In art auction jargon reserve price is the minimum selling price agreed upon by the owner/consignor and the auction house.
As a buyer, you are seldom made aware of the actual price agreed between the art auctioneer and the consignor. But the starting bid is usually a little below that. Reserve prices extend to other types of business transactions than buying art at auctions. In microeconomics, for instance, the term indifference price is more commonly used in its place. Another term for the same phenomenon is the ‘walk away’ point.
When the reserve price is not being exceeded, the lot is called Pass/unsold and is returned to the seller(owner). In rare cases, an art auction house would guarantee to pay the consignor for a lot regardless of whether the reserve price is being achieved or not. This is called ‘guarantee line‘.
