Reserve Price

A reserve price is the confidential minimum price that a vendor sets for each lot before an auction begins. If bidding does not reach the reserve, the lot is "passed in" — meaning it is not sold. Setting appropriate reserves is one of the most important strategic decisions a stud producer makes in the lead-up to a sale, as it directly affects clearance rate, average price, and buyer perception.

Reserves that are too high risk lots being passed in, which can dampen the mood of a sale and deter buyers from competing on subsequent lots. Reserves that are too low may result in the vendor not receiving fair value for quality genetics. Experienced vendors typically set reserves based on a combination of the animal's genetic merit, comparable recent sale results, the depth of their buyer database, and current market conditions. Many seek input from their stock agent or auctioneer when finalising reserves.

From a buyer's perspective, the reserve system provides confidence that a sale is being conducted fairly — vendors cannot bid on their own stock to inflate prices without the transparency of a reserve mechanism. Post-sale, analysing the relationship between reserve prices and achieved prices provides vendors with valuable feedback on their pricing strategy and helps refine approach for future sales events.