A penny auction is an auction that is held online where people bid against each other to win items at a discounted price. There is a timer on the auction and the winner of the item is the last person to bid when the timer runs out.
Penny auctions work differently from eBay and other auction sites, in the sense that the products being sold, are being sold by the website owners. This varies from many other auction sites where it is normally third parties doing the selling, who are not affiliated to the website in any way.
This all sounds straightforward enough; however, another difference with penny auctions to an auction site like eBay is that every time a bid is placed on the item, more time is added to the auction. So the trick is letting the timer run down and then placing your (hopefully) winning bid.
Bidding fees vary depending on the product you are bidding for on the penny auction sites but generally you can be sure it will be between fifty cents and one dollar per bid. Usually product auctions will start very low, sometimes at zero and then increase by a small fraction each time a bid is placed, normally this small amount is a penny, explaining the name penny auction.
The majority of the time, buyers will purchase packages so that they can bid again and again quickly without having to worry about entering payment details, for instance fifty bids for twenty dollars. Bidding fee auction sites run many auctions at the same time and it is always worth checking that terms and conditions for the bids.
People often wonder how the penny auction sites make their money and simply put, they make money from all the bids, which can add up really quickly.
Maybe you've have heard about the amazing deals that people have managed to get on penny auctions. However, it is still good to be aware of the fact that despite paying money, you will not always win. The winner of course is normally very pleased with their purchase, often getting an item like an iPad for less than 95% of the actual retail cost meanwhile all the other bidders have bid, paid and won nothing.
The key to actually saving money is to have a strategy in place. Bidding fee auction sites get criticized for being too addicting, so limit the amount of items you bid on. Experienced bidders know how a particular penny auction site works and can win consistently.
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