If you are googling for one penny auctions then it is highly likely that you are looking for what is known as a penny auction site. It is also somewhat likely that you are not sure what a one penny auction is, how they work and how much they really cost. Do not be misled by any advertising you may see for these one cent auctions. They are not like ebay, not in the least.
And you will spend way more than one penny, no doubt about it.
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What is a One Penny Auction
One penny auctions are known as pay per bid sites. These sites work by offering up items for auction at a penny. The catch is that you have to pay, just to bid and just because you bid does not mean that you are going to win the auction and have the right to buy that item at that price. You have also spent that bid trying to win and have spent any money you spent, buying that bid.
An example of a one penny auction:
If bids cost $0.50 cents each. To buy 10 bids it will cost you $5.00. You now have 10 bids in your ‘bid bank’.
The penny auction site puts up an item you are interested in bidding on and the price starts out at one penny. Lets say it is a $25 gift card to your favorite restaurant. If you are willing to risk 1 of your 10 bids bidding on this item at $.01 then you click the bid button and the price jumps up one penny, a small amount of time is added to the count down timer and you are the top bidder and 1 of your bids is deducted from your bid bank. If no one else bids, you have the right to buy this item for it’s closing auction price of $0.01.
However, if someone else bids, the price increases 1 penny to $0.02 and the new bidder is now the one who will win if the auction timer reaches sold.
To fight back, you have to bid again spending another of your bids (you are down to 8), increasing the auction price by one penny to $0.03 and adding a small amount of time to the count down timer.
This continues until you or your competition folds and one of you is left at the top of the auction and the timer counts all the way down to sold.
If you win, you’ve gotten a great deal. If you are outbid, you have lost any money spent on bids trying to win the one penny auction. That money is gone unless you are bidding at a penny auction site with buy it now feature that allows you to use any money spent on bids towards purchasing the item from them directly.
In general though, think of spent bids as money lost. It is only on specific products or auctions that you want to consider using the buy it now option to obtain the item.
If you win the auction, you have the opportunity to then purchase the item for it’s ending auction price. In this example, let’s say you spent all 10 of your bids and won on the very last bid. The ending auction price is $0.20. You have to then buy the item at it’s $.20 price. Your total cost is the 10 bids you spent ($5.00) plus the ending auction price ($0.20) or $5.20 for the $25 gift card. There could also be a shipping charge of a few dollars, lets say $2.00, bringing your total price to $7.20 for a $25 gift card saving you $17.80.
How do One Penny Auction Sites Make Money? What’s the Catch?
It is important to understand that the one penny auctions make their money by selling bids, not by selling items. Going with our example above of $.50 cent bids, if an item ends for auction price of $1.00 that means that 100 bids were placed before a winner was crowned. 100 bids at fifty cents per bid is $50 dollars. So while the auction ended at $1.00 the one cent auction site actually generated $50 more worth of bids on that auction.
The amount of money the one cent auction ends on is now where they make their money directly, it is really just a counter of how many bids were spent trying to win.
Think about some of the auctions like these that have $50+ auction ending prices currently going… that means there have been over five thousand bids placed generating $2500+ of revenue! (Bids actually cost $0.60 at Quibids, so that revenue is even higher). Keep in mind thought that many of the one penny auctions go for very few bids giving bidders who strategically bid to win a big time deal on amazing items.
Are One Penny Auction Scams
As long as you understand how one penny auctions work and realize that they are a competitive game then the safe penny auction sites are not scams.
If you think that you are going discount shopping then you should stop right now.
One cent auctions are NOT discount shopping sites.
They are games where you can win incredible deals if you bid smart and know what you are doing before you get involved. If you just sign up because you see a cheap item going on auction right now and want to bid on it then you are going to be in for a rude awakening.
Here are some useful one penny auction articles to explore.
- How Penny Auctions Work – Understand how the pay-per-bid sites function
- Bidding Mistakes to Avoid at All Costs
- Penny Auction Site Top List
- Safest Penny Auctions – Bid at these sites and minimize your risks and know that you are getting a fair penny auction experience
You have to buy bids (which cost way more than a penny) and you use those bids to try and win the right to buy an item at it’s low auctioned price.