Penny Bids: Deal or No-Deal??
Penny Auction Risks/Rewards
Penny Bids - Penny Auctions
When E-Bay first found its way into America’s homes it was facsinating and everybody was looking for great deals, deals of a lifetime. E-Bay offered an exciting “auction” style website that allowed people to place items they wished to sell or no longer needed on the web for everyone to bid on. What a great concept!! It was the world’s garage sale, with a catch. Everybody on the web had access to see this item and bid up the price.
This was a great business model and some would argue that this is still a great way to find great deals. However, if you frequent the site like I do you have realized that as the popularity has grown, more visitor’s to the garage sale, the prices have risen closer to the retail price eliminating some of the “feel” that a deal has been achieved.
I thought this article was about Penny Auctions????? It is, I am getting there I promise.
If you are like me then you look for items on E-Bay, note the auction end time and then revisit the site when the auction is about to end to enter the “final bidding war”. This is truly where the fun begins and where the lunacy can also take hold of you and completely erase the figure we had labeled “most I am willing to pay for this item”. Enter Penny Auctions.
Penny Auctions allow you to participate in this lunacy right from the start. They have everything you crave. Want to wait to the last second to bid to win the item, you can. However, when you bid time gets added to the auction clock, let’s say 7 seconds. That does not seem that long and in 7 seconds I can see if I won. Someone else just bid, another 7 seconds added. You wait and bid to get back on top. Another 7 seconds. I think you get the idea on how the time works and the real treat is you have no idea when this auction will end.
Now let’s talk price and the cost of these auctions to you. In order to bid you need to buy bids thus giving you the right to bid on an item. Penny Auction site SkoreIt! sells bid packages that range from 15 bids for $10 all the way up to 990 bids for $567. This makes each bid you make worth about $0.64 per bid. Each time you spend $0.64 to bid the price of the item increases by 1 penny. So let’s do the math so far. You have placed 1 bid, costing you $0.64 and the price of the item increased by $0.01 making the total cost to you $0.65. So far go good. What’s the catch??
The bid you made is final and that bid is gone. If you won the item nice job and the bid was well worth the $0.64. If you did not win the item then you not only raised the overall price of the item you are bidding on, but you just spent $0.64 and have nothing to show for it but your user id on a long bid list. Big deal, it’s $0.64 that I found in my couch cushions. Good point. Let’s bring this all together now and use a live example from the closed auction site on SkoreIt!
I just looked up that last two Amazon Kindle Readers sold on SkoreIt!. The last winner paid $0.49 for the Kindle. Awesome!!! The person before them won the same Kindle for $12.15. What??? This proves a couple things. First, it is possible to win a wonderful item (Kindle Reader plug) for a very, very low price. Secondly, it is possible to get tangled in a bidding war and pay a much higher price for the same item, in this case the second person paid 25 times what the first person paid.
Now let’s look at the cost of second place. If you lost out on the Kindle that went for $12.15 you probably made a fair amount of bids in your attempt to win. Let’s for sake of argument say that you made 8% of the bids for this item. If we know that the item increases 1 cent each bid and it sold for $12.15, quick math says that 1,215 bids were made. WOW!!!!! If SkoreIt! sold these bids for $0.60 each then that means $729.00 worth of bids were used to win this item ($0.60X1215 = 729). If you come in second place and made 5% of the bids for this item then you paid $36.60 to not win the item.
Final word on this topic is that you can win some great items and pay “pennies” for them. You can also spend a lot of money and end up with nothing. I did not write this article to promote or deter the use of penny auction sites, but simply as a thought provoker that will hopefully provide those of us that get excited about great deals to stop and take another look.