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Penny Auctions Question

Discussion in 'Making Money' started by Newbie., Mar 5, 2010.

  1. Newbie.

    Newbie. Registered Member

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    I have seen a few penny auction sites online but I dont understand the profitability behind it. Some of the items I see sold would cost alot more then the auction ended at. I know you buy a bid pack and every bid costs ~.50 to 1.00. Anyone care to shed some light onto this for me?
     
  2. usbodyart

    usbodyart Newbie

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    Here's the basics:

    As you said, each bid costs ~.50 to 1.00. That's not each winning bid, it's every bid.

    The "price" of the item goes up one cent per bid.

    Let's setup an example, we'll auction a $100 VISA gift card on a site that is $1 / bid.

    ...skip forward to the last 15 seconds of the auction...

    Let's say the bid is at $1.78 when you first see it.
    you think "OMG I can get a $100 gift card for $1.79 + my bid cost of $1"

    So you bid, at which time the auction is extended by an amount of time (between seconds and minutes)

    Now, if someone else comes along thinking the same thing and out bids you or the person you outbid rebids, you are out, unless you bid again (paying again).

    The thing is, let's say it is your lucky day, and you "win" it for $1.79 with 1 bid, you come out like a champ, everyone else loses big time. and the site owner, what did he get....

    Well, he bought a $100 gift card, but had 179 bids which brought in $179 to his pocket, a net of $79....

    The best part is the phsycology behind this, if you have been bidding on a $100 gift card and get outbid a couple time, most people will keep bidding until they win it, thinking "well I'm already spent $50 trying to win this thing....Now I HAVE to win it!" When the site owner gets a few people on the same item with this mentality, they can make a lot of money.

    On the flip side, if you own the site and it has a low amount if users, you could end up giving up that gift card for 1 bid worth $1.
     
  3. pasdoy

    pasdoy Power Member

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    Sorry to up this thread, but anyone know any script for this ?

    found it!
    hxxp://scriptmafia.org/cms/5411-penny-auction-script-v3.html
     
    Last edited: Apr 27, 2010
  4. Waterfield

    Waterfield Newbie

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    There has been basic sales for these type sites, I have seen them.

    You'll have to do the searching though sorry!

    They are a license to print money...

    Phil
     
  5. happybloger

    happybloger Newbie

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    Well, even if the owner of the site has a handful of users, he can artificially make fake bids from his own account. This way its a win win situation (although a scam). It is very profitable to run a site like this and really clever idea