I think my favorite solution to this is to sell "guaranteed" and "standby" tickets. Sell full plane capacity of "guaranteed", and then any ticket after that is bumpable/standby. You could potentially switch to sell "bumpable" tickets earlier, too, at a discount.
If the airline is flying ~8 flights a day from SFO-SEA, I'd be fine in many cases paying x% less for y% risk of being bumped one or two flights later.
People are price-sensitive (will always buy the cheapest option) and then complain when they don't get the expensive service. It is incredibly difficult to explain to someone: "You are not getting to your daughter's wedding because reasons." ...and nobody wins that argument when it happens.
Apart from removing over-booking completely, the Delta "pre-blind-auction" is the best choice. All tickets are sold at their regular prices (no random discounts), and day-of people are able to decide if they are willing to be bumped (ideally: by how long) as well as the price it would take.
There's a huge difference in "I'll take $1000 to be bumped to a later flight today" and "I'll take $1000 to be bumped to a flight that's two days later" (depending on the route, that is something that can happen).
It's a delicate balance between customer service, incentives, and profit, and "guaranteed v. standby" pretty clearly fails.
If the airline is flying ~8 flights a day from SFO-SEA, I'd be fine in many cases paying x% less for y% risk of being bumped one or two flights later.