Penny auctions are becoming quite popular after the recession when shoppers are looking for good deals. True, penny bidding might get you some very good deals, but they are very unlike traditional auctions. Without knowing what these penny bids are, it is very risky to try to win listed items because you can lose a lot of money. This is How Penny Auctions Work?
What is a Penny Auction?
Unlike a traditional auction, penny auctions are not free to be bid on. Every bid you place, you need to pay a certain amount of money. This is very unlike real auctions. Also, you cannot place any bid amount that you want. You can only place a bid that would increase the price of the item by 1 cent typically (in some cases, it can be 2 cents as well). The way the penny auction makes money is by selling the individual bids.
How do they make money?
To find out how Quibids can give away such deals like a camera for $10 or Macbook for $50, let’s do a small math problem:
Suppose Quibids had an auction where the Macbook was given away for $50, which is not typical but one of the lowest prices of a Macbook. You might think that is a great deal, but let’s look at the auction in more detail. For the Macbook to sell at $50, there would have been 5000 bids because each bid increases the price by 1 cent. When 5000 bids are placed, it cost a total of 5000X$0.60 = $3000. The typical cost of this product might be around $1000, so that is still a cool $2000 profit for Quibids. So the site still makes money even by giving away Macbooks for $50! Usually a Macbook auction might go higher.
So the important thing to remember in penny auctions is that except the winner, everyone else loses money through the unsuccessful bids. So, if you really want to find good deals on penny auctions, you must make sure you are the winner of an auction no matter what. If things go bad and you are forced to place a lot of bids, you can always use the ‘Buy it Now’ feature of Quibids to purchase the item at the market price. This greatly minimizes losses.
3 tips to not get taken for a ride
This also brings an important point – don’t bid on items without the “Buy it Now” feature. Without this feature, you can easily be outbid on penny auctions and you will end up losing all the bids that you have used for that auction. Also, try to bid small at least in the beginning until you learn the process of penny auctions. As I already said, these are quite different from the traditional auctions that people are used to. Finally, remember that the best times to bid on penny auctions is during the non-peak hours, which are usually the mornings and office hours. Weekends tend to attract a lot of bidders and thus a lot of competition, so try to avoid them.
I hope this helped you learn How Penny Auctions Work.
Have you ever tried penny bidding? Would you?
Some of the links in this post are affiliate links that I make money from to take a trip to the North Pole to meet Santa Clause.