This report originally appeared in the February 2010 issue of DOTmed Business News
In the course of setting up a large virtual warehouse for a prestigious hospital in Texas, the Auction Manager did his homework and fixed a reserve price of $28,000 for a C-arm to be auctioned.
The reserve price is very important and is sometimes taken for granted - too high and the auction doesn't close. Too low and the item. . . well, it might not generate the value it should. That was almost the case in this situation.
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Time was a major factor as the hospital needed to get the C-arm removed to make room for new equipment coming in. With time critical, it was tempting to set a low reserve to make sure the sale closed. Of course, a reserve of $28,000 was a major shock for the hospital as we were to learn.
The hospital contact called in a panic as his experts had advised him that this unit was only worth $2,500 - in fact they had just sold one for this amount. The Auction Manager convinced him to leave the reserve for the cycle and hold fast. He acknowledged the hospital contacts concerns that the machine had to be removed by the following month, but he also expressed his confidence in the reserve price he had determined.
After promotion and above average activity, the unit went to the highest bidder at $36,000 - over 14 times the value the hospital's experts had determined.
