Some one today asked me about these penny auctions sites that are out there, so just thought would share my information about them.
Now we all know about the popular auction sites, these are where the item is on a set time auction you bid and if your the highest bidder at time of auction end then you win the auction at that price.
The penny auction sites work in a slightly different way, im not going to mention any individual site names, but these basics are mostly the same for all of them. You see a item that is listed the price starts from zero pence, you place bids at just a penny and the price just keeps going up by 1pence at a time, the auctions are normally for just 1 minute, but as a new bid goes on that item it then starts again for 1 minute, so if you have placed a bid and no one else bids in within that minute you win the auction at that price.
Now this seems great, but for you to put on a bid it costs you per bid, for example a site I was looking at, the bid price was 60p per bid, you can also txt in your bid but this works out at £1.50 per bid. I will now give you a few examples, prices below where at time of writing this article.
A macbook air at a rrp of £1149.00, had been bidded up to £108.57, but this means that 10879 bids have been placed, and at 60p per bid that means the auction site has made £6514.20, thats well over £5000 profit on rrp, but someone will have got a good bargain
Again a iphone 3GS 32gb rrp £549.00 had been bidded up to £33.92, so again with the maths that makes the auction site £2035.20, but again the winning bidder has got a good bargain.
Now as you can see from the above the auction sites do make a great deal of money, but they can loose out sometimes i.e. a canon SLR camera kit with a rrp £1290.00, when for a total of £8.37, so that just made the auction site £502.20, but as you can see from the previous examples they are making enough money off other items, that they can afford to let it go at that price.
You also had to pay a shipping fee and vat needs to be added ontop of the winning figure and shipping combined
So are they a scam, well no not really, as you can win at a very low price with just a little outlay, but you could still keep putting bids in at that nominal amount loads of times and not win anything, so these bids could amount up and you still have nothing to show for it, but on the other hand you may win a expensive item at a very cheap price. but again as you can see these sites are making possibly alot of money, and the person with the highest bid does get a very cheap.So just bear in mind if bidding on a item on these sites that it is costing you each time you put on a bid i.e. if you put on six bids that would be a total of £6.00.
In my opinion these sites are more like a lottery than a auction site. As its the same as playing the lotto, you pay your money and take a chance, and if you win anything that great, but if you dont was only a small outlay for a chance.
Now I know some people will disagree with what I have said, but this is just giving people the information of the way these sites work.
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