eBay Australia will remove the option to set reserve prices on auctions. Beginning August 10, eBay.com.au will be removing the ability to use Reserves for all categories except Cars, Boats, Other Vehicles and Motorcycles.

The Reserve Price feature puts a hidden minimum price on an auction. If an auction never meets the Reserve price, the seller is not obligated to sell the item to the high bidder. Many eBay sellers use Reserve Price feature to ensure that their item does not sell for a price lower than they wish. (There is an additional fee for using the Reserve Price feature.)

Why not just start the bidding price higher? Buyer behavior, or the psychology of auctions, say some sellers. Buyers are attracted to listings with a lower price. Once they have bid on an auction, sellers believe they are then invested in that auction and will follow it throughout the duration.

According to eBay's announcement, "This change is designed to help the small number of sellers in Australia who currently use Reserves to be even more successful. There is strong evidence that Reserves restrict the bidding activity on an item. eBay research has shown that sellers who don't use a Reserve on their listings experience a 34% higher sell-through rate than those sellers using Reserve."

Some eBay users are speculating on whether eBay's policy change in Australia will spread to the rest of the world.

http://pages.ebay.com.au/sellercentral/reserves.html