What is the starting price?
In numismatics, the term ‘starting price’ almost always refers to the opening bid: the amount at which a lot is called and from which bids are accepted. Depending on the platform/set of rules, no bids below this value will be accepted; the starting price is therefore the practical entry threshold for pricing.
It is important to distinguish between the estimated price (tax/estimate) and the starting price: the estimated price is a guide, while the starting price is a starting point for the bidding process. In auction conditions, this distinction is sometimes explicitly emphasised (catalogue price = estimated price).
How exactly is the starting price determined?
1) Technical assessment: What is actually available?
The first step is classic numismatic work on the object. The auction house determines the type, denomination, date/mint, assigns variants and assesses the condition. Small differences have a big impact, especially with coins: surfaces, centring, mint condition, patina, any processing or edge defects can significantly shift the market price. This technical classification provides the basis for determining where a lot ‘realistically’ fits into a market segment.
2) Market comparison: What have similar pieces recently fetched?
The next step is to compare with actual hammer prices. Auction houses use their own archives and public results sources for this purpose. As a collector, you can easily replicate this step by researching comparable items on results portals.
A practical example is Sixbid.com or the Sixbid Coin Collector’s Archive: there, you can search for similar types of lots and see how hammer prices have changed for comparable items. Sixbid itself describes the benefit as being able to track the development of comparable coins, including hammer prices, with just a few clicks.
This type of comparison is also relevant for the starting price: if an auction house sees that comparable items have recently been sold within a certain range, it can set the starting price to match the market – without stifling the bidding process.
3) House practice: starting price in relation to valuation
How ‘aggressive’ or “conservative” a starting price is set depends heavily on the auction house and the format. Some terms and conditions even specify typical rules of thumb. An example from German auction terms and conditions: the starting price is ‘usually one third’ below the estimated price.
Internationally, there are also clearly formulated practices; a numismatic auction house states, for example, that bidding ‘usually’ starts at 80% of the estimate, provided there are no higher pre-bids.
Such ratios are not laws of nature, but they illustrate the calculation: the starting price should be low enough to attract bids and high enough to ensure that the lot does not start ‘with an announcement’ below realistic demand.
4) Bidding increments: The starting price must ‘fit into the scale’.
In addition to valuation and market comparison, the auction mechanism plays a quiet but important role: bid increments. The starting price is the first increment – and subsequent bids must fit neatly into the sequence of increments. Platforms explain this very directly: The first bid increment is the starting price; no bid below this price will be accepted, and subsequent bids are based on the valid bid increments.
This may sound trivial, but it works in practice: an ‘uneven’ start can inhibit the flow of bids or lead to unnecessary jumps, while a suitably set start facilitates competition.
What the starting price indicates – and what it does not indicate
The starting price is not a definitive value judgement, but rather a tool for opening the auction. It marks the beginning of a price determination process, the final outcome of which is only determined by demand, competition and timing. If you want to classify the starting price, you should therefore always read it in the context of object quality and comparative data – and for this, results portals such as Sixbid are very helpful (in some cases) because they reveal the market track of comparable items.
References and recommendations
Kahnt, Helmut: Das große Münzlexikon von A bis Z (The Great Coin Encyclopaedia from A to Z). 2nd revised edition. Regenstauf: Battenberg Verlag, 2005. (See keywords ‘Taxe’ (tax), ‘Auktion’ (auction), “Schätzungspreis” (estimated price) and ‘Erhaltung’ (preservation) for information on the pricing of numismatic lots.)
Additional recommended reading:
Menzel, Peter: German Emergency Coins and Other Money Surrogate Tokens 1840–1990. Gütersloh: Gietl Verlag, 1993. (Introduction to valuation and market assessment.)
Adams, John W.: United States Numismatic Literature, Vol. I. Crestline: Kolbe & Fanning, 2010. (Basics of valuation, rarity and market mechanisms.)