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What is the point of reserve prices in auctions? Do you use them sucessfully?

I have noticed that reserve prices seem to be used less & less by sellers on ebay which I think is a good thing because I would often get my hopes up when seeing a low current bid, only to find it still hadn't reached a reserve price (which is an amount unknown to the bidders below which the seller will not sell). If a seller isn't willing to sell an item for less than x money then why don't they just set x as the starting price? I know that on ebay the starting price affects how much the seller pays to insert an item, but ignoring that quirk what is the idea behind reserve prices? If it is to be able to use a stupidly low starting price in order to 'get the ball rolling' and encourage a frenzy of bidding, has anyone actually found it to work in this way with their own auctions?

Public Comments

1. Sure they work, I mean, it gets people interested in bidding that might not otherwise be interested (and they might end up bidding higher than they had initially planned), but if it doesnt reach the amount the seller is looking for, no worries, they dont have to sell it. What you get now is the problem of sellers not getting the amount they want, and refusing to sell the item. I think I am dealing with that right now, but the seller is acting like its "lost in the mail". Yeah, right.
2. I've tried reserves on valuable items a few times, but to tell you the truth, I think it actually discouraged buyers. I know for myself when I see that an item has a reserve price, I usually try to find the same item from another seller without the reserve and I imagine most people do the same. For some items, like classic guitars or REALLY valuable stuff, I could see the point of not losing your investment and most times the reserve is met in those cases, but I'd say in most cases a reserve might actually detur bidders. If it's really worth a lot, people will pay no matter what you do.
3. As a buyer you may not understand the reserve price. From the sellers standpoint the reserve is a way to not end losing out on an items value. For example you are going to sell your cell phone. You can get $20 for it from any of your friends or even the next guy walking down the street. It may cost a little more to list your phone with a reserve but why would you want to sell it to anyone for less than what its worth? So you put a reserve price on it of $20 or more so you are insuring that you recieve the price an item is worth. Good Luck and happy bidding!
4. If you put an item in an auction but only want to sell if meets a minimum desired price, you can put a reserved amount to it. If the bids do not meet the reserve, then the item is not sold. It can be useful if you are not desperate to sell for any silly price, but can hinder you selling if a best bidder got close.