Penny auctions are a term you are probably unfamiliar with. A penny auction is an auction where bidders pay each time they place a bid on an item and the time increases with each bid. Bids usually cost between .50 cents to a $1. Every time someone bids, the timer usually resets back to 10 or 15 seconds. The winning bidder is the bidder whoever is the last to bid when the timer counts down to 0 seconds . Unfortunately, there a lot of people who go into a penny auction and have no idea what they are getting into. They get excited when they see these cool items going off at low prices, buy a bid pack and then waste all their bids on an item with nothing to show for it. The customer now believes they have been ripped off and wants to tell everyone how penny auctions are a scam. However, this belief could not be further from the truth.

It is true that the business model offers the potential to make a lot of money if they can attract enough traffic to the website. This does not mean that the business is not legit... isn't the purpose of almost all businesses to generate as much revenue as possible. I don't hear anyone calling Ebay a “scam” or “fraud” when they charge you for both listing fee's and 10% final value fee every time you make a sale ( in fact, almost every update ebay makes to their website is always in the interest of making them more money).

Not all penny auction websites are equal or the same. At most penny auction websites, you can spend your money on bids, not win anything and then be completely out for that money. This is why there have been numerous comparisons of these types of auctions to gambling. However, there are also sites out there that will allow you to apply your bids to buy the item out right at its retail price - therefore you don't get a great deal but you do get your moneys worth. There are even websites out there that have some sort of redemption. This means every time you spend money to buy bids, you accumulate some free bids that you can use to redeem an item.

What most people need to start understanding is that for every winner there are going to be 10 other people who did not win the auction. You're spending money for the CHANCE to win brand name items at huge discounts. That is exactly why it is essential to find a site out that will offer you the most for your money. There are actually people out there who make a living winning penny auctions and then others that only bid to win every once in awhile but enjoy the entertainment aspect. The point is, there are many satisfied customers despite some of the misconceptions that have formed regarding penny auctions. It is your job to do some research about a site before signing up for it. Take a little time to find out which sites are reputable and will offer you the best deal... there are plenty of forums and reviews out there which can point you in the right direction. If you do this, you might decide you don't want to participate at all or you might find an auction site that you love. Either way, you will know what you're getting into and won't be one of those people who think they have been “scammed”.

View all Toni Kirchner's articles

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