Penny auctions certainly look enticing don’t they? When you see an iPod that sold for a winning bid of a buck, you likely will want to dive right in and get yourself one too. Slow down there, honey. Do you know what that iPod really wound up costing the winner?
Some simple math will help you determine what was really paid for a penny auction item. Penny auctions work on a system in which you have to purchase bids. The price per bid varies by site, but is generally in the $0.50 range. These bids are not offered in singles, only in packs.
So, let’s say that the price per bid was indeed $0.50. If it took you 50 bids to win it, the price would be $30, plus the total of the pennies bid, plus the shipping cost. Yes, this would still be a great deal on an iPod. However, your chance of winning it for only 50 bids is quite slim. This is because people bid like mad on these auctions. It is easy for many to forget that they are not actually bidding just a penny and push to the back of their mind the real cost.
I’m not saying that you cannot score some sweet deals at penny auction sites, just that everything is not what it may seem on the surface. You will need to dig a little deeper to see the true cost of items and to develop bidding strategies that will allow you to get the best deals.
One strategy that works well is to never bid before the end of the auction. About 99 percent of the bidding does not happen until that time, and for good reason. Unlike traditional auctions where you may want to bid first to lay a initial claim to your prize in order to scare others away, penny auctions do not have this effect. Basically, if you bid first, you will be wasting a bid because there is no doubt you will be overbid.
You should also not enter into a bidding war mid-auction. Throw your pride out, and let the items sit until close to the end. Bidding against someone in the middle of an auction does nothing more than waste bids out of your bid pack.
Patience is key. You must have it, along with nerves of steel to win items at a cheap price. Not only should you wait until the end of the auction is near, but you should wait until other bidders have exhausted their bid packs. Since the time left on the auction is extended each time someone bids, it could take literally an hour or more before you realize the prime time to jump in. When bidding slows and you sense that others have spent all they are willing to spend, go for it.
You may also want to set a limit as to how many bids you will place during each auction. This will help you stick to a budget, and always be mindful of what each bid actually costs you.
Penny auctions are a lot of fun for those who do not fall into the penny auction trap. Forming strategies and setting bid limitations is key. When you get the hang of mastering this system and are actually winning some great auctions, you will no doubt be hooked.