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Penny Auctions: What you Need to Know
By Sid Kal
Penny auctions are a class of entertainment auctions. These penny auctions differ from ordinary auctions in several ways. These differences are important and crucial to understand from the point of view of bidders. Before deciding to participate in any online penny auction, it is very important that you know the way they work. The basic concept is that the price starts at $0.01 and is incremented by a penny each time a bid is placed, hence the name penny auctions. Here are the main themes of penny auctions that you should know - Pay Per Bid Auction Model
Penny auctions use the pay per bid auction model. This might sound new to many bidders who are used to sites like eBay where bidding is totally free. In these penny auctions, the bidding process is not free. Every single bid that is placed during the course of the auction is paid for in advance. The typical cost of a bid in these auctions varies from $0.50 to $0.90. You should know that every bid you place has a price, and therefore your goal is to win the auction with as few bids placed as possible. You might ask why anyone should pay for the bids. The reason is, you can potentially get great deals. It is not uncommon to see electronics like iPads sell for under $20 at these auctions. This is possible only because the bids are not free. Timer isn't Fixed
Many beginners to penny auctions are confused by this idea. In an auction at a site like eBay, there is a fixed time within which the auction ends. People place their bids within this time. At penny auctions, however, each time a bid is placed, the timer is incremented by 10-20 seconds. This means there is no real fixed end time for the auctions. They can go on for a few minutes or up to a day. It all depends on the bidding process. Potential Bargains Like Never Before
Owing to this auction model, penny auctions are able to offer their customers up to 90% off retail. This is not a scam but comes from an understanding of the model. Since every bid is paid for, the auction makes money not just from the selling price of the item (90% off in this case) but also from the bidding process itself. This also means that if you do not win the auction, you will lose the money placed towards the bids. Luckily, established penny auctions have a feature where you can use the lost money towards bids by buying the item at its full retail price. Thus if you bid intelligently only on the items that you really want, you can either get a great deal of 90% off or you end up paying retail. Either way, you have something to win. Indiscriminate bidding can, however, lead to losses and should be avoided. By following the right penny auction strategies, it is very easy to get the best bargains online.
Sid is an expert in penny auctions and maintains a highly successful Penny Auctions Blog. For all levels of penny auction bidders, read my Penny Auction Strategy.
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PLEASE VISIT THE CONTRIBUTOR'S WEBSITE
Quibids Blog
Quibids and Penny Auction Tips for Winning
quibidsblog.blogspot.com
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This intel was contributed by Sid
Sid
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May, 2012
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