Which online storage auction service's business model makes more sense?

There are several online storage auction services out there, each with their own business model. The following are some examples:

10% final value fee paid by the seller, 15% final value fee paid by the buyer, $20 cancellation fee.

$50 monthly recurring fee paid by the seller, no fee to the buyer.

No fee to the seller, 10% final value fee paid by the buyer. 

10% final value fee paid by seller, no fee to the buyer.

Annual membership fee, no final value fees to the buyer or seller.

Now, forget that you're a buyer for a moment and try to be objective. Which online storage auction service's business model do you think has the greatest chance for long term success and why? Or would you do something entirely different?

Whichever offers the most value for the facility. I think the speed of disposal and the net proceeds after all fees are paid is the main driver.

Say I was a facility owner and I had a unit that owed $500 in back rent including late fees and anyother penalties legally applied according to state law and the terms of the initial contract. I wanted to recoup as much of that $500 as possible, assuming by state law any monies collected over and above that amount are returned to the tenant.

I have the option of using a free service that has few auctions listed, or another service that charges buyers a 15% fee and sellers a 10% fee and has several hundred auctions listed. Both sites claim to get alot of traffic, one site that traffic is directly to the listed auctions, the other site that traffic is to blog posts about storage auctions with a few to the auctions itself.

Say the facility was only 70% occupied and so not in a hurry to clean out the unit. They decided they could eat a cancellation fee to test out which site works better. Just in case though, they list on the free site first, ie no cancellation fee.

They list it on the free site. It gets a number of views, the majority being from anywhere in the country because there are so few auctions listed that anyone visiting the site looks at the listing out of curiosity with no intention of bidding(I know I have). The bidding ends with 4 bids for a total of $215(number made up). They cancel the auction without taking any monies and immediately relist on the other site with more auctions.

The listing gets approx. same number of views, but the vast majority are local, the auction ends with 28 bids for a total of say $475(number made up). The seller then has a 10% premium of $47.50 bringing the income from the auction to. $427.50 which is $212.50 higher then the other site.

In site 1 they are still $285 in the hole as far as what the tenant owes and probably want to attempt to collect on that still. Site 2 they are only down $72.50 and may just write that off as a loss. Theses are all hypotheticals, but it is the way I view it.

The logic is different if the facility is @ 100% capacity, they will get more money renting it out to another tenant then the hassle of collecting from the previous tenant is worth and will therefore go with whichever site can get it cleaned out fastest. Ie the site with more local traffic.

Bottom line it is the value of the service in the end result of monies collected if they are not in a hurry, no matter what the fees are. If they need to rent the unit out to someone else, it is whoever can get the unit cleaned out quickest.

Main first impression for buyers and sellers is number of auctions. Hundreds vs 6. Thats why eBay survives even with price gouging, because they are the biggest and no other auction service has as many auctions or as much traffic.

I apologize for being so long winded.

Just follow already proven successful business models..

Charge the SELLER a Per Listing Fee (If they sign up for a monthly plan, then they can list 50 auctions each month for $20)

When the unit sells, charge the SELLER a final Value Fee, whatever is reasonable 10% up to $200 (Put a cap on it) like eBay does.

Charging the BUYER never makes sense, you want buyers, without buyers you can't get SELLERS. I never seen a STORE stay in business without BUYERS

Main first impression for buyers and sellers is number of auctions. Hundreds vs 6. Thats why eBay survives even with price gouging, because they are the biggest and no other auction service has as many auctions or as much traffic.

That is certainly true.

That is certainly true.

That's why I still use eBay - There are lots of other places to list auctions, but only eBay is going to deliver. They have the customer base to support making the SELLER pay more.

I apologize for being so long winded.

No problem, it was a good read, but I think you made a few assumptions. For example, that the free site, despite having fewer auctions listed, might not have as much targeted traffic or receive bids as high as the paid site. 75% of the traffic to an online auction is going to come from the legal notice. The paid site might have more registered bidders, but the free site might have a better marketing plan in place and more organic traffic. Combine the organic traffic, the targeted marketing and the traffic generated from the legal notice and the free site might offer a storage operator better exposure. From what I've seen so far, visits & bid amounts are at similar levels on both sites. However, since every unit is different, one could only speculate as to which site delivers the best results. 

I did make assumptions based on what I have seen without any behind the scenes data, but most facility owners won't have that data either. They will just make their own assumptions on what they see. Plus storage battles will charge the CC of the buyer if they don't show up to pay(whether you agree with that or not is a different story) but with the free site who is to stop somone from bidding up units way high and then not paying, wasting the facilities time and costing them more money.

I did make assumptions based on what I have seen without any behind the scenes data, but most facility owners won't have that data either. They will just make their own assumptions on what they see. Plus storage battles will charge the CC of the buyer if they don't show up to pay(whether you agree with that or not is a different story) but with the free site who is to stop somone from bidding up units way high and then not paying, wasting the facilities time and costing them more money.

I totally agree with you, the free business model has imperfections and with any considerable growth, it isn't sustainable. Notice that the free business model wasn't included in the choices above. But that brings up a good point; if a service wasn't charging a buyer's premium, how could they ensure that the buyer comes in to pay? Do you think that online auction services could get away with charging a deposit to bidders?

Both buyers and sellers are used to paying a fee.  In the case of an online auction the buyers fee is even more justified but now as a convenience fee.

Seller will always have to pay because its their stuff that they are trying to sell.  Sellers usually have to pay an auctioneer anywhere from 15% - 20% plus a cancellation fee, if all rooms cancel, plus a flat fee for even showing up.  These rates of course vary from auctioneer to auctioneer, state to state, facility to facility ..etc.

Buyers have to usually pay either 10-15% or $15 whatever is more.  This is just to get walked around the facility.  With online auctions this should be the same but now its a convenience as they are sitting on their couch, zooming in, taking notes, looking prices up on ebay ..etc.  They no longer have to make snap decisions.  This is a benefit and a detriment but at least I'm not driving around wasting gas, eating lunch on the road ..etc.

The model that currently exists is fine for this type of business.

There is also the mental game where people perceive value based on price.  Seller doesn't mind paying (its already in their annual budget) because they are getting a service - higher percentage will translate to higher marketing budget which translates into higher traffic which potentially translates into higher bids and buyers want the higher traffic so more facilities sign on so they have more rooms to look at.

my 2cents

Both buyers and sellers are used to paying a fee. 

I agree; however, over half of the storage facilities in the U.S. don't use an auctioneer because they don't want to pay a 10-20% commission to sell their units. Buyer's fees are generally accepted, but they aren't the norm. Out of the 300 or so auctions in the Houston area every month, less than 10% have buyer's premiums. Not sure if that varies from one location to the next.

There is also the mental game where people perceive value based on price. 

I agree with that as well. Some operators assume that since our service is free, that it's somehow sub-standard to our competitor.

im not sure where you're located auctionguy but there is only ONE auction where i l
ive that charges any kind of commission on the sellers side. if you bid $350 you pay $350 here.

I'm in Long Island and do it in the city as well... no buyers premium would be nice but of course around here everything is more expensive.