Penny Auctions - The Basics You Have To Know

“If it seems to good to be true, then most likely it is.”

We’ve heard of this many times, haven’t we? But just like any rule or principle, there’s always an exception. And one that immediately comes to mind are online penny auctions. TVs, smartphones, SLR cameras – everything is sold at rock-bottom prices. But here’s the sweet part: it’s 100% legit.

Just To Clarify…

Penny auctions – online or otherwise – sell bids and NOT products. These auction sites have been designed form the ground up for selling bids, which is why a lot of people look at these as bidding sites and NOT auction sites. With that out of the way, let’s take a look at how it works at a basic level.

How It Works

“How many bids were spent?” – This is the primary concern of every penny auction site. The amount the product was sold for is merely an postscript.  What penny auction site owners hope for is that the total amount of money spent on the bids exceed the cost of the time item they’re auctioning.

Let’s check out an example: Let’s say a 58-inch, LCD TV (at a retail price of $2000) is being auctioned. The ending auction price amounted to $100, with the price increasing by a penny for every bid placed. With a little bit of math, we can determine that this specific auction took 10,000 bids ($0.01 x 10,000 = $100).

As mentioned earlier, penny auction sites make money NOT from the selling price of the item on auction but through the number of bids it received. You see, they charge for every bid. How much exactly depends on the online auction site – it could cost anywhere from $0.50 to $1 per bid. Taking the lowest end, 10,000 at $0.50 translates to $5,000 worth of bids!

So an LCD TV that cost them about $2000 got $5000 worth of bids, which means they have made about $3000 on this specific auction! The website made a boatload of money and the auction winner got an expensive TV at 95% discount. It’s that crazy!

Before You Jump Into Penny Auctions

It’s a very cut-throat field – keep this in mind. It’s not discount or entertainment shopping. At their truest form, penny auctions count as a competitive game like poker. And just like poker, it can be a lot of fun especially when you start winning $2,000-gadgets without spending more than $10.

If you’re a poker enthusiast and have played for quite some time now, you’ll probably love penny auctions. Penny auctions heavily reward all-out aggression, and it requires playing with the minds of other bidders. Go for the jugular and use psychology to your advantage, and you’ll have a huge edge against the average penny auctions bidder.

But while it is fun, keep in mind that winning isn’t as easy as others make it out to be. There are no fail-proof techniques that lets you win every single time. If you want to get your hands on penny auctions and make it big, start by learning the basics of the game – focusing on different strategies and bidding styles.