Penny Auctions – Scam Or Good Way To Save Money?

Penny Auctions - Great Deals or Big Scams?

Penny auctions exploded onto the scene last year and their popularity is continuing to explode and it seems like everywhere I turn I see advertisements for new penny auction sites that have popped up.

However, are all these penny auction sites scams or are they truly a good way to get a good deal?

After all, they advertise buying iPods for $10, iPads for $50, and big screen TVs for $95.   While those prices are legit, there’s a catch to those huge discounts.

In this article, we’re going to dive into the world of penny auctions and help you decide once and for all if they’re a good way to get a great deal on products or if they’re not worth the trouble.

How Penny Auctions Work

I remember the first time I saw a penny auction site, I thought it had to be a scam because the prices on their items were so low.  However, after spending a little time learning how penny auctions actually work, I understood why the prices were so low.

Unlike with a traditional auction where you can bid at anytime and you’re only obligated to pay if you’re the winning bidder, with penny auctions you not only pay the final bid price but you pay for every bid your place – typically 75 cents to $1 per bid.   You pay the money you bid whether or not you won the item.  That means you could spend hundreds of dollars on a single item and NOT get anything in return.

The reason they’re called “penny auctions” is because most of these sites raise the bidding by only a penny at a time.  That means that an iPod that is selling for $20 has had $2,000 worth of bids placed on it.  ($.01 bid increments x 2,000 bids = $20).

That means that the auction house has taken in $2,000 on an item that is worth $250 – can you see how this can be really profitable for the people running these websites?

While the person who wins the final bid will probably get a good deal, several dozen or hundreds of other people get nothing despite the fact that they did spend money on the auction in the form of placing bids.

It’s really easy to lose money with a penny auction site – keep that in mind before you read any further.

Penny Auction Free Bids

As a way to get you hooked on their services, some penny auction sites will give away a few free bids when you sign up.  Here is one such service (make sure you use the promo code “freefive” when you sign up to get your free bids).

You’ll also see many sites auctioning off bid packs which allows you to buy a big package of bids the same way you bid for other merchandise so you could theoretically turn a few bids that you purchased into hundreds of bids that you can use to go after some of the bigger items like computers, HDTVs, or even a new car.

Penny Auction Bidding Strategies / How To Win Penny Auctions

Just like with blackjack, the lottery,  and poker, people have spent countless hours trying to figure out how to win more than they lose so that they actually save money.

First and foremost, let me says this – ALWAYS SET A LIMIT. If you reach your limit and you didn’t win, walk away.  The sites are designed to get you caught up in the heat of the moment so you spend more than you wanted to – don’t let yourself become one of those people.

Now on to some of the bidding strategies if you’d like to be successful with penny auctions.

Here’s a video that goes over some strategies in depth.

httpvh://www.youtube.com/watch?v=YQa1V0QRCc0

Also, certain times of the day and certain times of the week are going to be much better times to bid. For example, in the middle of the night (4:00am ET) is generally a better time to bid because there are less people bidding.  Also, certain days of the week are better than others.  Wednesday and Tuesday are typically better than Sunday or Monday when there are more people on the site.

Also, never bid on an item until the auction is in extended time.   Make sure you look at who is all bidding on the item and get a feel for the “lay of the land” before you get started.

If you just sign up, and place a few bids, you are guaranteed to lose your bids and your money so you need to be strategic with your bidding.

Conclusion – Are Penny Auctions A Good Way To Save Money

We think that when it comes to penny auctions the old adage of “if it seems to good to be true, it probably is.”

While the bidding can be fun and there is plenty of entertainment value, I’d classify penny auctions as online gambling sites rather than deal sites.  If you want to gamble, go ahead and sign up but they’re not for the person looking to get a good deal – just remember to be prepared to lose money and don’t risk money you can’t afford to lose.

Legitimate Penny Auction Sites

If you’re still interested in giving it a try (you’ve been warned), here are a few penny auction sites that are legitimate – that means if you win the bid, you’ll at least receive the merchandise you won.

BidRivals – Use promo coupon code: freefive for five free bids.

BidHere – Better Business Bureau Accredited (very few penny auction sites are) – lot of high end merchandise

Bid Cactus – Tons of gift cards – I was tempted to go after the Starbucks one (I didn’t though).

BigDeal – Lots of iPads, iPhones and Apple products

Flutteroo – Bids are only 50 cents

Swoopo – One of the oldest and largest penny auction sites.

BozBids – Offers a lot of HDTVs

Bidswap – Lots of low priced items – many items sell for under $1

Related posts:

1. How To Switch From Lattes To Coffee – Save Money
2. The Smart Way To Use Coupons To Save Money