Silent Auction Budgeting 101: Fundraising Success Strategies

You’ve decided to host a silent auction! These fundraising events are exciting opportunities to raise funds while creating a fun, memorable experience for guests. However, while auctions can be high-earning events, they also often require a high initial investment, making crafting a smart budget essential.

Budgeting for your silent auction will not only help you avoid unnecessary expenses but also ensure you maximize your fundraising potential. To get started, we’ve provided our top four strategies:

1. Set Budgeting Goals
2. Consider Your Predicted Expenses
3. Conduct Audience Research to Maximize Revenue
4. Price Items Effectively

Let’s break down these strategies one by one to get your silent auction budget ready.

Set Budgeting Goals

Overcome challenges ahead of time by thinking through your budgeting logistics. Set markers for success, so your team has a goal in mind when planning and executing your event.

Some items you might calculate include:

• Estimated Total Revenue: Estimate how much you should expect to raise through this fundraising event. Categorize your expected revenue by revenue stream including individual donations, ticket sales, sponsorships, and auction item revenue. 
• Estimated Total Expenses: Take an account of your predicted expenses to get an idea of your total overhead cost. These items include administrative costs, marketing costs, and other auction-specific expenses (more on this in the next section).
• Calculated Return per Dollar (RPD): Predict the effectiveness of your auction by dividing the total revenue generated by the auction by the total expense to run it. A higher RPD indicates higher fundraising success. For example, for an organization that spends $10,000 to host an event and raises $30,000, the calculation would be as follows:
  • RPD = ($30,000/ $10,000) = 3
• Calculated Return on Investment (ROI): This metric refers to the amount of money your organization expects to raise in relation to the money spent organizing it. To calculate ROI, subtract your total expected expenses from your estimated revenue, divide this number by the total expenses, and then multiply it by 100. For instance, if your organization spends $10,000 to host an auction and raises $20,000 from the event, the ROI would be calculated as follows:
  • ($20,000-$10,000) / $10,000= 1 x 100 = 100%
• Maximum Spending Limits: After determining your expected revenue and ROI, set maximum spending limits to ensure your organization does not exceed spending limits and negatively impact your ROI. 

You can adjust these goals as needed, but keep in mind that it’s best to reference them throughout the planning process. Then, you’ll be able to set the stage for budgeting success. Next, you’ll form a strategy for how to achieve these specific goals by taking your expected expenses into account. 

Consider Your Predicted Expenses 

There’s a fine line between going overboard on spending to impress guests and choosing your expenses strategically. In other words, you want to hit your revenue goals without sacrificing the guest experience. 

When establishing your budget, consider your core expenses. Common costs for nonprofit silent auctions include:

• Event venue and decor. Depending on your silent auction type—online, hybrid, or in-person—you’ll need to set aside expenses for a venue and decorations. If you decide to take your fundraiser online, make your silent auction special by adding gamification elements like out-bid notifications and countdowns. 
• Auction items. How much will your team set aside for consignment auction item procurement? Most item donors will provide items or services as donations, or at a discounted price. However, there may be a precious few consignment items you may want to consider for your auction. 
• Advertising and promotion. Like any nonprofit event, you can choose whether to invest in paid advertising options or stick to free or low-cost methods. Paid ads on social media, radio, and the newspaper can put your nonprofit in front of more eyes or you can save money by promoting your silent auction on your social media profile, your website, and printed flyers in your community. Consider reaching out to sponsors to boost your event attendance, as well.
• Catering and entertainment. If your silent auction is live, what other elements will you add to make the night special? See if you can partner with a local restaurant and ask if they’d be willing to cater your event at a discounted price. 
• Software. Many auctions use silent auction software to help them pull off an effective and memorable auction experience. You’ll want to find a provider with a user-friendly interface and transparent pricing to provide the tools you need to run an efficient in-person and/or online silent auction. 

Write down your expenses and look for areas where you can save without compromising your event’s quality. For instance, you might find a venue that’s discounted on a Thursday night, and if your supporter base is willing to come out on that day, you could save significant money. 

Conduct Audience Research to Maximize Revenue

Knowing your audience is key to generating silent auction revenue. That’s why it’s essential to choose auction items that will excite your guests. For instance, guests of a school auction will prefer different auction items than guests of an annual charity gala. 

To scout for items that will engage your audience, conduct research on:

• Demographics. Who will be attending your events? Will guests mostly be single or married with kids? Would they be more interested in date night opportunities, family-friendly event experiences, or maybe a mix of both?
• Interests. Sports fans, artists, cooking connoisseurs, and fitness fanatics may all make up your guest list. For example, if you have more sports-inclined guests, you may focus your procurement budget on a new set of golf clubs rather than an original painting.
• Community involvement. What sort of community events do your guests take part in? Maybe a few of your guests are involved in a community vegetable garden. Recipe books and gardening tools might catch their eye. 
• Previous top-performing items. If you’re not sure where to start, research previous top performers. Or, attend other silent auctions to get an idea of which items were best-sellers and which ones to avoid. 

Getting to know your audience will help you decide between auction items and will give them a great experience. Plus, when attendees notice how much time you’ve placed into scouting items that will interest them, they will be much more likely to donate, volunteer, or look for other ways to support your cause. 

Price Items Effectively

Now it’s time to get into the nuts and bolts of silent auction item pricing. According to SchoolAuction.net’s pricing guide, it’s best to set your opening bids as between a third and a half of an item’s Fair Market Value (FMV) which is the item’s sale value as determined by the item donor. For items without a retail tag, like a signed baseball, consider researching the sale of similar items to double-check its value. 

You can use other resources like eBay and Amazon to verify FMV or as a starting point for items with an undetermined value. From there, you can set important metrics like:

• Starting bids. Usually starting bids are set at 30-50% of an item’s FMV to keep bidders invested without devaluing your silent auction items. 
• Bid increments. To set the bidding pace, set your bid increments at 10% of an item’s FMV. Consider going up to 15% for popular, high-ticket items. You generally do not want more than 7-8 bid increments between the opening bid and the FMV of the item, in order to maximize your revenue from the bidding.
• Buy-it-now options. In a silent auction, there are typically a few items that draw the most bids—front-row concert tickets, fancy dinner certificates, or weekend getaways. Offer a buy-it-now option at 150%-200% FMV for bidders willing to pay top dollar. 

You can also choose to partner with a silent auction software provider to streamline the pricing process. Their built-in calculations can help you set starting bids, bid increments, and buy-it-now options, so you won’t have to perform the calculations on your own. 

Silent auction budgeting is all about finding ways to enhance the bidding experience without wasting excess time or resources. Setting measurable goals, researching your audience, and thinking through your expenses will help you discover the best way to divide your budget. To get started, consider your expected expenses, expected revenue, and your guests’ expectations for your event. To your silent auction budgeting success!