How to win at a penny auction

Live penny auctions

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A bidding fee scheme, also known as pay per bid auction, is kind of auction where participators pay a fee for each bid that they put on a timed auction. Each bid raises the price of the sale by a fixed amount and extends the time of the sale. When the time runs out on the sale, the last person to have placed a paid bid is the winner and gets to buy the item at the auction ending cost.

Pay per bid auction sites appear to be a very lucrative business. When having a look at certain items, it may seem that these auctions are making giant profits. New pay per bid auctions keep opening all the time, but a lot of them close immediately. Users are more likely to get great bargains on newly opened sites, as there is not too much competition from other bidders and auctions tend to not last as long as on grown up sites. If a pay per bid auction sites does not attract enough bidders, it sells many items at a loss.


Example
Each bid increases the auction price by $0.10. Shall we say the starting price of the sale is $1.00, and so the final ('winning' ) bidder manages to get the contraption at the cost of $25.00. To get from $1.00 to $25.00 in $0.10 increments requires 240 bids. Each bid cost each bidder $1.00. Therefore, the auctioneer has picked up $240.00 for the bids, plus $25.00 for the sale of the item, for a total of $265.00. Presuming the auctioneer paid $90 for the device, the gross profit is $175.00. However , it is not known what customer acquisition costs are to run an auction so even those auctions that seem to have major profit may not generate a profit.

The bidder who placed the last bid ( for $25.00 ) has needed to spend at least $1.00 for the bid, as well as the $25.00 to get a gadget which retails for $100.00. He could have spent extra money on previous, unsuccessful bids. All the other bidders who have placed the prior bids have spent $1.00 for each bid they placed before the winning bid and came away with nothing material.
Online penny auctions

as an example, one bidding fee scheme site placed a Web ad that publicized'A New PS3 at $40.59,'[citation needed] deceptively implying that a new PlayStation 3 was available for any one to purchase at that cost. To guard oneself against the chance of such shill bidding, the best practice would be to use only credible long-time websites that divulge their management, financiers or other details of the company.[citation needed] Those sites that don't instantly reveal who is running the site, complete with contact info, should be avoided.[citation needed]
Penny Auction Watch is a consumer watchdog site which reputedly helps bidders tell the difference between valid and fraudulent auctions.

Certain corporations that run bidding fee scheme websites show the same auctions on multiple websites.


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