you spend money on a whole new package, ask yourself if there are other packages in your auction that you could make better with a smaller investment. If, for example, you have phenomenal tours and tastings up in Napa or Sonoma but don’t have a place to stay, it would be worthwhile to try and acquire a hotel for a couple of nights. Many upscale hotels that are unwilling to donate outright are willing to offer significant discounts for purchased stays.

Museum passes for a trip to Paris, rounds of golf to accompany a stay at Pinehurst, or having an event’s invitation engraved on a large format bottle of wine are all examples of purchases we’ve seen surpass the 3 to 1 rule.

Don’t let purchasing your lots become the rule instead of the exception. Once you stop asking your board, committee and volunteers for help obtaining lots you start losing out on necessary relationship building for your organization and marketing for your event. The same relationship building and marketing that brings new bidders into the fold.

No Comments

Leave a Comment