Penny auctions are growing in popularity on the Internet. They are a variation of the standard auction, Dutch auction or reverse auction format.
In the standard auction, people bid on objects until the price for the object goes no higher. It's free to bid on the item. The winner pays for the object won.
A Dutch auction is the type where the object's starting price is high and the auctioneer lowers the object's price until the auctioneer's reserve price is met. There are no opposing bids. Rather, the only bid is the winning bid when the price is low enough to be acceptable to one buyer.
In a reverse auction, sellers compete by sealed or anonymous bids and the price of the object goes down. This is the similar model that many businesses use to obtain good or services when they ask for bids; usually the lowest of the competing sealed bids wins.
In an online penny auction, sometimes called a bidding fee auction, bidders pay small nonrefundable fees, usually one cent, with each bid. The winner pays the final price in addition to the bidding fees already paid. Objects sold are usually listed much below their true market rate, in order to entice potential bidders to pay for the bids. Bidders buy the right to bid in increments called bid packages, the exact package depending upon the exact online auction. Another way to look at them is to think that with each bid, the price of the item increases by one cent. Why are items offered at such low prices? In part because purchasing bid packs defrays the cost of the merchandise. The format is livelier than that of standard auctions. There's always something happening during the course of the auctions. Mere seconds matter. The excitement is almost as much a draw as the chance of winning the item itself is.
Popular items include desirable electronics. Compared to standard auctions, the starting prices of items is much lower. The latest flat screen television, the newest electronic tablet and the most modern cellular telephone: just about any of these can be found on a penny auction site starting at just a few dollars.
Penny auctions are timed in the sense that each bid advances the clock by a preset amount of time. The person who placed the last bid before the clock reaches zero won the auction. Seasoned bidders say the best strategy is to wait to bid, rather than to bid early.
Is an online penny auction for everybody? That depends. Perhaps a good strategy is to join some online auction sites and watch a few auctions. Not only is it a good way to decide if they would be fun, it's a good way to see which penny auctions sites to join and an excellent way to learn some useful auctions strategies.
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