Is buying things on penny auctions a good idea? How do penny auctions work?

Question

Is buying things on penny auctions sites like QuiBids.com a good idea? I heard you can get things very cheaply there.

Answer 1

QuiBides has a description of how the process works. Simply put, every bid costs money (60 cents to place) so when you win an item for $20 that's worth $100, there may be 200 bids that were not won, but the company pockets. The concept is a huge turn off for me. Too much like gambling.

Edit - given the selling price is nearly always on the low side (e.g "iPad 3G for $150!") I'm sure the seller gets most of the bid revenue. I don't know the exact details of the fee sharing.

Answer 2

There's been a great deal of growth in this market with new sites opening all over the world. It has only the illusion of being a bargain.

Each bid is worth 1 penny/cent and can cost anywhere from 50 pence/cents to 1 dollar/pound per bid.

Quick calculation: the auction site needs to clear 1% to 2% of the bid price to cover the cost of the item being sold.

From observation it appears that big ticket items (like a car) attract sufficient interest to push it over the 2% level quite rapidly (where "rapid" can be measured in days given that it can be up to two minutes between bids, at 1 cent a time). It is the lower-priced items that can often go for less.

However, this is all a function of the site's popularity. The earlier you get in the more likely they are to still be burning cash like the dotcom flameouts many are likely to be.

Answer 3

A: No.

See: http://www.ripoffreport.com/organized-crime/swoopo-com/swoopo-com-avoid-these-pay-to-c79m8.htm

Go to a casino and play craps instead. At least you'll have a good time.

Answer 4

It amounts to chance, more or less. It's more of a "last man standing" deal: If you're the last person to throw in the towel and cut your losses, you win.