Do you want to know how do penny auctions work? Before one can find out how penny auctions work, it is important for one to understand what penny auctions are. So what are penny auctions exactly? From the title itself, penny auctions are auctions online that start with an unusually low bidding price and increases slowly in one penny increments. The following is a bird’s eye view of penny auctions. Penny auctions can also be called bidding fee auctions. Participants pay for every bid they make. A specific fee is charged to the bidder for every bid him or her places on the item. Fees are non refundable. Penny auctions are also timed. Every time a bid is made, the time is increased. When the time limit is reached, the last bidder wins the item. Now we can ask, how do penny auctions work exactly? I will explain how they work below.
There are different components to a penny auction. First of all, there should be an item. A specific price is placed on the item by the seller. As I have mentioned, it usually starts with a very low price. Secondly, an auction cannot begin if there are no bidders involved, so we would require participants. The third component is the auction site. The bidder looks for an auction site to place bids on. It is important to note that the bidders have to pay for every bid. In online penny auctions, the users create an account and use their credit or debit cards to purchase the bids. That brings as to the fourth component of a penny auction. A specific fee is charged for every bid made. The fee usually ranges from $.75-$1.Finally, a specific time is set for the bidding. The next section further explains how do penny auctions work?
With the five components complete, we can now start the bidding. As explained, every bidder will be paying for the bid they make. The bidding is focused not so much on the final price of the item, but rather, on the number of bids placed. Every time a bid is made, it increases the time left in the penny auction. It is usually increased by 15 seconds. Whoever is the last to bid when the time reaches zero is the grand winner. The winner gets the item and pays the final price. The final price usually is very low compared to the regular retail price. The difference is usually around 90 percent off the regular retail price. The auctioneer or the seller earns both from the final price of the item, as well as the total amount charged for all the bids that were made.
So now you may ask how do penny auctions work or differ from that of the regular online auctions.
For starters, the participants are being charged for every bid placed. That’s why it is also called a bidding fee auction. The bidding is also not about who bids the highest, but rather it is who bids last. It is similar to EBay. In addition, the winner also gets to buy the item at a very low price since the increment of the bid is by a penny at most. It can be fun and addictive.
Now that we have answered the question “how does penny auctions work?” are you ready to try it out?