Online Penny Auctions

[Buff]

Just wondering if anybody here ever uses the online penny auctions. I discovered Buck2Bid, a FaceBook app, and got a $500 camera for around $250. The camera sales price was just over $20, delivery was $25 and I spent about $200 in bids. I obliviously checked out the daily auctions on Buck2Bid for items I may want, one time missing getting a PS3 for under $1.00 + Shipping by only a couple of minutes, and also having the same thing happen to me for a Wii.

It wasn't until a couple of weeks ago that I discovered this wasn't a new idea, and that it has been going on for a couple of years now. I was just wondering if anybody here participates in penny auctions.

For those who don't know what they are, here is a quick overview. An item comes up for auction, and a timer of 24hrs is usually set (sometimes less, depending on the item and site). The time runs down until it hits 0:00, and the last person to place a bid wins the auction. However, each time a bid is placed, the timer increases a few seconds (5-10 seconds, depending on the site). So an auction can go on for more than 24hrs, depending on how many people are bidding and how persistent the bidders are. The price of the item starts off at $0.01. Each bid increases the price of the item by $0.01. So an $500 item can sell for $20.00... WOW! What a GREAT deal eh?!?!!? Well, here is the catch. You have to buy your bids. Generally the bids start off at $1 per bid and you have to buy them in packages. The higher the package the less per bid. So you have to pay attention to how much you're spending in bids, and add that to the price of the item, and decide how much you are willing to spend. It is essentially gambling. I've watched some bids, and I check in to see who won the bids, and there are some people who have spent hundreds of dollars and have either come up with nothing, or an item that is much less than the cost of all the bids they've sent.

Pretty neat concept, especially for those who run the auction sites. They can sell a $500 item for $20 but (based on $1 per bid) they actually sold that item for $2020. Just last night on Buck2Bid a $500 vacuum cleaner sold for only around $1.70. Big loss on that item for the auctioneer, but huge savings for the user.

I've only used Buck2Bid (the Facebook app), but I've recently took a gander at the other ones. You can certainly get great deals, but you do risk losing money, and you have to have nerves of steel to stick with it through the end. I've only seriously bid on the camera I won. I probably spent a total of 20 bids on a few other items but I could tell that those items were going to go for high prices and I wasn't into fighting the long haul.

[Likwid]

Umm, how exactly do you get this app? I did a search on facebook for Buck2Bid and no results came up.

[Fozzie_DeBear]

So how much did you spend on bidding for the PS3 and the Wii...b/c you should really consider that as a part of your camera expense.

[Resolute 14]

Yup. I have to admit, this is an absolutely brilliant scam. They manage to get people to pay $500 for a $300 camera and think they spent only $100 on it because people often fail to think of how much they spent just bidding on things.

[Buff]

Originally Posted by Fozzie_DeBear

So how much did you spend on bidding for the PS3 and the Wii...b/c you should really consider that as a part of your camera expense.

Nothing on the Wii, maybe 5 bucks on the PS3.

[Buff]

Originally Posted by Likwid

Umm, how exactly do you get this app? I did a search on facebook for Buck2Bid and no results came up.

Sorry, BuckToBid.

http://apps.facebook.com/bucktobid

[jtfrogger]

Okay, I just took a quick look at penny auctions, since I have never heard of them.

So, you pay every time you bid, whether you win or not. Some sites also want the winner to pay for the final bid amount, but that is nothing compared to the amount of money the collect for all the bids.

Here is the first item I looked at through a simple search and clicking the first thing I found. Someone got a $299 iPod touch for only $16.20. The final "price" was $52.27, but the bidder only put in 27 bids and it does not appear that this site adds the final value to your price. If you buy in bulk, you can get bids for the low price of $0.60 each. Great deal for the winner.

However, since it went for $52.27, that means there were 5227 bids on the thing. At $0.60 each, the site collected $3136.20 for a $300 iPod. That is a nice return for them. On one item. Even the previous item that sold for a mere $8.85 really collected over $500 in bid sales. Sure, there would be some free bonus bids in there, but there would probably even be some priced over the minimum. Even if you use an average of $.30 per bid, it is still a crazy amount of money.

Given that some penny auction houses actually have scripts running to do shill bidding, this whole concept is really shady.

I am surprised it isn't illegal.

EDIT: I just looked a bit deeper and the site that I linked does make you pay the final price in addition to your bids. I misread that at first glance. Well, that is even more money for them.

[Slava]

The whole thing operates on a psychological concept called the escalation of commitment. At first you've bid and it costs you next to nothing, but then as the price increases and you put more and more money on the table you feel like you have to keep going. It's basically a thought of "well, I've already come this far so to quit now would be pointless and admit that I shouldn't have done this at all".

I've used a similar exercise in presentations that I give where I auction off a $20 bill. The catch is that both the high bidder and second place bidder have to pay though. I've never done this and had the amount be less than $30-35 (I of course don't actually collect the money).

I just find these things really interesting!

[algernon]

When I first bought stuff from e-bay, I got snaked at the last second on a few items. I then waited on a pair of shades until the last (8) second(s) and out bid the guy by $3 or something.
Almost immediately, the prick fired off an ALL CAPS expletive filled tirade, lol.

Maybe there could be a CP fundraising tie in to these auctions?
There could be;

Arcade Machines
Mazada 3s
Extension Cords
???
PROFIT!

[yads]

Originally Posted by Slava

The whole thing operates on a psychological concept called the escalation of commitment. At first you've bid and it costs you next to nothing, but then as the price increases and you put more and more money on the table you feel like you have to keep going. It's basically a thought of "well, I've already come this far so to quit now would be pointless and admit that I shouldn't have done this at all".

I've used a similar exercise in presentations that I give where I auction off a $20 bill. The catch is that both the high bidder and second place bidder have to pay though. I've never done this and had the amount be less than $30-35 (I of course don't actually collect the money).

I just find these things really interesting!

Beaten to the punch. I was going to bring up this exact concept. It's like they say in War Games. The only smart move is not to play.

[missdpuck]

I have never actually bid on anything but love to go onto the sites and watch others do so.
I occassionally will go to the casino and sacrifice 20 bucks to the slot gods. What's interesting about the penny auctions is you never know what your odds are, how many people you are bidding against. That last-minute bidding frenzy amazes me.

[Resolute 14]

Yeah, the best are sites like Swoopo, which auction not only items, but bids. They've actually convinced people to pay for the right to pay for something else.

[Bob]

Penny auctions are gambling.