Penny auctions sites, also called bidding fee auction sites, are all-pay online auctions. Penny auctions sites fall under the entertainment shopping model that is increasingly popular. You could buy such items as shopping gift cards, electronic items such as Smart Phones and tablets, fashion items, laptops/computers and Xbox and PlayStation sets. It is important that you know how penny auctions sites work if you are thinking of buying an item.
To participate in a penny auction, you will be required to pay a non-refundable fee. This is called the ‘credit pack’. You can buy several credit packs for use in future penny auctions. This amount is usually very small.
With each bid that bidders place, the price of the item increases with a small amount. As the name suggests, each bid increases the price of the item by one pence (0.01 GBP), but U.S. based penny auctions have price increases of one U.S. cent (0.01 USD). The bid price varies from one penny auction site to the next and by quantity purchased.
Once the auction is over, the penny auction site, also called the auctioneer, collects money from the person who placed the final bid as well as the money that was made from the non-refundable fee.
In some penny auctions sites, the penny auction ends when the time indicated on the website elapses. In other penny auctions, however, no time is indicated. Such penny auction websites have ‘Hidden Random Reserve’ prices and the auction ends when someone matches the reserve price.
Some penny auctions feature ‘buy now’ options. With this option, bidders have the option between the penny auction method and the retail price (MSRP) two identical items. As the bid price for the first item increases, the ‘buy now’ price now decreases. Bidders who meet the criteria (some penny auctions sites demand that you must have bought a credit pack in the recent past, usually in the past one month) can buy the identical item at the ‘buy now’ price.
Most penny auctions offer discounts and other incentives to people who buy many credit packs at a go. Active members get to participate in free to bid auctions in some websites. Some penny auctions sites offer rookie auctions for members who have not won anything so that they can practice with other bidders who are trying to learn. However remember to go for penny auctions that are backed by Top 500 Retail Websites.