The Whacky World of Penny Auctions

For a long time their were only two main ways that you could purchase products online at a discount. The first was to bid on items via eBay, the second was to hunt down used merchandise on Craigslist.

A Dutch auction is the type where the object’s starting price is high and the auctioneer lowers the object’s price until the auctioneer’s reserve price is met. There are no opposing bids. Rather, the only bid is the winning bid when the price is low enough to be acceptable to one buyer.

In a reverse auction, sellers compete by sealed or anonymous bids and the price of the object goes down. This is the similar model that many businesses use to obtain good or services when they ask for bids; usually the lowest of the competing sealed bids wins.

So the best way out to win penny auctions is by spending less and winning more. In Penny auctions, bid on only those items that you actually require, and better still go for buy-it-now items. Becoming aware of the things you need makes you spend on Penny auctions a lot more wisely.

The second major difference is the fact that the products for sale are brand new rather than used. This is surely a positive difference especially considering the fact that many people falsely describe their products when they place them for sale on some of the aforementioned websites.

So what is the main reason that so many people second guess the penny auction format? The reason is simple and it involves the fact that when you bid and lose you are simply not pleased. For instance on eBay you could place 20 bids and be the loser but be no worse off than when you started money wise. With penny auctions however if you may place 20 bids and lose, and be out $15-$20.

The safety net however is the fact that you are able to purchase the product you are bidding on minus the cost of your bids on most sites. For instance if you spend $50 on bids for an item valued at $100, you will be given the opportunity to purchase that item for an additional $50 which takes a large portion of the risk out of the game.

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